Shaping the future of financial protection

Md. Ahsan-uz Zaman 
Managing Director  & CEO, Midland Bank

The Daily Star (TDS): What is the rationale behind your bank's interest in entering the bancassurance sector alongside its existing financial services?

Md. Ahsan-uz Zaman (MAZ): Bancassurance, an arrangement between a bank and an insurance company, allows the insurance company to sell its products to the bank's customers. Insurance penetration in Bangladesh is low despite the high number of insurance companies. Given the importance of protection through insurance in one's financial planning, we felt it necessary to enter into collaboration with insurance companies to help our customers gain income protection in the event of death and also protection from accidents related to motor cars, travel, and crop failure. At the same time, since we shall earn additional revenue by selling insurance products—and insurance companies shall be able to expand their customer bases through bancassurance without increasing their sales force—we felt this was an important initiative for us.

As a relatively new concept in our banking landscape, and within our institution in particular, it has required a significant mindset shift and adaptation across our organisation to offer bancassurance. One of the primary challenges we experience is the limited familiarity and experience among bankers regarding insurance products.

Furthermore, unlike traditional banking products, insurance is inherently a product that people are generally not willing to avail. The additional challenge for our staff is positioning and promoting life insurance offerings alongside our core banking services. Further, non-life insurance products—such as motor, travel, agricultural, and crop insurance—tend to be infrequent in nature, which might add another layer of complexity in terms of sales consistency and planning.

That said, life insurance products have shown relatively encouraging traction. Their dual benefit of risk coverage and long-term savings aligns well with our customers' needs, making them more acceptable, which is a promising sign as we continue to develop our bancassurance capabilities.

TDS: What types of insurance products do you plan to offer through bancassurance partnerships?

MAZ: In compliance with the regulatory guidelines of Bangladesh Bank and the Insurance Development and Regulatory Authority (IDRA), Midland Bank (MDB) has strategically planned to offer a comprehensive range of insurance products under its bancassurance partnerships, covering both life and non-life insurance segments. In the life insurance category, we have introduced short-term money-back plans and long-term life policies that combine financial protection, savings, and attractive bonus benefits—ensuring both security and future planning for our customers and their families. In non-life insurance, we are authorised to provide motor, travel, agricultural, and crop insurance. Initially, motor and travel insurance are being offered through our partnered companies, and we will introduce the others gradually.

To support these services, we have established a dedicated Bancassurance Department at our Head Office, in line with regulatory requirements. Ensuring our officials are well-equipped, we conduct regular training sessions in collaboration with our insurance partners. Additionally, around 102 of our officers have received professional certification from the Bangladesh Insurance Academy (BIA). We also utilise internal training programmes to continually educate our staff. Through these continuous efforts, we prioritise transparency and customer understanding by ensuring that all product features, terms, and exclusions are clearly communicated—enabling informed decision-making and fostering trust in our bancassurance services.

Moreover, to facilitate informed decision-making, we have arranged for support from the respective insurance companies. Their representatives will provide proposal forms, brochures, and other product literature to help customers fully understand the features, terms, conditions, and exclusions of each product before purchase.

TDS: What systems or processes will be implemented to handle insurance-related complaints? How will you ensure compliance with the regulatory frameworks of both Bangladesh Bank and the Insurance Development and Regulatory Authority (IDRA)?

MAZ: Midland Bank has established a structured process for its bancassurance services, in compliance with the guidelines established by Bangladesh Bank and the Insurance Development & Regulatory Authority.

Customers can lodge complaints through numerous channels, ensuring both accessibility and convenience. The available methods for submitting complaints include branch complaint boxes, the Contact Centre (by dialling 16596), email communication, and our official website.

Upon receiving a complaint, the MDB Bancassurance Head Office Team will promptly acknowledge it and initiate a thorough investigation. The team will communicate with the customer to collect any necessary information or clarification. This process is designed to uphold transparency and fairness, ensuring timely resolution.

Throughout the complaint handling process, customers are kept informed of the status of their complaints until final resolution. After resolving the issue, we actively seek feedback to evaluate customer satisfaction and conduct follow-ups to ensure the customer is fully satisfied with the resolution.

TDS: How do you view the future of bancassurance in Bangladesh, and what role do you foresee your bank playing in its development?

MAZ: The future of bancassurance in Bangladesh looks promising, particularly as the sector grows with strong compliance and proper governance. Besides, being a commission-based model, it will provide a valuable opportunity for non-funded income for the Bank, which aligns well with a long-term sustainable growth strategy. Given the relative lack of awareness regarding insurance products, there remains a risk of mis-selling. However, with appropriate training, transparency, and a customer-centric approach, we have taken steps towards mitigating these risks through ongoing staff training, monitoring, and customer feedback to build long-term trust.

As banking platforms are among the most trustworthy, there is the possibility of increasing the penetration rate of insurance through bancassurance. In countries like Singapore, insurance penetration exceeds 7%, while in India it stands at 3.7%. Nepal has achieved 44.64% life insurance coverage. In contrast, Bangladesh has one of the lowest insurance penetration rates in the region—just 0.40%.

At MDB, with the passage of time, we are committed to developing our bancassurance business with a clear focus on becoming one of the leading banks in this category, ensuring successful claim settlements for our clientele, as we always prioritise 'quality over quantity'. Selection and engagement of suitable customers plays a vital role in the present circumstances to recognise that early policy discontinuation—something common in the market—can be avoided, to create long-term viability of an insurance policy.