Overview of the Actuarial Functions

of MetLife Bangladesh
 Overview of the Actuarial Functions of

MetLife Bangladesh

Internship report submitted to the IBA Career Center, Institute of Business

Administration to fulfill the Degree of Bachelor of Business Administration (BBA)

Submitted by

Sk. Ezaz Ahmed

Roll: 104
Batch: BBA 26th

Supervised by

Tasneema Afrin
Assistant Professor &
Moderator, IBA Communication Club
Institute of Business Administration
University of Dhaka

Date of Submission: April 18, 2022

 Letter of Transmittal

April 18, 2022

Md. Iftekharul Amin

Associate Professor and Coordinator, IBA Career Center
Institute of Business Administration
University of Dhaka

Subject: Internship Report Submission on MetLife Bangladesh.

Dear Sir:

I am delighted to hand over to you my internship report titled “Overview of the

Actuarial Functions of MetLife Bangladesh”, which has been written based on my
experience of working as an intern in the actuarial department of MetLife Bangladesh.
During my internship tenure, I have been able to learn a lot about the financial
management of insurance companies and the life insurance industry of Bangladesh in
general.

Let me take this opportunity to thank my supervisor for her constant guidance and
support while writing this report. I hope this report will add value to the research
literature written on Bangladeshi insurance companies. Please let me know if there are
any queries, I would be obliged to provide further clarifications on them.

Sincerely yours,

__________

Sk. Ezaz Ahmed

Roll: 104, Batch: BBA 26th
Institute of Business Administration
University of Dhaka

Page | i
 Acknowledgement

I would like to take this opportunity to thank Mr. Satyam Sadhu, Assistant Director and
Actuary at MetLife Bangladesh- for giving me useful advice and insights that helped
me write this report. I would also like to thank Ms. Sharmistha Saha, Assistant Manager
at MetLife for providing me with necessary guidance and training during my internship
tenure.

I would like to convey my sincere gratitude to Ms. Tasneema Afrin, Assistant Professor
and Moderator, IBA Communication Club- for supervising me through the internship
period and extending her support and guidance at all times.

Page | ii
 Table of Contents
Letter of Transmittal ....................................................................................................... i
Acknowledgement .........................................................................................................ii
Table of Contents ......................................................................................................... iii
List of Figures ............................................................................................................... iv
Executive Summary ....................................................................................................... v
1.0 Introduction .............................................................................................................. 1
1.0 Introduction .......................................................................................................................... 1
1.1 Background ...................................................................................................................... 1
1.2 Objective of the Report .................................................................................................... 2
1.3 Methodology .................................................................................................................... 3
1.4 Scope................................................................................................................................ 3
1.5 Limitations ....................................................................................................................... 4
2.0 Study of the Life Insurance Industry.................................................................................... 4
2.1 Global Life Insurance Industry Overview ....................................................................... 4
2.2 Bangladeshi Life Insurance Industry Overview............................................................... 6
2.3 Regulatory Authority of the Life Insurance Industry ....................................................... 7
2.4 History of Legal Framework Development for the Insurance Industry of Bangladesh . 8
2.5 Role of Insurance Companies in the Economic Development of Bangladesh ............... 9
3.0 Company Overview of MetLife Bangladesh ..................................................................... 10
3.1 Company Mission .......................................................................................................... 11
3.2 Main Products Overview ............................................................................................... 12
3.3 Structure of the Actuarial Department .......................................................................... 17
4.0 Analysis of the Actuarial Function at MetLife Bangladesh ............................................... 18
4.1 Activities of Actuarial Department at MetLife Bangladesh .......................................... 18
4.2. Liaison Between Actuarial Department and Other Departments ................................. 24
5.0 Comparative Performance Analysis of Bangladeshi Life Insurance Companies ............. 26
5.1 Comparison of Gross Premium Collected .................................................................... 26
5.2 Comparison of Claims Settled ...................................................................................... 27
5.3 Comparison of Life Fund Size ...................................................................................... 27
6.0 Findings ............................................................................................................................. 28
7.0 Recommendations .............................................................................................................. 30
8.0 Conclusion ........................................................................................................................ 34
9.0 References ......................................................................................................................... 36
10.0 Appendix ....................................................................................................................... A-1
 List of Figures

