By supporting the dual objectives of both risk taking as well as risk protection anchored on insurance, Green Delta Insurance creates long-term value for our customers, our shareholders and the communities we serve Through our focus on deepening insurance inclusion in Bangladesh, our overall purpose is to improve the lives of our policyholders, create value for our shareholders, and build a better society for the long-term. This shapes every aspect of how we do business.
Ladies and gentlemen,
I extend a very welcome to you to Green Delta Insurance Company Limited’s Annual Report for the year 2019, and take pleasure to address you through these pages, especially at a time when your company registered a strong all-round performance during the year.
In 2019, gross premium receipts surged 13 per cent to Tk. 4164.15 mn, net profit rose 21 per cent to Tk. 300.71 mn and EPS (earnings per share) rose 10% to Tk. 3.39. Such a financial performance expanded the scope of our dividend distribution strategy. The result is that we have announced a 15% cash and 5 % stock dividend for 2019, which is up by 50% cash and reduce 50% stock dividend disbursed during the last year. This remains aligned with our focus on enhancing value consistently and sustainably in the hands of our share owners
Bangladesh’s economy is surging ahead at 8 per cent GDP growth, ahead of both China and India. The country has also provided a secure business climate, thanks to political stability and the government’s pro-business stance. This in turn has offered an enabling environment for businesses to plan for future investments and contribute to increased employment.
Bangladesh has also been quick to capitalise on the opportunities emerging out of disruptions in global supply chains, especially those originating out of the United States and China. Indeed, there have been reports that to escape higher Chinese tariffs, large US retailers are shifting orders to Bangladesh. Resultantly, Bangladesh’s share of US trade has increased, and overall merchandise exports have grown at double-digits in fiscal year 2019. This bodes well for both the employment scenario in Bangladesh, as well as in increasing the share of manufacturing and services to the national GDP.
A strong and resilient economy, a facilitative and supportive climate and improving country-specific socio-economic indicators will continue to strongly aid Bangladesh in achieving its aspirations of emerging as a middle-income nation by 2024, as per UN parameters, thus lifting tens of thousands out of baseline poverty and enabling millions of others to access a better life and lifestyle.
34 YEARS OF CONTRIBUTION TO NATION-BUILDING
At the dawn of 2020, Green Delta Insurance celebrated its 34th anniversary and market leadership, commemorating the joyous occasion of 34 years of supremacy of the organisation in the insurance industry, and of our influence on the developmental path of Bangladesh. While this represented a great start to the new year, it was also a time to reflect on our past and draw inspiration to stride towards an exciting future.
In serving our bigger cause of fostering a stronger developmental impact through insurance, we have gained strong global as well as national recognition in acknowledgement of our ability to conceive innovative insurance products and solutions that suit the specific needs of the masses, in embracing the highest levels of transparency and accountability in our governance practices and financial reporting standards and in advancing the cause of sustainability in Bangladesh.
As our people rally around the cause of nurturing an enterprise anchored on excellence, I’m proud that we
are the first insurance company in Bangladesh to have received the ‘AAA’ credit rating for six years in a row, demonstrating high-quality financial credentials, and the prestigious ICSB Gold Award for five consecutive years and the ICMAB first prize for three consecutive years, reflecting the robust quality of our governance framework and standards.
These awards are an encouragement for us to remain undaunted and continue to strive towards creating a meaningful impact in the lives of our customers through insurance and, in doing that to the best of our abilities, ensure that we not only align with all the regulations and regulatory guidelines, but also create sustainable value for all stakeholders, including our customers, employees and beneficiary communities and societies.
OUR 2019 PERFORMANCE FRAMEWORK
In the year 2019, we were able to expand our gross premium receipts by13 per cent to Tk. 4164.15 mn, thus registering a 3-year CAGR of 8 per cent. Notably, the expansion in our premium receipts was driven by underwriting almost Tk.4164.15 mn of components of mega infrastructure projects being executed across the country for private sector players engaged in various parts of the value chain. Though this is a largely one-off business, we will focus all our energies on further deepening our engagement in the country’s infrastructure development space
During the year 2019, our emphasis was three-fold:
- Diversifying our product mix
- Premiumising our portfolio
- Optimising our cost structures
In the year under report, we channelised our energies on portfolio diversification, with the result that the share of retail and SME insurance businesses scaled up from under 3 per cent in 2018 to above 5 per cent during the year, enabling us to stay true to our overarching philosophy of providing insurance for all. Especially, in retail insurance, we witnessed sharp organic growth in travel insurance, facilitated by ease in customer access to our broad range of travel insurance products through digital insurance, propelled by the theme of increased travel among Bangladeshis. In addition to fulfilling our focus on digital insurance, increased focus on travel insurance was also representative of our concerted push in impact insurance.
