Bancassurance takes root in Bangladesh

Mashrukh Khan: Bancassurance has emerged as one of the most promising developments in Bangladesh financial services since regulators opened the door to it more than two years ago. Under this model banks sell insurance products directly through their branches, agent banking outlets, and digital platforms, giving insurers access to millions of customers who might never walk into a traditional insurance office. The initiative, which began with joint guidelines from Bangladesh Bank and the Insurance Development and Regulatory Authority in December 2023, has already produced measurable results even though it remains in its early stages.

The regulatory framework took shape when Bangladesh Bank issued its circular on December 20, 2023, allowing eligible scheduled banks to act as corporate agents for life and non-life insurers. The Insurance Development and Regulatory Authority issued parallel guidelines, and formally launched the channel on March 1, 2024. Banks must meet strict prudential standards, including a capital to risk-weighted assets ratio of at least 12.5 percent with capital conservation buffer, net non-performing loans below five percent, and other governance requirements before receiving approval from both regulators. Not every bank qualifies immediately. Out of 61 scheduled banks, only about 12 to 14 have secured the necessary approvals so far. The pioneers include City Bank, BRAC Bank, Eastern Bank Limited, Standard Chartered Bank, Dutch-Bangla Bank, Mutual Trust Bank, Prime Bank, Jamuna Bank, Pubali Bank, United Commercial Bank, and Premier Bank. Several others continue to work toward compliance.

Early sales figures show steady if still modest growth. By December 2024 banks had sold a total of 8,413 policies nationwide, of which 6,544 were life insurance and 1,869 were non-life products. Momentum accelerated in 2025. City Bank alone reported selling 15,145 policies during April 2025, while BRAC Bank sold 4,562 in the same period. By mid-2025 City Bank had crossed 16,000 policies in total, many of them sold to first-time insurance buyers.

Guardian Life Insurance has captured the largest share of the bancassurance market, accounting for roughly 79 percent of policies distributed through bank channels in the initial phase through its partnerships with City Bank, Dutch-Bangla Bank, and Mutual Trust Bank. MetLife Bangladesh has built strong positions with BRAC Bank, Eastern Bank Limited, and Standard Chartered Bank, while Green Delta Insurance and others have also forged multiple agreements. Mutual Trust Bank entered the space with the highest number of insurer partners, reflecting its strategy to offer the widest possible product range to customers.

The potential scale is enormous. Bangladesh insurance penetration stands at just 0.4 to 0.5 percent of gross domestic product, among the lowest in Asia. Total premium income reached approximately 18,700 crore taka in 2024, yet only about 16.5 million people hold any form of coverage despite a population exceeding 170 million. Gross written premiums are projected to reach 15.56 billion US dollars by the end of 2025 and to continue growing at around four percent annually.

Industry analysts believe bancassurance could capture 25 to 30 percent of new business within the next five to seven years. If overall market premiums approach 30,000 crore taka by 2030, the channel alone might contribute 8,000 to 9,000 crore taka annually. Credit-linked life and non-life products tied to loans and deposits are expected to add another 2,500 to 3,000 crore taka in premiums over the next three years. Banks bring unmatched reach, with more than 11,000 branches and over 21,000 agent banking points across the country, many of them in rural and semi-urban areas where traditional insurance distribution has struggled.

Recent activity in 2026 underscores the growing commitment on both sides. In January BRAC Bank and MetLife Bangladesh held a joint awards night to recognize top performers and kick off their 2026 targets. Eastern Bank Limited and MetLife followed with a similar event in March, reaffirming their partnership goals. These ceremonies highlight not only sales achievements but also the training of hundreds of bank staff, such as the 100 officials from BRAC Bank who completed formal bancassurance certification through the Bangladesh Insurance Academy.

The newly enacted Deposit Protection Bill 2026 is likely to give bancassurance an additional lift. By doubling deposit insurance coverage to 200,000 taka per depositor and reducing payout times to just 17 working days, the law has increased public confidence in the banking system. Customers who feel safer keeping money with banks may prove more receptive when those same banks offer complementary insurance products. Many industry observers expect bancassurance partnerships to become even more aggressive as banks look to deepen customer relationships and generate fee income.

Challenges remain. Rural penetration through bancassurance still hovers around seven percent, and product innovation has been limited so far. Dual regulatory oversight sometimes slows decision-making, and the sector as a whole continues to grapple with claim settlement ratios that average around 67 percent. The Insurance Development and Regulatory Authority decision to suspend individual agent licensing for non-life insurance starting January 2026 may further tilt the balance toward bancassurance and digital channels, but it also places greater responsibility on banks and insurers to maintain service quality.

Overall the outlook is optimistic. With continued regulatory support, digital integration through mobile banking apps, and the tailwind of stronger depositor protection, bancassurance stands ready to play a central role in lifting insurance penetration above one percent of gross domestic product in the coming years. For millions of Bangladeshis who have never purchased insurance before, the convenience of buying protection at their local bank branch or through a trusted mobile app could mark the beginning of genuine financial resilience. As one senior banker noted recently, the channel is no longer an experiment but a strategic necessity that aligns the strengths of two vital sectors to serve the underserved.