Figure 2.1: Largest Insurance Groups in the World ...................................................... 5

Figure 3.1: Main/Popular products of MetLife Bangladesh ........................................ 12
Figure 3.2: Structure of the Actuarial Department at MetLife Bangladesh ................. 17
Figure 4.1: Calculating reserves for a life insurance company .................................... 21
 Executive Summary

Actuarial function is a highly specialized section of the financial management of an

insurance company. Actuaries are skilled professionals who are adept in statistics, data
analysis and financial risk management. They serve a crucial role for insurance
companies by calculating company reserves, designing insurance products, conducting
pricing and underwriting, calculating risks and costs of insurance, ensuring regulatory
compliance etc.

One of the key activities of the actuarial department at MetLife Bangladesh is

conducting statutory valuation of policyholder accounts. This involves calculating
values of some key accounting elements, such as- Cost of Insurance. COI is a charge
levied by insurance companies as fee for providing protection against death or
accidents, which depends on factors such as- age, medical history, lifestyle etc.
Actuaries help determine the rate of cost of insurance by conducting statistical analysis
of macroeconomic data. Actuarial department also helps determine the amount of
reserves the company needs to keep to be able to pay all of its claims. Moreover, earned
profits, distribution of bonuses, risks associated with different investments are also
determined by actuaries. This department ensures that the company books are in
alignment with the IFRS 17 regulations, as well as, the US GAAP. The actuarial
department also develops financial and actuarial models which helps other departments
make forecasts and assumptions about the future and make critical business decisions.
Actuaries can also advise departments such as- financial planning and analysis
department, investment department etc. regarding financial risk management.

For the way forward, MetLife Bangladesh should undertake the following
recommended steps to improve their actuarial function and overall risk management of
the company- diversifying its investment portfolio, getting publicly listed, train
actuarial professionals locally, empower the local actuarial department, conduct
experience studies in collaboration with the government and other companies,
revamping their marketing activities, focusing on training of sales agents, increasing
public understanding of insurance terms and conditions etc.

Page | v
 1.0 Introduction

1.1 Background

Riding on the momentum of recent economic progress, Bangladesh is running in the

fast-track of social and infrastructural development. However, the insurance sector of
our country has failed to onboard the bandwagon of progress. Compared to other
financial sectors, the insurance industry is lagging in terms of infrastructure, resources,
and regulations.

Due to this crisis, insurance penetration in our country is still at the nascent stage- as of
2020, it stood at only 0.40% of the GDP. This figure is considerably lower than other
South Asian countries. For example- India and Sri Lanka have 4.2% and 1.2%
insurance penetration rates. Bangladesh is the 33rd largest economy in the world, in
contrast, our insurance premium volume stands at 66th position. The low penetration
rates can be attributed to a decline in customer confidence, stemming from the poor
performance of most of the insurance firms in our country (Insurance penetration in
Bangladesh fell in 2020, 2022). Lack of skilled employees is one of the major factors
underlying this poor performance of insurance firms.

The insurance industry is a specialized sector, and there is an acute shortage of skilled
insurance professionals in Bangladesh. This results in poor financial performance of
the insurance companies, which in turn, leads to deterioration in customer confidence.
Actuarial function is a specialized line of work related to the financial management of
insurance companies, which is integral to the success of these firms. Actuaries are
highly trained professionals who apply statistical and financial concepts to maintain
profitability and solvency of insurance companies. The lack of skilled professionals is
evident in the fact that, there are only a few actuaries in Bangladesh- whereas the
number of insurance firms in our country is 81. However, some insurance companies,
especially MetLife Bangladesh, has come forward develop trained professionals in this
sector.

