'Strong compliance culture needs to be established within the DNA of an insurance company'

Syed Moinuddin Ahmed has experience spanning over two decades in the banking and finance sector in Bangladesh. He started his career as a management trainee at a bank and subsequently drew rich experience through working with several other reputed commercial banks in the country in various roles, before joining the renowned Green Delta Insurance Company (GDIC) in 2009.

Mr. Ahmed was later elevated to play the role of the Additional Managing Director as well as the Company Secretary of Green Delta Insurance Company. In addition, he has been assigned the role of Managing Director of GDAssist, a fast-emerging subsidiary of GDIC operating in medical tourism industry and also the role of In-charge of Professional Advancement Bangladesh Ltd. (PABL), which is the pioneering training house of insurance professionals. The Fintech team recently interviewed this dynamic personality. Here is an excerpt of that interview for our readers.

We talked to you last year and had a great insight of insurance business. Today we want to know about compliance challenges in insurance sector of Bangladesh. How compliant do you think our overall insurance sector is?

Well, our insurance industry is quite old, I would say. It has been there for about last four decades. Since it is almost four decades, our industry expects to have some sort of maturity either in dynamism or in the way they do business. Unfortunately, insurance company in Bangladesh has not been able to touch that level of maturity despite having all those years of experiences. Now there are lot many factors to be attributed for this non compliances. However, majority of compliances or non-compliance things happen because of the tremendous competitiveness. You might know our neighboring country India has less than 30 insurance companies. Countries like Srilanka and Malaysia also have similar numbers.

We have about 46 non-life insurance companies as well as 39 life insurance companies. Though the penetration rate is lower, the number of players within the market is pretty high. We are tariff driven market and prices are more or less fixed. When prices are fixed, you are going to sell similar products. Then you have to do some under cutting, make some foul processes and you’ll try to take advantages since there remains not adequate monitoring or supervision which people or institution try to exploit by finding out the loopholes.

We are now at a stage in where we believe that the Bangladeshi insurance industry has great potential. Butthere are two or three compliance issues which should be addressed immediately. One is definitely price and commission which are main loop holes in terms of compliances. Many of the insurance companies do not follow the exact corporate governance that they are being advised with by the regulatory bodies. This happens due to lack of supervision (by the regulatory authorities).

However things are improving and we are at the very critical juncture of transition for the insurance industry in Bangladesh. We believe positive outcomes are waiting for us near future.

How does Green Delta set itself apart from other insurance companies in term of ensuring compliance? Can you give us a brief overview of how Green Delta ensures compliance in its company management?

Green Delta and compliance go hand in hand and this journey started when the company was floated in 1996. Unlike many other insurance companies, Green Delta is only company which has board of directors who are not big corporate bigwigs. Most of the original sponsors, shareholders or directors of Green Delta are technocrats like professors, doctors, engineers, NRBs. So almost none of them, except, one or two members in the board, have come from corporate background.

From day one, our founding MD and Advisor Mr. Nasir Choudhury has ensured that the board plays their role according to mission, vision company policy, rules and guidelines. Our management is our separate entity and MD plays the role to breach people in the owner’s board and the managements. Hence, from the beginning, strong compliance driven culture has been established within the company and it is within our company’s DNA.

You know, Green Delta is the first public listed company and first ever company to appoint independent director as its chairman. And you won’t find it anywhere in the country. It shows the commitment towards a culture of compliance because the independent director plays a major role for complianceto insurance regulations and serving interest of customers and consumers. That’s why we made independent director as chairman. Secondly, GDIC is the only company where we conduct compliance workshop among the board of directors. Now the next generation board members are coming in after the expiry of first generation sponsors or shareholders. So it is giving us a huge global outlook to the whole compliance scenario and we are being taught that you are rather allowed to forego business not achieving a target but you are not allowed to do business which will hamper your image. If the compliance remains within the DNA of the company, business will be good indeed. This is the competitive edge that we believe we have in Green Delta, and for that compliance is a top priority for us.

Staff training is a key mission for compliance-checking function. It is designed to raise awareness of employees about non-compliance risks. Does Green Delta conduct regular staff trainings? If so, what types of staff trainings?

We believe, development of human capitalization is very necessary for the survival. And if you want to remain ahead in the game, you need to have smart people at your organization. Green Delta has been the pioneer of the industry by putting training as a priority since day one. That’s why you will find that a number of incumbent CEOs of insurance companies are ex-employees of Green Deltas. Green Delta gives a very strong tie whoever joins as a fresher or experienced through training indeed. And GDIC ensures the individuals go at a vigorous process so that at the end of five to seven years that individual can be the resource of the company and industry. We have seen that in many of the companies, there is a discussion on cutting budget cost in trainings but Green Delta is not like them. It didn’t happen in the past and won’t happen in future.

A trainee has been playing a very effective role in developing the overall culture of GDIC. We want to establish a training institute named Professional Advancement of Bangladesh Limited. Why? See, what Green Delta has realized over the last few years that none of the local training institutes have been able to cater the need of developing resources to insurance sector. Besides, more and more foreign trainings are becoming expensive. Previously, GDIC used to send people to Switzerland, Munich or different parts of the Europe, London for training, even for month-long training but those have become exorbitantly expensive. Now it is not really wise to send people there. So the benefits of establishing the institute will be twofold. One is definitely to cater the training need of GDIC but the most important part is to cater the need of insurance industry as a whole.