With a view to augment our profitability and achieve our aspirations, we also emphasised on premiumising our portfolio. The outcome was that though our retail insurance policy sales declined sharply during the year, this drop was more than compensated by strong growth achieved in premiums collected. Going forward, we will continue to embrace ways that helps us enrich our portfolio quality, while also focusing on achieving volume sales that will have an additional positive impact on our profits. We will also impart a greater focus on marine and motor insurance in 2020 and beyond. These businesses typically offer a higher risk-reward.
Foreseeing a challenging macroeconomic environment in Bangladesh, we embraced several proactive steps in 2019 with a view to prune costs and re-engineer processes, focusing on taking-out or minimising the impact of any activity that was a cost burden and did not deliver commensurate or expected value. We also undertook a number of human resource productivity enhancement initiatives to boost our people value-add, while also increasingly incorporated technology with a view to enable the switch from routine manual tasks to eventual automation. In the context of technology, we are also embracing advanced tech solutions in the fields of machine learning and even artificial intelligence to strengthen our actuarial practice, which will only buttress our underwriting standards.
During the year in review, we also focused on re-organisation of our branches, creating unified zones under a central command for ensuring streamlined operations, while also enabling a more localised approach to enable us to stay closer to customer needs, requirements and realities.
PROVIDING MASS HEALTH INSURANCE THROUGH SSK
Green Delta Insurance joined hands with the Ministry of Health and Family Welfare, Government of Bangladesh, for the implementation of the second phase of the Shasthyo Shuroksha Karmasuchi (SSK) project. Green Delta is the scheme operator of the project that provides health insurance to the rural poor living below the poverty line. Green Delta Insurance has been working as the scheme operator of SSK since the launch of the program in March 2016. With the government initiating the second phase in certain areas in Bangladesh, Green Delta Insurance has continued its services as the scheme operator. Working in alignment with the WHO’s (World Health Organization’s) ‘Universal
Health Coverage (UHC)’ ambition to ensure health care for everyone, regardless of their social status, the government resolved to take up the challenge to achieve UHC by the year 2032 through implementing the SSK project. The project was originally taken up in Kalihati of Tangail district and was seen as a consequential step in revolutionising healthcare delivery through micro-insurance. Under the scheme, the poor, selected under certain criteria, get a card to receive treatment for 50 common diseases. The treatment is dispensed in district health facilities of the government. The government gives Tk. 1,000 per family each year as the premium for a pool fund. One family gets Tk. 50,000 treatment a year. I am proud that through our involvement with the SSK, we are contributing to:
- Reduced out-of-pocket payments amongst the poor
- Increased access to hospital services by the poor
- Defined quality standards for clinical service
- Improved efficiency and transparency in hospital management
FURTHERING THE CAUSE OF INSURANCE EDUCATION IN BANGLADESH
Insurance is a highly specialised business requiring knowledge, skills and aptitude for customer service. Further, the sector is also a dynamic one, requiring the need to constantly update to adapt to the changing landscape.
In this context, Green Delta Insurance, in association with Professional Advancement Bangladesh Limited (PABL), conducted a day-long workshop and training seminar on ‘Anti-Money Laundering & CFT Compliance in General Insurance’ in December 2019 in Dhaka for our employees. Training on various topics was
conducted by our highly-experienced personnel and also external industry experts who were invited as guest speakers.
Such sessions are a demonstration of our commitment to insurance and its impact, encompassing our focus on customer service, compliance with regulations and also our emphasis on ensuring that all our employees remain up-to-date with all policy guidelines and statutes.
Further, PABL and Chartered Insurance Institute (CII) also jointly organised a regional session of ‘Dive In Festival 2019’ in Dhaka in September 2019, sponsored by Green Delta Insurance. Interestingly, ‘Dive In’ is a global movement in the insurance sector to support an inclusive workplace culture, celebrating diversity and inclusivity in insurance. The purpose of the 2019 Dive In festival was to explore institutional support and talent development in a multi-generational place of work.