Page | 1
MetLife Bangladesh is a dominant player in the life insurance industry of our country.
It is the only foreign firm operating in the insurance industry. There are more than 33
life insurance companies in our country, whereas MetLife Bangladesh alone holds
around 30% market share. The company started its operations in Bangladesh in 1952,
and since then it has been running with good reputation. MetLife has been a pioneer in
good practices for the insurance sector of our country, especially for developing and
recruiting trained professionals. The company has been supporting the development of
skilled actuaries in our country, by providing scholarship, mentorship, and employment
to actuarial students. Good actuarial and financial management has enabled the
company to run profitably for a long time and fulfill their clients’ insurance claims
diligently. Hence, despite the poor performance of most other insurance companies,
clients still place their trust on MetLife Bangladesh which is evident in the fact that the
company’s gross premium rose by nearly 26% between 2015 and 2017. (IRDA, 2018)
Good actuarial practices have played a critical role in the success of MetLife. Hence,
actuarial management activities adopted by this company can be used as a case study
for the entire industry to learn from.

1.2 Objective of the Report

The broad objective of this report is to observe the actuarial function at MetLife
Bangladesh and analyze the business impact of the key activities conducted by the
actuarial department.

The broad objective of this report can be broken down into the following specific
objectives:
1. Observe and analyze the activities of the actuarial department.
2. Analyze how the activities of the actuarial department adds value to the company's
main purpose.
3. Observe the interconnections between the actuarial department and other
departments in the company.
4. Observe the dynamics and characteristics of the life insurance industry, as well as,
MetLife Bangladesh.
5. Compare the performance of MetLife Bangladesh with other prominent insurance
companies in Bangladesh.

Page | 2
 1.3 Methodology

Both primary and secondary data sources were utilized for the preparation of this report.
Since MetLife Bangladesh is not a publicly listed company of our country, information
on its financial reports is not available for external uses. Hence, only information that
have been published by the company on its public communication channels have been
used for this report.

Primary Data Sources:

This study has been prepared based on the discussions, interactions, and interviews with
multiple employees of the Actuarial Team under the Finance Department of MetLife
Bangladesh. Personal observations acquired during my tenure as an intern at this
company have also been used.

Secondary Data Sources:

Secondary information used in this report has been gathered from MetLife
Bangladesh’s official website. Moreover, annual reports and other information
available on the official websites of Insurance Development and Regulatory Authority
of Bangladesh (IRDA) and Bangladesh Insurance Academy (BIA) have also been used.

1.4 Scope
This report discusses the principles and activities related to actuarial management of an
insurance company. It builds upon the core principles of actuarial management to
analyze the actuarial functions at MetLife Bangladesh. Though the analysis is based in
the context of one company, it has the potential to serve as a case study for all insurance
companies, financial researchers, and even regulatory bodies of our country. MetLife
Bangladesh is a subsidiary of the multinational company, MetLife, Inc. which is
incorporated in the state of Delaware of the United States. MetLife, Inc. is registered
under the U.S. Securities Exchange Commission (SEC) and has to strictly follow
actuarial rules and regulations in financial reporting to maintain compliance with the
U.S. GAAP (Securities and Exchange Commission, 2022). Hence, MetLife
Bangladesh has invested much of its resources in developing a robust actuarial
department within the company. Its actuarial management activities can hence be
Page | 3
regarded as best practices in the life insurance industry of Bangladesh and can be a
source of learning for other insurance professionals.

1.5 Limitations

MetLife Bangladesh is not listed under the Bangladesh Securities and Exchange
Commission (BSEC) hence its financial reports are not disclosed to the general public.
For this reason, sensitive financial information of the company could not be used for
the analysis of this report. However, some KPI data of the company has been published
by the IRDA on its website, which has been used in this report.

