BSEC pushes insurers to enlist in capital market
Currently, 53 out of 78 insurance companies, 32 life and 46 non-life, in Bangladesh are listed on the stock exchanges
The stock market regulator has requested non-listed insurance companies to comply with regulatory requirements for getting listed in the capital market.
The Bangladesh Securities and Exchange Commission (BSEC) already asked the Insurance Development and Regulatory Authority (IDRA) for taking necessary initiatives in this regard.
In November 2020, BSEC did not approve 26 insurers that have less than Tk30 crore paid-up capital for market enlistment.
The companies will have to invest at least 20% of their equity in the capital market if they want to get listed. Also, they have to raise at least Tk15 crore by offloading shares.
Keep updated, follow The Business Standard's Google news channel
Of them, seven insurers already got listed on bourses by complying with the regulatory requirements. But 19 failed to comply.
Earlier March 2021, the securities regulator sent a letter to the Bangladesh Insurance Association (BIA) in this regard.
According to a BSEC official, the government gave a facility to the 26 companies hoping that it would contribute significantly to bringing these companies to the capital market, but the progress in this regard is not as expected.
So far, they did not take any initiative to file applications for Initial Public Offering (IPO) under the fixed price method as well as not investing at least 20% of their equity in the capital market, he added.
As per the securities rules, companies can apply for enlistment to raise at least Tk30 crore by issuing shares.
According to insurance rules, the sponsors and directors must jointly hold at least 60% shares of the paid-up capital of every company, but some of those companies did not comply with this rule.
An insurance sector insider said many of them had plans to get listed in the capital market but could not due to the Covid-19 pandemic.
Previously, Finance Minister AHM Mustafa Kamal said all insurance companies in the country would have to be listed on the stock exchanges by the end of 2019.
He also threatened to cancel the licenses of the companies that failed to comply with the directive.
Currently, there are 78 insurance companies, 32 life and 46 non-life, in the insurance sector of Bangladesh. Of them, 53 companies are listed on the stock exchanges.
Experts have been saying for a long time that Bangladesh is one of the most untapped insurance markets in terms of penetration rate.
Awareness and a strong culture of insurance service behind economic activities can help the industry thrive.
According to the Swiss Re Group, a leading global reinsurer, shows that the overall insurance penetration in Bangladesh stood at 0.40% in 2020 – the lowest among emerging Asian countries.
The penetration rate is measured as the ratio of premium underwritten in a particular year to the GDP.
Insurance penetration was 5.4% in Malaysia in 2020, followed by 5.3% in Thailand, 4.5% in China, 4.2% in India, 2.3% in Vietnam, 1.9% in Indonesia, and 1.2% in Sri Lanka.
