Dear friends of Green Delta Insurance,

In the middle of all the rhetoric about de-globalization and the world’s fragmentation into power blocs, the recently-concluded Football World Cup is a bright example of globalization’s benefits. FIFA’s membership exceeds that of the United Nations and over 70 percent of World Cup participants play for clubs outside their home countries. As many as 25 million viewers watched the World Cup Qatar 2022 Round 16 on Toffee, the only digital entertainment app livestreaming the mega sports event in Bangladesh, which has not even qualified for the competition. There are sponsors from all over the world, with the Chinese pouring $835 million into the event. A number of important football clubs are owned by non-citizens, and national teams feature many players born outside of the country they represent.

What impact has globalization had on the sport? Fans and spectators can now watch the top teams compete, and club allegiances are now global. During the previous World Cup, fans of Neymar and Messi fought with machetes in a Bangladeshi village.

It’s no secret that money is the common thread connecting football and economics. World Cup matches are watched all across the world, making them a prime target for commercialization. Sponsorship, airtime, merchandise and admission fees will all add up to billions of dollars. There’s an instructive example here as well. For example, former Goldman Sachs chairman Jim O’Neill stated that the selection of South Africa in 2010, Brazil in 2014, Russia in 2018, and Qatar in 2022 to host the world’s most watched sporting event was definitely dependent on the expansion of emerging economies. Who knows, but Bangladesh can be host of the FIFA World Cup in the future!

As hope resolutely persists in the face of the impossible, at Green Delta Insurance, over the last number of decades, we have operated through every macroeconomic cycle that is thrown at us. Being at the forefront of digital and InsurTech environment means that inherently we have been very adaptable and agile as an organization. We are very deliberate about assessing our strategy, looking at market conditions and the broader economic environment and then determining how we will run our operations and the structure of business, priming it for the future. We are committed to continue to investing in areas where we see growth and opportunity.

As I sit to pen my thoughts in the mellow winter sun of January 2022, for many of us, ringing in the new year involves making health and wellness- related resolutions. Whether in the workspace or in our personal lives, we must evaluate the events that can either hinder or facilitate our achievement. The insurance sector follows suit.

Last year at this time, the globe was eager for COVID-19 vaccines to curb the pandemic and put an end to the necessity for physical separation and travel restrictions. While we had some reprieve, new virus varieties have arisen, necessitating our continuing vigilance in preventing its spread. Even as we speak, China is continuing to face a high coronavirus caseload in the face of a complicated COVID management strategy. Cases have increased in a few other countries too, such as Japan, Singapore and Thailand.

Continued uncertainty and major challenges due to inflation has sparked fears of a recession, with the IMF in its October 2022 WEO projecting global growth to slow to 2.7 percent in 2023, down from an estimated 3.2 percent in 2022. Notwithstanding the persistent uncertainties, demand for insurance products and services will continue to remain stable in the future.

Insurance is the antidote to uncertainty and the only correct approach to protect businesses, assets and individuals from risk. Intensification of risk and uncertainty will enhance insurance penetration and this has been made clear in the Insurance Revenue Landscape 2025 research that projects the global insurance industry’s revenues to tough $7.5 trillion by end-2025.

With new challenges and opportunities being spawned every day, at Green Delta Insurance we have to be ready to improve our navigation capabilities and responsibly steward the business to remain on track to revive and thrive in a new environment that we have survived despite the intense challenges of the “black swan” COVID-19 event.

list some key trends that I see shaping up in the future.

1. Emergence of new “insurable” segments such as EVs

The global market for electric vehicles (EVs) is projected to rise from $171 billion in 2020 to $725 billion in 2026, representing a 27%+ compounded annual growth rate (CAGR). Globally, 115 million electric fleet vehicles are assessed by 2030. These EVs comprising passenger vehicles, trucks, etc., join the global insurance market at a time when the growth rate of existing auto premiums is slowing in major economies, including the United States, the United Kingdom, Germany and China. While India is in the midst of an EV explosion, the trend will catch up sooner in Bangladesh rather than later. This is a potential growth area and not a substitute for declining traditional auto premiums. Customers with EVs will have extra requirements, such as charging points at home and easy access to charging stations when travelling. There is opportunity here for new, innovative and customer- centric insurance products in a risk industry where sustainability and ESG agendas have been prioritised by major organizations.

2. Continual supply chain and inventory management challenges will likely boost product innovation

COVID-19 will continue to wreak havoc on supply networks well beyond 2022. However, with the reinvention of traditional freight and cargo insurance products, the associated business disruptions and the frustrations they create may diminish. Risk data may be accessed in real-time due to the digitization of international trade and the spread of sensors and other IoT devices and connected technologies throughout supply chains.

In this context, insurers may now offer risk reduction and management solutions and automate the payment of claims when necessary, thanks to advanced analytics and AI.

As precious supplies of COVID-19 vaccines traversed the globe in 2021, the number of insurance providers increased. In 2023, one can anticipate an increase in the number of insurers who apply these technologies more generally and go beyond indemnification to assist their customers in addressing core operating risk. This may also give rise to a new way of digital insurance technologies.

3. Operational models of insurers will require to be adaptable to seismic shifts

The insurance business is currently operating at the intersection of two tectonic plates: COVID-19 and the great resignation. Insurers will be compelled by the pressures in 2023 to disrupt the traditional apprenticeship models upon which the sector has relied for training manpower in vital areas, including claims and underwriting. In addition, these shifts compound ongoing difficulties in attracting and retaining people in roles crucial to the transformation of the insurance industry, such as technology, analytics and actuarial sciences.

Humans will always be needed by insurers. However, with fewer workers, there will be growing need for human capital aided by technology, which is redefining how work is performed regardless of who is doing it and where. Furthermore, advanced technologies such as AI and machine learning (ML) will likely take over processing jobs and so the man- machine combination will help drive better risk pricing.

At Green Delta Insurance, we are building capabilities for the future and the most visible reflection of this focus is our investment in resources and technology. We are also active in insurance being applied to innovative fields such as agriculture, comprehensive women insurance through Nibedita, etc. In parallel, we are also fortifying our project appraisal and underwriting capabilities, thus bolstering the foundations of our business. We are also striving to enrich our product mix that will aid accelerated profitability growth in the future.

Going forward, we are not disillusioned that the near term will be challenging. This is especially in the wake of the war that has no end in sight so far, has polarised the world and has created a major energy crisis that will have an impact on future economic growth. Furthermore, Bangladesh, as a major energy importer, will have to contend with energy shortages and hence judicious macro-financial management of the economy to help crest over the global challenges will have to be an imperative for the nation to achieve its full economic potential. Hence, resiliency will be the key in 2023.

The same is true for Green Delta Insurance too, as the Company will need to strengthen adaptability, harnessing the learnings of the past to survive, superintending the present to revive, and reimagining the future to thrive! Our specialist teams are engaging in scenario-based planning, which is necessary to make our business strategy more resilient in 2023 and beyond. Having said that we are ready to welcome the coming year with positivity, optimism and hope.

As I close my piece, I look forward to writing to you next year to share our continued success story.

Thank you ladies and gentlemen!

Best wishes to you and your family,

Nasir A. Choudhury
Advisor