2.0 Study of the Life Insurance Industry

2.1 Global Life Insurance Industry Overview

The total size of the global insurance industry was nearly $2880.18 billion as of 2021.
It grew from a value of nearly $2860.4 billion in 2020. The industry has been growing
at a compound annual growth rate of 1.8% from the year of 2015. According to forecast
reports, the industry is supposed to observe a 4.4% growth rate from 2020 to 2025 to
reach a $3550.8 billion net worth. The growth can be attributed to the fact that- people
are in general more concerned about rising number of critical illnesses, hence they are
more inclined towards buying life insurance products. This trend is expected to rise and
by 2030, forecasts assume the global insurance market to reach a value of $4266.6
billion- growing at a CAGR of 3.7% (PR Newswire, 2021).

The major segment among the insurance industry in the global life insurance industry.
Life insurance companies can be further classified into different segments such as-
whole life insurance, term life insurance, accidental insurance, annuities, unit linked
life insurance and other life insurance. As of 2020, the term life insurance segment is
the largest segment of the insurance industry worldwide, comprising of 27.3% of the

Page | 4
market. It is also deemed to be the fasted growing segment, with an expected CAGR of
4.6% from 2020 and onwards.
Global life insurance industry can be further segmented into regions such as- Asia
Pacific, Eastern and Western Europe, North and South America, Middle East and
Africa. 33.5% of the total market was within the Asia Pacific region as of 2020,
comprising of 33.5% of the market. The second largest region was North America, after
that came the Western Europe regions. Other regions are below that in ranking.
However, forecasts show that Africa and South America regions would be the fastest
growing regions for the life insurance industry, showing CAGR growth rates of 7.6%
and 6.5% respectively. All these growth forecasts have been calculated by insurance
industry research firms and analysts. Other regions such as Eastern Europe is expected
to grow at 4.6%, while Asia Pacific is expected to grow by 6.4% growth rate (Global
Newswire, 2021).
Some of the largest insurance groups of the world are Ping An Insurance group of
China, AIA group of Hong Kong, China Life Insurance group, MetLife group from the
United States and Prudential Insurance group from the United Kingdom. The following
chart shows the largest insurance groups in the world by market capitalization as of
February 2020 (in billion U.S. dollars):

Figure 2.1: Largest Insurance Groups in the World (Statista, 2022)

Page | 5
 2.2 Bangladeshi Life Insurance Industry Overview

Currently, there are 62 insurance companies that are operating in our country. Among
these companies, 18 companies are specialized in the life insurance business. Among
these 18, 13 companies are listed companies. These companies are listed on the Dhaka
Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). However, the other 5
companies are not listed on stock exchanges.
Studies on people’s perception of the life insurance business in Bangladesh show a
negative trend overall. People in general do not trust life insurance companies in our
country. Only 4 people for every 1000 citizens in Bangladesh owns a life insurance
policy. This results into a penetration rate of only 0.4% as of 2021, which is one of the
lowest figures in the world. This data was reflected in the findings of a study conducted
by the world bank. However, the penetration rate has improved since 2016 at least. The
penetration rate was only 0.2% in 2016, so it shows that there has been a gradual
improvement in life insurance penetration rates in our country. But there still is a long
way to go (Halder, 2022).
Only 0.23% of Bangladesh’s total GDP is contributed by the life insurance industry.
This means that Bangladesh as a country is not being able to leverage the benefits of
the insurance industry. Life insurance industries in other growing South Asian
economies are contributing more to the national economy. For example, insurance
penetration ratio in Malaysia had reached at about 50% as of 2016. If we compare this
figure with that of our country, the penetration rates in our country is beyond
disappointing. The Malaysian success story was created by effective and timely
governmental policies. The regulatory bodies in our country should take necessary steps
to transform our insurance industry as well (Ali & Mahmud, 2022).
The life insurance business in Bangladesh is riddled with many problems. Some studies
have identified the critical problems in the life insurance industries of our country- lack
of training and skills of employees, lack of professionals with technical knowledge,
shortage of actuaries, misunderstanding of insurance terms and conditions, lack of
proper governmental regulations etc. are some of the burning concerns in the life
insurance industry of our country.
The negative perception about insurance companies prevailing among the general
populace is largely due to the delay in claim settlements. This has reduced the trust

