Market Trends of Bangladesh Motor Insurance Industry
Increase in Motor Vehicles Registration Driving the Market
The motor insurance business in Bangladesh accounts for the largest number of policies from a single sub-class of general insurance business over the years and represented around 65% of total policies last year. Most of the listed non-life insurance companies in Bangladesh posted lower profits during the second half of last year. For the industry, a big blow came from a sharp fall in automobile insurance as third-party insurance become largely non-existent in the country with third-party insurance made non-mandatory under the existing Road Transport Act 2018.
A rise in motor vehicle registrations often indicates economic growth and prosperity. It suggests increased consumer confidence, higher disposable incomes, and greater spending on durable goods like cars. Additionally, the automotive industry plays a significant role in driving economic activity, including manufacturing, sales, services, and related sectors. A surge in motor vehicle registrations may strain existing transportation infrastructure, leading to congestion, longer commute times, and increased wear and tear on roads. This can highlight the need for infrastructure upgrades, such as road expansions, public transportation improvements, and investments in smart mobility solutions.
Rising Technology based Insurance product driving Motor Insurance
Usage-based insurance (UBI), which is also referred to as pay-per-mile, pay-as-you-drive, or pay-as-you-go, is a type of auto insurance, in which the insurer can measure how far a vehicle is driven, where it's driven, and how it's driven. UBI is generally powered by telematics technology that is pre-installed in a vehicle's network or can be used through a plug-in device/mobile application. Telematics devices, when installed in vehicles, gather real-time data on driving behavior, encompassing factors like speed, acceleration, braking, and mileage.
Insurers utilize this data to determine premiums based on individual driving habits. This approach rewards safe drivers with lower rates, fostering responsible behavior.
Usage-based insurance (UBI) not only promotes safer driving practices and lowers accident rates but also allows insurers to align premiums more accurately with the actual risk. This alignment leads to improved pricing accuracy and enhanced profitability. With the advent of connected car technologies, vehicles can now communicate with external systems, such as GPS navigation, roadside assistance, and emergency services. Insurers leverage this connectivity to provide value-added services like stolen vehicle recovery, remote diagnostics, and predictive maintenance alerts.