Professional Advancement Bangladesh Limited is there to have a focus in insurance industry and they have strategically tied up with Chartered Insurance Institute UK (CIIUK) which is the prime body of the world in awarding the highest level of professional insurance degree which is called Chartered Insurance. We have connections with CIIUK so that we can bring the best of the best for the market. Besides, we are offering a discounted courses and exams for the local market which is not really present in other regions. We are also tied with big regional players like EM Insurance Institute, Triple I, National Insurance Academy and few other regional players from Singapore. And we have been bringing lot of international resource persons on a regular basis. I mean this year also we brought four international resources for Bangladesh to train our staff and industrial staff. However, we offer very low price for the course so that people can actually be benefitted. Training has been a number one agenda for Green Delta when it comes to the development of human resource fact.

How adept and skillful the IDRA is from your perspective? Do you think they are aiding the insurance companies to become compliant or are there scopes of evading their radars through other means?

It goes without saying that Insurance Development & Regulatory Authority Bangladesh (IDRA) has been playing a massive role not only in developing market but also structuring the market to create a positive chain. Furthermore, people of IDRA are more matured and experienced. They are taking lot of strategic moves, access, and plan to make the market more sustainable. Nowadays, insurance market is not sustainable. They are doing all the necessary things, step by step, to bring more sustainability for the insurance companies. Actually, they are so strategic in their way that none of the players, I believe, have any complaint against them.

The best thing about them is that they have brought all the players at the same platform to achieve one objective for developing sustainability of insurance market and they have been pretty successful so far. We are very optimistic that insurance market is going to be one of the best structured financial markets in the country just like banks of coming days. The way IDRA is moving, I am pretty sure, they will grow their capacity, knowledge through the World Bank they have been awarded and recruitments. They are doing good and playing best role for the insurance, no doubt.

Bangladesh lacks sensitization in terms of insurance awareness, especially in non- life/general insurance sector. Why so? Is GDIC doing anything to change that? What role is IDRA playing in increasing awareness?

The biggest challenge of insurance industry in Bangladesh is its low penetration of awareness. I mean, even people like us don’t know about insurance, don’t want to know about insurance. And we don’t have any interest to learn about insurance even though professional education or background we have because there have been negative perceptions about insurance and so we don’t want to learn anything about it. But things are changing. Frankly speaking, Green Delta is working with top of the top corporate in the country as well as the poor farmers in the country. So we have seen the awareness growing over the last few years and specifically are growing more on bottom of the pyramid when we work with farmers, livestock owners and they understand the importance of insurance for overall business ecosystem. We should protect them from going below poverty line.

Yes, awareness is a big issue. Most of the insurance products are push products like motor insurance, marine insurance, fire insurance etc. which are tied up with financial credit lines as well. Though most of the products are push ones till now, going forward we believe that time will come when insurance becomes a pool product. People like us will realize how important the health insurance is, how important to have flat insurance if you have a house, how important to have compensation insurance if you possess a car. So those days are coming. Considering everything, people of nowadays are very smart, assertive. Younger generations are more aware and when they make a decision they take a conscious decision.

GDIC in this very regard creates image campaign, brand building campaign. We probably are the first insurance company to have a department called Brands and Communications. Even we are the first one to recruit experienced players from telco industry. We did it because we believe brand is our capital and Green Delta has been doing lot of activities which help uplift its image to the level where it is today. We are doing agro insurance, we have product like ‘Nibedita’ for women, we are doing livestock insurance, we have micro insurance, we have insurance program for RMG workers and many more. So you could see these all are untouched area of the society and Green Delta is concerned about it for the further development of country’s economy. We want to keep going on good works and keep communication to the public. We are truly a good brand not by having a good communication but also through our works.

Presently, IDRA is doing a fantastic job by addressing the critical points which are contributing to negative image of the insurance and negative image mainly comes from non-settlement of claims. People believe that if they have insurance, it’s not going to get any claims and IDRA from day 1 sat with the insurance companies, tried to figure out for not happening of claims and they are promoting to settle claims with the insurance companies. Many people cannot trust insurance policy but eventually their communication is happening to the mass people and they try to regain the trust of the common people towards the insurance.

Insurance Awareness Day (June 26) is not being celebrated in a large fashion here. Do you think the insurance company should pivot around this day to start a large campaign about raising insurance awareness?

Yes, definitely. But unfortunately we haven’t been able to celebrate the insurance awareness day in June 26. Our 100^th anniversary of Bangabandhu Sheikh Mujibur Rahman is coming in next year. There’s a huge plan with industry and there will be the declaration of insurance day. In Bangladesh it maybe June 26 or some other day but there’s a plan and I am sure, the declaration of the celebration will come so soon. If the plans will perfectly be executed, the particular day of insurance will be placed at calendars. Hope, this is going to make a positive impact towards the industry as well as outside the industry.

Thank you very much.

You’re welcome.