Page | 6
worthiness of the life insurance companies of Bangladesh to the general masses. Delay
in claim settlements has not yet been curbed by preventive governmental policies so
far. In the current context, most of the insurance companies are opting for a “push
marketing” strategy to promote their products. However, they should be working
towards building enough trust worthiness to be able to attract customers through “Pull
marketing” only.
However, there is ample need for life insurance products among the general people of
our country, but this opportunity is not being exploited properly. Studies show that even
among the lower-income people of our country, there is adequate need for micro-
insurance policies. One study conducted by Manik & Mannan (2022) on 50 hawkers in
Dhaka found eagerness among hawkers for buying such life insurance products.
Researchers have found that one of the main barriers towards people buying insurance
products is the lack of knowledge and understanding of life insurance products.
Creative marketing campaigns, digital management systems, consumer centric
programs etc. are useful factors for restoring customer confidence on life insurance
companies. Insurance companies need to understand different demographic variables,
motives for saving activities, risk aversion tendencies etc. to design insurance products
for building a customer centric portfolio.
Studies have also shown that awareness regarding insurance products is especially poor
in rural areas of our country. In addition to the education level of the families,
psychological factors are also important determinants of customers’ purchasing
behavior of life insurance products. Popular life insurance demand forecasting models
for Bangladesh include factors like demographic characteristics, financial intentions,
saving tendencies etc.

2.3 Regulatory Authority of the Life Insurance Industry

The regulatory authority overseeing the private insurance companies in Bangladesh is

called Insurance Development and Regulatory Authority (IDRA). IDRA first started its
operations in 2011, after the Insurance Act of 2010 was passed at the parliament. IDRA
monitors and controls all insurance companies except Jiban Bima Corporation and
Shadharon Bima Corporation. The two state owned insurance companies are formed
and regulated by the government under the Insurance Corporation Act of 1973 amended

Page | 7
in 2019, through a separate control structure. The Bangladeshi insurance industry is still
at a very nascent stage at the insurance penetration rate is very negligible. The IDRA’s
efforts are directed to creating more insurance friendly regulations and enforcing them
properly to build a better ecosystem in this industry.
Despite a lot of efforts from the regulator, the insurance industry is full of financial
malpractices and non-compliance, including issues like- minimal shareholdings of
directors, non-compliance with tariffs paid, inadequate capital reserves of the insurers
etc. IDRA has also mandated that all insurance companies must be listed on the stock
market. However, MetLife Bangladesh has been exempted from this mandate, since
when the company started its operations in Bangladesh- there was no such obligation
for insurance companies. Considering the huge investment that MetLife has made in
Bangladeshi economy and for the purpose of attracting foreign direct investment, the
regulators have made this exemption for MetLife Bangladesh. However, many other
smaller insurance companies have failed to get listed on the stock market without being
granted any such exemption (Bangladesh Bank, 2022).
One of the biggest challenges for IDRA right now is to develop the regulatory
infrastructure of the insurance industry. The regulator must create and enforce relevant
and effective laws in the fields of insurance solvency, governance, compliance,
reserves, distribution, investing et. The organization must also increase its manpower
and bring in proper trained professions in the insurance industry.

2.4..History of Legal Framework Development for the

Insurance Industry of Bangladesh
The insurance industry of our country was nationalized after the Liberation War of
1971. Bangladesh Insurance (Nationalization) Order 1972 was passed and all the
insurance companies were unified under five state owned corporations. Only postal life
and foreign life insurance companies were outside of this unification. However, later
these five corporations were placed under only two state owned organizations- Jiban
Bima Corporation (JBC) and Sadharan Bima Corporation (SBC). Up to 1984, private
entities could not enter the insurance industry of our country. In 1984, the government
passed the amendment of the insurance corporation ordinance and for the first time,
private organizations were allowed to enter the market. A major reform occurred in

Page | 8
2010, when the Insurance Act 2010 was enacted. The Act mandated the formation of
IDRA and a lot of regulatory changeovers in the insurance industry of Bangladesh
(Hoque, Sultana & Kulsum, 2021).