In addition to the presence of a number of eminent personalities from across the educational and corporate spectrum at Dive In 2019, the event had also invited a number of other insurance companies of the country, in a true measure of the festival’s spirit of inclusion and inclusivity.
I must also mention that being committed to insurance education among the youth of the country so that they can become a part of the mainstream workforce in the future, we relocated PABL to a new address in Gulshan, Dhaka, in May 2019. This larger and more modernised premises with state-of-the-art facilities that enhances studentteacher engagement and augments the learning experience, expresses our desire to continue to provide training to high-quality insurance industry professionals in partnership with CII of the UK.
PABL also arranged a world-class workshop titled ‘Micro insurance Master class’ in July 2019 at its new premises. The 2-day workshop
was designed with key insights from the Micro insurance Master Leadership Program, offered by Micro insurance Master, featuring two globally-respected experts, Mr. Bert Opdebeeck, Founder, Micro insurance Master, and Mr. Geric Laude, former Head of Pioneer Insurance, the Philippines. At the session, practical examples from different micro insurance champions around the world were introduced to give participants in-depth practical knowledge about various micro insurance models. The international workshop was attended by many insurance professionals and reinsurance brokers from Bangladesh and around the world.
OUR FOCUS ON AGRI PROTECTION THROUGH INSURANCE
Bangladesh’s agricultural sector has achieved tremendous progress in feeding the expanding population of the country. Yet however, the farm segment of the country continues to remain vulnerable and is plagued by the adverse impact of climate change, including flooding, drought and salt water intrusion. This vulnerability has typically deterred insurance providers from venturing into the risk-prone segment, resulting in farmers having to dishearteningly bear the losses inflicted by regular cyclones and floods in the vast delta of Bangladesh. Indeed, farm lives and livelihoods can be swept away by the floods in one swift stroke.
Considering the fact that interventions in this field are not just important but imperative, we ventured into agri-insurance with the purpose of meeting the critical needs of farmers to help them protect their farms and incomes against natural adversities through insurance support. Towards this extent, our pilot project to introduce a weather index-based agri-insurance product for bringing hope to farms won the third prize at Inclusion Plus Awards, a global
competition organised by Metlife Foundation.
We initiated the pilot project in 2015, jointly with International Finance Corporation (IFC), which was supported by USAID’s Agricultural Value Chains Activity and BFP-B Challenge Fund. We launched our first few policies for 200 tomato farmers with technical assistance from the IFC and World Bank. The policy included coverage for such diverse uncertainties as unseasonal rainfall, cold spells and droughts, and we conceptualised the products to be area-specific, crop-specific and weather-specific, thereby trying to be as accurate as possible in the face of many variables.
Further, we also automated the claim settlement process, hence augmenting customer confidence in our product and also in our ability to service any claims. Besides, satellite data and Bangladesh Meteorological Department and Skymet Weather Services data was used to ascertain damage. Altogether, the integrity and credibility of this data ensured a fair and transparent evaluation and claims disbursal methodology.
As a result of our 2015 initiative to launch the weather index-based insurance project, IFC developed and deployed a weather data grid providing a spatially-smooth source of interpolated weather data, including for rainfall and temperature, for every 10 sq. km of Bangladesh. This was the first time in Bangladesh where an agri-insurance product was designed for cash crops, such as industrial potato, vegetables, hybrid rice, cassava, etc., across the country.
Demonstrating our end-to-end capabilities, we also settled the country’s first agri-insurance claims because of heavy rains and also due to a cold wave. This boosted farmers’ morale and, consequently, 2,000 additional farmers purchased weather insurance from us in the next season. We also engaged in partnerships with specific microcommunities to create a network
and a robust grassroots ecosystem to make this practice scalable, secure and sustainable. Our partner agencies have discovered value in such an approach since their businesses also become more secure in a risk-off situation where agriculture is protected through insurance.
Today, enthused by the success of our weather insurance platform, we are working on digitalisation, as well as incorporating agriculture micro finance in the insurance network. We hope that such institutional capacity-building initiatives will only contribute to formalisation of farm incomes, reinforcing the sector’s capability and credibility in mobilising formal credit.
