Bangladesh: IDRA concerned over high lapse rates
Source: Asia Insurance Review | Mar 2015
The Insurance Development and Regulatory Authority (IDRA), the insurance regulator of Bangladesh, has expressed concern over the high lapse rates of policies issued by private life insurance companies.
The IDRA said that private insurers in Bangladesh have one of the worst lapse rates globally, due to policyholders’ ignorance and companies’ wrong strategies. The first year lapse rate for private insurers is in the range of 60%-70% in Bangladesh.
Private companies mostly target the rural areas for marketing their policies and people there do not have much knowledge about insurance. Lapses happen when policyholders fail to pay their premiums on time, leading to cancellation of the insurance cover.
According to the IDRA, there are currently 8 million policyholders in Bangladesh and the total life fund of these policyholders stood at BDT25,000 crore (US$3.5 billion). There are 31 private life insurers operating in the market, out of which 12 were given licence to operate in 2013.