News Life and Health07 Nov 2018

Bangladesh:Low returns obtained from insurance fund investments

07 Nov 2018

The insurance sector's returns on investments, including securities and fixed assets such as land and buildings, have been minimal.

Thirty-two life insurance companies invested BDT139.49bn in government securities, from which the return was 2.62%, or BDT3.65bn, in the first quarter of this year, according to a report in The Daily Star citing the Insurance Development and Regulatory Authority (IDRA).

In the first quarter of the year, life insurance companies invested BDT24.7bn ($294m), or 8.48% of their total funds in fixed assets. The return was only BDT100m, which is 0.40% of the investment.

Life insurance companies had a total BDT291.18bn invested in a range of different sectors. The highest portion of the insurance funds— about 48%—was invested in government securities as insurers are mandated to invest at least 30% of their funds in such instruments, said Mr Mohammodi Khanam, CEO of Prime Insurance.

Life insurers had also placed BDT90.28bn in fixed deposits, which was 31% of their total funds as of March this year. The return from the investment was almost 2% in the January-March quarter.

The life insurers had invested BDT24.2bn in the stock market, from which the return was BDT130m, or 0.54%, in the first quarter.

These returns have left the regulator concerned  and it has asked insurance companies to invest policyholders' money wisely and boost the return on investment.

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