Further, because of how the data is used, no assessor is needed for claims settlement, making the process smooth, quick and confidence-enhancing. Taking a step forward, we also introduced weekly weather forecasts and crop advisory for our farmer community. We also established call centre infrastructure for farmers to access crop advisory on any crop, free of cost.
Going forward, our ambition is to forge a network association with relevant partners who are complementary parts of the value chain, including banks, seed and fertiliser companies and other agriculture aggregators so that we can provide bundled insurance coverage to our farmers, thereby further reinforcing the value proposition among them.
In yet another initiative, we signed an agreement with Syngenta Foundation for weather indexbased crop insurance in April 2019. Under this agreement, Green Delta Insurance will provide insurance coverage to paddy and vegetable farmers in the northern parts of Bangladesh through different NGOs, MFIs and farmers’ hubs, with contribution from the Swiss Agency for Development.
USHERING FARM REVOLUTION THROUGH LIVESTOCK INSURANCE
Livestock is an integral asset of any rural household. In fact, livestock is essential for rural communities to escape out of penury and deprivation.
Considering this reality, at Green Delta Insurance, we signed a MoU with iFarmer on livestock insurance, in October 2019. The purpose of this MoU was to set out the framework of collaboration between the two partners to develop a meaningful livestock insurance product that could reduce vulnerability of farmers associated with iFarmer, with the overall intent of testing the product’s viability through pilot projects.
Further, we also partnered with Info Corp Partners for activating a pilot to deploy tamper-proof livestock identification technology through Info Corp’s Farm Trek app for registration of livestock and livestock owner’s identity, issuance and storage of livestock insurance policies and tracking and identification of livestock via the use of NFC collar livestock tag.
This association represents a significant event in Bangladesh for enabling the delivery of social and economic empowerment to cattle farmers in the country which has an estimated 25 million cattle population. The association will strive to develop a comprehensive financial ecosystem that solves the risks associated with livestock insurance by responding to such key issues as identity and asset ownership frauds and data security and credit security risks. This will create a strong developmental platform for enabling unbanked farmers to eventually use their livestock as collateral or mortgage for institutional credit. Eventually, the solution is expected to create a livestock insurance platform through block chain.
Singapore-based Info Corp is the world’s first block chain company that created a platform for livestockbacked financial services through developing an inexpensive sensorbased collar for cattle. Cattle farmers can download a mobile app that would aid them to keep up-to-date with livestock activity levels, health, age, location and other key behaviours like reproduction, etc., which would enable owners to improve their profitability. Bangladesh is the second market where Info Corp is bringing its block chain platform, after Myanmar.
With a view to further create farm value, we signed an agreement with Daak box Limited, a diversified enterprise also engaged in the agri value chain, on weather index-based crop insurance, livestock insurance and other insurance products that could reduce vulnerability of the farmers of Daak box.
TAKING INSURANCE TO THE DOORSTEP OF RURAL SMALLHOLDER FARMERS
In a unique initiative that is expected to create a high impact by securing farming for rural smallholder farmers through insurance coverage, we expect to pilot a project with CARE Bangladesh’s Krishi Utsho Micro franchise, with funding from MEDA (Mennonite Economic Development Associates), Canada. The MoU has been designed to initiate a nontraditional financing scheme for rural smallholder farmers of Bogra and Jessore by taking insurance to their doorstep. Krishi Utsho is an emerging social enterprise that is working towards helping secure farming for smallholder rural farmers through agri-centric loans and insurance services.
BICCHURON – AN IDEA WHOSE TIME HAS COME
The Centre for Research and Information (CRI), Ministry of Power, Energy and Mineral Resources, and Green Delta Insurance signed a MoU in September 2019, encompassing a collaborative agreement to find, promote and nurture new innovation, talent and solutions in the realm of non-conventional energy. The partnership worked towards engaging and marshalling Young Bangla, representing the youth network of CRI, in a project named ‘Bicchuron – Idea search on adaptive technologies for renewable energies’.
Introduction and promotion of sustainable and renewable energy in the private sector and at the community-level is a priority in Bangladesh to assist in solving power and energy challenges among marginalised groups. Sustainable electrification among these communities can have a transformative impact on their lives and livelihoods.
