Written by The Banking Post
Just five companies control the bulk of Bangladesh’s insurance sector, creating risks for the entire industry, according to the central bank’s latest Financial Stability Report.
The report said the dominance of a few firms has weakened competition, left smaller players struggling to survive, and reduced product and service diversity. It also warned that a crisis at any of the top firms could trigger shocks across the sector.
In the life insurance segment, total assets stood at Tk48,560 crore in 2024. Of this, nearly 77 percent — Tk37,357 crore — is concentrated in the hands of five companies. These firms also control over 65 percent of total premiums. State-run Jiban Bima Corporation alone accounts for 6.45 percent of assets and 7.01 percent of premiums.
The non-life segment shows a similar trend. Assets stood at Tk20,530 crore, with the top five companies holding 62.67 percent or Tk12,865 crore. They also collect 56 percent of the premiums. Among them, state-owned Sadharan Bima Corporation dominates with 42.17 percent of assets and 27.10 percent of premiums.
Such heavy concentration, the Bangladesh Bank report noted, is limiting competition and increasing dependence on a handful of companies.
The report also linked the sector’s fortunes to the broader financial system. Life insurers have invested about 63 percent of their funds in government bonds. Deposits with banks and non-bank financial institutions fell from 15.57 percent in 2023 to 13.25 percent in 2024, accounting for less than 1 percent of total banking sector deposits. This means sudden withdrawals by insurers would not put significant stress on banks.
However, the risk is the other way around. If banks or financial institutions come under stress, insurers could face heavy losses. Nearly 11 percent of insurance funds are invested in the capital market, where weak performance has already weighed on sector income.
