Insurance Sector in BD Still Lagging in Digitalisation, UMP Platform Seen as Game Changer
Business Report:
Despite significant progress in digital transformation within Bangladesh’s banking sector, the country’s insurance industry remains technologically underdeveloped, facing various challenges ranging from limited use of digital tools to a lack of skilled human resources and unhealthy competition.
Although several initiatives have been taken to digitise the insurance sector, these efforts have often been hindered by vested interest groups. Experts point out that the insurance industry plays a critical role in a modern economy and needs urgent reforms to align with global standards.
To modernise the sector, the Insurance Development and Regulatory Authority (IDRA) introduced the Unified Messaging Platform (UMP), recently rebranded as the Insurance Information Management System (IIMS). Speaking at a seminar jointly organised by IDRA and the Insurance Reporters Forum (IRF), IDRA Chairman Dr. M Aslam Alam emphasised, “Digitization could eliminate up to 85% of irregularities and corruption. We are taking initiatives, but cooperation is often lacking.”
Oversaturation and Unhealthy Competition
Since 1991, a total of 82 insurance companies have been registered in Bangladesh, 60 of which were approved in the past 15 years. In comparison, India has 57, Pakistan 40, and Sri Lanka only 28 insurance firms. Bangladesh now has 36 life insurance companies (1 public, 35 private) and 46 non-life insurers (1 public, 45 private).
The sector is also home to only one fully international insurance firm and one joint venture. Industry analysts argue that the excess number of companies has led to unhealthy competition and instability.
UMP/IIMS: A Step Toward Transparency
Originally misunderstood as just an SMS-based notification system, the UMP platform actually supports 10 key services. Due to misinformation from certain quarters, the platform’s full potential was initially underutilized. However, in the past seven months, following stricter regulatory enforcement, most insurance companies have started submitting regular data through the IIMS.
One major point of contention remains the IIMS data submission fee—currently set at BDT 3.50 per policy per quarter—regardless of policy size. Insurers argue this uniform charge is unfair, especially for small-value policies with lower premiums.
Modern Tools for Oversight and Customer Service
IIMS has already begun to transform insurance operations by collecting centralized policy data similar to the Credit Information Bureau (CIB) in the banking sector. Technical implementation of the platform is being handled by Dware Services PLC.
Key features of IIMS include:
- Premium Notifications via SMS and email
- QR-Coded E-Receipts for added transparency
- A mobile app and online policyholder portal for policy verification
- Business Intelligence tools for data analysis
- Report Verification Modules to ensure regulatory compliance
IIMS also enables offsite supervision by IDRA, allowing the authority to detect unauthorized branch operations and unlicensed agents.
Agent Registration Made Simpler
In a bid to streamline agent-related operations, the Agent License Online (ALO) module under UMP allows for digital recruitment, license renewal, and monitoring of agents. This has reduced fraud, ensuring agents can’t work with multiple companies simultaneously. The introduction of e-KYC services further simplifies identity verification and age authentication for policyholders.
As Bangladesh seeks to build a more transparent and efficient insurance sector, the full implementation of IIMS is seen as a critical turning point. While challenges remain, regulatory authorities believe that with sustained efforts, digitalization can significantly improve the sector’s performance and public trust.