Bicchuron was an open competition for the youth of Bangladesh, with the winners selected on the basis of their innovative ideas supported by basic scientific principles and covering design, operations and functionality across renewable power comprising solar, wind and biogas.
We received over 700 applications with tremendous ideas as a result of a month-long online and offline call for application campaign across 50 universities and local institutions throughout the country. After a preliminary screening, the top-100 projects received invitation to come to Dhaka for an official pitch. Out of these, 30 teams were further short listed by the jury. The selected teams got the unique opportunity to attend a three-day residential boot camp. Thereafter, the top-ten finalists were selected in a gala event in Dhaka and provided with funds to venture into commercial operations and sustainable scale-up. Ideas around
mini-hydropower, hydrothermal biomass processing, solar dryer, electricity from plants and other unique solutions were some of the highlights of Bicchuron.
A sum of Tk. 50 lacs was budgeted for funding the top ideas, and selected projects received technical, strategic and logistical support for seamless roll out. Today, we hope to make Bicchuron an annual exercise
GREEN DELTA INSURANCE AND THE SDGs
At Green Delta Insurance, we are assisting in the global efforts to meet the targets under the United Nations’ SDGs. We have succeeded in getting the SDGs into our culture and, enthused by the influence of these on innovation, outreach and impact, we are leading by example of how they can have a transformative effect.
Today, I’m proud that we are weaving the goals of the SDGs to develop a wide range of insurance products and solutions that target the needs of specific marginalised and often vulnerable communities, including women, the youth of our country, farmers and agriculturalists and SMEs. Importantly, each of our schemes are supporting our country to achieve a wide range of SDGs.
Take the case of Nibedita, which is not just an insurance product, but a platform for women’s economic security.
Nibedita has brought Green Delta Insurance global recognition and is the first insurance product in South East Asia that has been exclusively developed for women and women empowerment. Nibedita works as a support partner for women to help them reach their goals in the society, workplace and within familial settings.
Comprehensively addressing SDG-5 under ‘Gender Equality’ through Nibedita, I’m proud that today, our women customers under Nibedita
have forged a unique bond of intimacy with our women workforce with the result that almost 12-13% of our Nibedita policies are sold by our women employees.
Or take the example of SDG-13 ‘Climate Action’, where we are implementing the vision of this goal having partnered with the IFC to provide insurance services to address weather-related risks faced by both lenders and farmers in Bangladesh. Today, we have successfully strengthened the techno-financial capabilities of the ecosystem to administer agricultural insurance that will eventually help remove credit mobilisation constraints faced by our farm communities, thereby facilitating direct and sustainable agricultural transformation.
Through our partnership with the IFC, and indeed with several other developmental agencies and strategic partners for other products, we are contributing to SDG-17 ‘Partnerships for the Goals’.
There are several other instances by which we are meeting our commitment to offer insurance protection to communities through the SDGs.
Our partnership with the Access to Information (a2i) program of the Prime Minister’s Office supports us to offer insurance services from nationwide Union Digital Centres and, along with our focused retail insurance division, we are driving insurance penetration and inclusion across the country.
Further, we have also joined hands with the Ministry of Health and Family Welfare, Government of Bangladesh, in the Shasthyo Shuroksha Karmasuchi (SSK) project, under which we are working as the Scheme Operator to provide health insurance to the rural poor. These partnerships help us meet the goals enshrined under SDG-17 and also SDG-1 ‘No Poverty’.
I am also proud that expanding access to insurance will be
tremendously facilitated by our initiatives and investments in digital insurance, even as we have initiated online payment services to make payment methods easier for our customers. Increasing insurance digitalisation will help us directly contribute to the cause of SDG-13 ‘Climate Action’.
In effect, all our products and schemes cater to the overarching mission of the SDGs, where we cater to the immediate needs of our customers and also serve to help them explore and realize their full potential.
Consistent value creation has only contributed to strengthening the Green Delta brand, with the result that today, our stakeholders are proud of their association with us. This has put in motion our virtuous cycle for growth.
However, rather than sitting on our laurels, we are pushing forward with greater SDG adoption to bring forth a stronger intensification of impact, and optimism prevails that main streaming the SDGs in Bangladesh is not only possible but is imminent too.
