Guardian Life is a company on a mission - “Insurance for All”. So far it has covered the lives of more than 11 million microcredit borrowers and their family members in Bangladesh. In their short journey, they have earned many national and international accolades for their smooth claim settlements, innovative products, IT solutions, largest life coverage etc. We talked to CEO M M Monirul Alam and Deputy CEO M Shazzadul Karim, with additional insights from Assistant Vice-President, Microinsurance Department, S.K. Khalidujjaman.
MiN: How does Guardian operate?
Monirul: Our Guardian Brac Bima (GBB) partnership started as a pilot and we now cover around 11.1 million low-income people, mostly in the informal workforce, offering life and credit cover through the Credit Shield plan. The insurance sector in Bangladesh is growing very slowly, and merely four to five insurers provide microinsurance coverage for low-income people. Brac understands the need of insurance for their borrowers - mostly poor women. To protect these families GBB Project started back in 2015 and it has now become one of the largest successful microinsurance models in the world.
Bangladesh has a huge unbanked population - around 40 percent of workers are in the informal sector and live from hand to mouth. We aim for their financial inclusion through insurance - for example, offering micro savings insurance products to help integrate the unbanked population into the financial sector.
Shazzadul: Many microfinance institutions (MFIs) and non-governmental organisations (NGOs) have in-house, informal insurance programmes, but GBB is the first formal partnership with an insurance company. We looked at this huge untapped market and thought, “Why don’t we jointly implement a customised insurance programme?” So we designed a product specifically for Brac, taking their inputs into account. From January, 2021, we’re also planning a savings product.
MiN: How has Covid-19 impacted you and your clients?
Monirul: Like other places in the world, COVID-19 has had a big impact on our economy and especially in the insurance industry, since our insurance products are mainly sold by our agents through face-to-face sales. Due to COVID, maintaining health, safety and social distancing this sales process came to a halt, meaning no new business for the company and no commission income for the agents.
As per the life insurance policy in Bangladesh, there were no exclusions for pandemics. Otherwise, how would the poor community repay their loans or recover from income loss? The regulator of MFIs and NGOs issued instructions that customers would have a loan repayment holiday for three months, which has since been extended to six months. Guardian covers the additional risks as well - that gives clients peace of mind - but it has created extra financial burdens for us. This is a new experience for all of us, but it’s the time to prove our commitment to the low-income community.
MiN: How can insurance help Bangladesh deal with climate change?
Shazzadul: The insurance sector mainly offers crop cover against damage from floods and drought, but the problem is that weather data in Bangladesh isn’t very credible. That’s a big constraint on developing insurance products. There have been some pilot projects but unfortunately the experience was not good - for one product, the flood level trigger point was too low and the insurance company had to pay out every single policyholder. For another, it was set too high so no one could claim. It’s been difficult to convince insurers to carry on after the pilot projects. We need to test for longer to be able to develop products correctly.
MiN: Last year’s ICII was held in Bangladesh - what were your key takeaways?
Monirul: The conference opened our eyes to the potential of InsurTech. Traditionally, most microinsurance in Bangladesh has been sold by agents on a commission basis, meaning it is relatively expensive. Digital technology could help MFIs incorporate value-added services by partnering with insurers - that would be a win-win-win for MFIs, insurers and clients. There are some fantastic digital microinsurance products in Africa, the Philippines and Indonesia, and we could really learn from them.
Shazzadul: The most important thing was that both the Prime Minister and Finance Minister mentioned that insurance activities handled by MFIs and NGOs should be formally managed by insurance companies. If this happens, the scope for insurers and NGOs to work in tandem will be huge. There are hundreds of NGOs in Bangladesh offering informal, in-house insurance - but many products are overpriced and the benefits are relatively low. With our technical and actuarial expertise, we can lower costs and create higher benefits for the end-user.
Monirul: Covid shows that InsurTech is the future. We’ve had to adapt to new technologies to keep our operation going - we’ve developed an online claims submission portal to deal with nearly 1,000 claims a week. We’re communicating with our customers and raising awareness using social media and also kept our call centre open 24/7. During nationwide lockdown due to COVID, our office may be closed physically, but our operation remains open virtually to serve our customers.
We’ve developed the Easylife app, a contactless e-KYC (electronic Know Your Customer) selling process which works by swiping your ID card. People can now buy insurance online from anywhere at any time in just three to five minutes. We’re just at the beginning of this journey, and Covid has been a spur to optimise InsurTech. The world isn’t going to go back to how it was before - people will gradually go for online financial services rather than physical services from banks or insurers in the future. We’re investing heavily in technology, data protection and cyber security to enhance our digital journey.
Shazzadul: Guardian is at the forefront of advanced technological processes in the insurance space in Bangladesh, having introduced e-KYC capturing, mobile apps and other digital processes.
MiN: What are the major challenges and opportunities for microinsurance?
Monirul: If banks and NGOs are allowed to work as Corporate Agents, they can get commission and be incentivised. Once these regulatory issues are addressed there will be huge opportunities to scale up microinsurance. At the moment, penetration is only around 0.5 percent, although we have a target to reach four percent by 2022. Now we have independent regulators and we’re working together with the government to overcome these hurdles. I’m optimistic - this is a good time for the insurance industry in Bangladesh.
Shazzadul: The Microcredit Regulatory Authority (MRA) Act 2006 and MRA Rules 2010 gave permission to MFIs and NGOs to offer insurance services to their borrowers. To protect the interest of low-income people, these scopes should be discontinued and should involve working together with the licensed insurance companies instead. If we can introduce Bancassurance so that banks can act as agents for insurance companies, the scope will be widened further. The government is working on a common set of regulations for both microinsurance and Bancassurance. If we can solve these two challenges the insurance sector will be able to do much more.
MiN: What excites you most about being a member of the MiN?
Shazzadul: MiN is a very good platform for learning and sharing experiences. With 11.1 million lives covered, we have one of the biggest microinsurance operations in the world. We’ve learned a huge amount, and we’re very happy to share our vast experience with other members.
Monirul: It’s good to be a part of an international network containing such a pool of knowledge on microinsurance products and operations around the world. We want to know what’s going on in other parts of the world. With the MiN’s support and global experience, we want to make insurance accessible for everyone. It’s a blue ocean out here and we believe that with a good product and plan, we can implement and scale up microinsurance in Bangladesh.