NADIRA ISLAM, MAS: The insurance sector is globally recognized as a key pillar of economic stability, financial inclusion, and long-term investment mobilization. In Bangladesh, however, the sector’s contribution to Gross Domestic Product (GDP) remains significantly below the regional standards despite steady economic growth and a rapidly growth middle class.

Over the past few years, the insurance sector’s contribution to GDP has remained relatively low and stable in many developing countries. In Bangladesh, insurance penetration has shown little change, standing at about 0.5% of GDP in 2020, slightly declining to 0.4% in 2022, and remaining within 0.3%–0.5% in 2024, indicating very limited growth in the sector’s economic role.

In comparison, other Asian countries show much stronger performance. Malaysia maintains a mature insurance market at around 4.5%–5% of GDP in 2024, slightly below its 2020 level but still stable. Sri Lanka showed a positive growth, rising to 1.4%–1.6% in 2024 from about 1.3% in 2020. India has recorded steady growth, increasing from 3.2% in 2020 to 3.7% in 2024, while China rose from around 4% to over 4.5% during the same period. Meanwhile, Japan remains the regional leader, consistently contributing over 8%–10% of GDP through its highly developed insurance sector.

The low penetration level clearly indicates that Bangladesh’s insurance industry has yet to realize its full economic potential. The sector currently contributes through risk management, long-term savings mobilization, employment generation, infrastructure financing, and capital market investment. However, its overall macroeconomic impact remains limited.

Recent data show that total premium collection in Bangladesh reached around Tk 18,768 crore in 2024, growing by approximately 7.3% from the previous year. However, growth slowed due to declining public confidence, weak claim settlement performance, and governance-related concerns.

Building the Future of Insurance in Bangladesh

Bangladesh has significant untapped potential in the insurance sector. With proper regulatory enforcement, technological modernization, and restoration of consumer confidence, insurance can become a major contributor to national GDP and sustainable economic development.
If Bangladesh can raise insurance penetration to even 2% of GDP over the next decade, the sector could unlock billions of taka in long-term investment capital, strengthen economic resilience, and accelerate inclusive growth.

Although regulatory reforms under the Insurance Development and Regulatory Authority (IDRA) and the Insurance Act have improved oversight, structural weaknesses—particularly low trust, weak market penetration, and limited product innovation—continue to constrain growth.

In conclusion, while Bangladesh’s insurance sector remains small compared to regional economies, it holds strong potential to become a significant driver of economic growth. Strengthening governance, expanding digital insurance services, and rebuilding public trust are essential steps toward increasing insurance penetration and enhancing its contribution to GDP.

References

• Swiss Re Institute – Sigma World Insurance Reports (2020–2024)
• OECD Insurance Statistics (2024)
• Insurance Development and Regulatory Authority (IDRA), Bangladesh Annual Reports
• IRDAI Annual Report (India, 2024–25)
• Central Bank & Insurance Authority Publications (Malaysia & Sri Lanka, 2024)
• The Business Standard report on insurance growth in 2024.

Author: SVP & HoD, Actuarial Function, Akij Takaful Life Insurance PLC.