MAKING INSURANCE INCLUSIVE AND HIGHIMPACT
Lack of insurance literacy, absence of awareness around the benefits of insurance and lax compliance standards are some of the key barriers that come in the way of boosting the growth of the insurance sector in Bangladesh, whose contribution to the country’s economy remains incongruously low. Hence, with a view to enhance the contribution of insurance to the national GDP and attract talent, stakeholders have to focus on awareness-building and strengthening compliances.
Insurance has a history of more than 45 years in Bangladesh, yet it has not received the attention or focus it needs. As a result, there are many misconceptions and misperceptions
about the sector, aroused in no small measure by a large number of companies venturing into insurance without fully adhering to compliance and governance standards.
Further, the sole state-sponsored insurance company has a relatively weak reinsurance practice with the result that some business originating out of Bangladesh is going to overseas reinsurance players. Therefore, strengthening this state-owned company through capitalisation and other measures is crucial for the long-term sustainability of the re/insurance sector of the country. Moreover, the national insurance policy, if implemented across scale and with respect to the true spirit with which it was conceived, will further help expand the insurance industry. Also, there are a few crucial acts and policies in the insurance sector that have not been reviewed yet. These issues need to be addressed swiftly.
Regulations and enforcement have to be tightened as well to bring to task any misconduct with stringent penal action, as well as to prohibit players from engaging in unfair practices like collecting customer deposits but failing to discharge payments upon scheme maturity. Such acts paint the whole industry with suspicion and makes our task all the more difficult to restore public confidence on insurance.
Further, the insurance regulator, IDRA (Insurance Development & Regulatory Authority) has capped agent commissions to 15 per cent for non-life insurance companies and we are following the directive 100 per cent across our businesses. However, my personal opinion is that there should be no concept of commission in the insurance sector, which will progressively go a long way in eliminating commissionbased bias in sales, thus taking it solely on the merit of the product. As regulatory enforcements become highly stringent and non-negotiable, we expect smaller players to find compliance increasingly difficult, which will sweep in consolidation into the industry, as well as reinforce
price discipline, while also benefiting customers through average lower policy prices.
The need of the hour is to make insurance compulsory in every sphere of our public life, and the support of all stakeholders is crucial for realising this vision. For instance, personal accident insurance should be mandatory. Every vehicle on the road must have an insurance policy. This level of insurance inclusion can have holistic socio-economic benefits. For instance, if could alter driving behaviour on the roads, it could make people take their health more seriously, etc. Insurance can usher wider changes that can also help the government meet its democratic mandate with regards to public welfare, etc.
I believe such measures will go a long way in enhancing the insurance sector’s contribution to the GDP, which is less than 1% today.
At Green Delta Insurance, we aspire to create a one-stop financial services platform for insurance of international standards. Creating a platform thus will also enable us to diversify our bouquet of services, enabling us to extend into other financial products as well.
So what does all this mean for our shareholders?
Motivated by our successes and performance in 2019, we feel confident in committing to ambitious targets for the upcoming years. Our plan is to increase our earnings per share and to grow our return on equity. At the same time, we will not compromise on our balance sheet strength and keep the target solvency capitalisation ratio secure.
We are aware that we continue to have a lot of work ahead of us. In particular, we need to become more productive and we need to be quicker and more rigorous in tackling necessary changes, especially in the area of digital insurance. This will be one of the most urgent goals to
pursue in 2020 and over the next few years.
We also believe the key levers are to reduce complexity and to consistently simplify products and sales processes. We also need to increase organisational agility to be able to respond to customer needs faster and better, establish scalable and dependable platforms, and, of course, continue digitalising everything we do. We want to let go of things that generate costs without adding any incremental value to make our organisation leaner and more cost-efficient.
Going forward, our aim is to utilise the valuable time and energy of our dedicated staff, both in our back office and in our sales force, to provide even more personalised support services to our customers. High productivity is directly reflected in customer value, brand value and growth, which is why we will continue to invest in our employees so that they can remain fit for the future and strengthen contribution to our aspirations and goals.
With 34 years of supremacy in Bangladesh’s insurance industry, we want to look at the future as being better than our past. I believe one of the key ways to make this happen is to be able to shape change rather than merely reacting to it.
We will remain a solid and trusted partner at our customers’ side and a strong value creator for our investors. Thank you for trusting us to keep creating value for you in the future.
Managing Director & Chief Executive Officer