10/03/2010 - 12:01:47 BANGLADESH: HUGE INTEREST IN STARTING INSURANCE COMPANIES
Bangladesh's Ministry of Finance and the Department of Insurance are swamped with hundreds of applications seeking permission to open new insurance companies, reports The New Nation newspaper.
"We have already forwarded 230 applications to the Ministry of Finance. Some 120 more applications are still in our hands," said a high official of the Department of Insurance. Finance Ministry sources say that the Ministry has already directed the Department of Insurance to give permission to two new companies under the new insurance law passed by the parliament last week. The ministry is considering giving the green light to a few more insurance companies.
The huge interest in starting insurance operations is attributed to the perception that insurance business is more profitable than banking or other businesses. An official of the Department of Insurance says that during the last couple of years, the insurance sector registered 20% growth on average.
"The main reason for the overwhelming applications for new insurance companies is the high price of insurance shares on the stock market. At present the lowest share price of an insurance company is Tk450 (US$6.51). A Tk100 share of Delta Life Insurance is selling at Tk16,100. On the other hand, bank shares are selling at between Tk250 and Tk1, 630," said an official.
A total of 62 insurance companies at present operate in Bangladesh, of which 18 are life insurers and 44 are non-life. Of the companies, 31 are listed in the capital market, of which eight are life insurers.