2.5..Role of Insurance Companies in the Economic

Development of Bangladesh

The insurance industry started its operations in our country back in the British colonial
era. However, major progress was observed only during the period of 1947 to 1971.
Considerable numbers of both foreign and domestic insurance companies were in
operation at that time. The government of Bangladesh mandated through its 1984 Act
that all the insurance companies in Bangladesh were to acquire 100% reinsurance
protection from Sadharon Bima Corporation. During this time period, there were six
companies which operated life insurance business in Bangladesh. The were 9 other
companies which were in the non-life insurance business.
Before 1990, the insurance industry was mostly based around the government owned
entity. Private companies owned only 16.37% of the market share. The total industry
stood at about 1.71 billion BDT whereas the private sector comprised of only 280
million BDT. In 1990, the government allowed the private insurance companies to take
up only 50% reinsurance which really helped the private companies take a flight. The
insurance industry’s total earned premiums in 2004 were 23.06 billion BDT, of which
20.31 billion BDT belonged to private companies, or 88% privatized market share.
During this time period, the market share for life insurance businesses were at around
73.5%. Non-life businesses held 26.5% market share (BIA, 2022).
Two nationalized insurance companies and one foreign life insurance company
(American Life Insurance Company, currently known as MetLife) was the basis of the
country’s insurance industry after the Liberation War of 1971.
The insurance companies have a lot of potential in terms of making earnings or
generating cash flows in the economy. In the year of 2017, the life insurance industry
earned a gross premium of 8203.1 crore BDT whereas the non-life insurers earned a
total of 2908.1 crore BDT in premiums. These figures show the huge potential of
earnings that is hidden in the insurance sector of our country.

Page | 9
With rising income levels of the people in our country, people have more disposable
income on their hands than ever before. This factor influences in the increase of
insurance policy purchase behavior- which is a positive force in this industry. The
industry surpassed the value of $2.2 billion dollar in 2020, which was a 7.04% increase
from 2015. The industry was worth only $1.58 billion in 2015. Rising insurance
penetration rates have a great impact on the economy of our country. It not only protects
more against unforeseen losses, but also protect the right of earning.
Through the insurance sector, more employment can be generated and foreign direct
investments can be brought into the economy. Since the government has mandated all
insurance companies to be listed on the stock market, a boom in the insurance sector
can bring a massive reform in the stock market as well. However, though earnings from
the life insurance companies are showing promising numbers, non-life insurance
industry has not grown much in the last six years.

3.0 Company Overview of MetLife Bangladesh

MetLife Bangladesh first started operations in our country back in 1951, under the name
of American Life Insurance Company (ALICO). It continued operations with this name
until in 2010, ALICO was acquired by MetLife, Inc. globally and was con-branded as
MetLife ALICO. Later in 2015, the name was changed to only “MetLife” or MetLife
Bangladesh. It is now one of the largest employers in the country, with more than 16000
field force employees. More than 350 skilled full-time employees are working in the
company. The company has been successfully catering to over one million individual
customers and more than 800 corporate customers since 1952.

MetLife Bangladesh is a AAA rated insurance firm in our country. The company
received a Best Employer Brand Award 2018 given by World HRD Congress. It has
received multiple times the Top Taxpayer’s Award, given to it by the National Board
of Revenue. The company has 65 unit-offices, 9 sales offices and 232 agency offices
around the country.

Page | 10
In the last five years, MetLife Bangladesh has settled more than 5000 crore BDT in
claim payments. As of March 2021, the company had invested more than 13000 crore
BDT in government bonds, to protect interest of their policyholders as well as
contribute towards the society.

MetLife Bangladesh has also been investing in our country to develop a skilled set of
insurance professionals. Through trainings and workshops, it has been building up a
professional and knowledgeable work force. Also, MetLife has been trying to develop
the actuarial field of study in our country. It has been providing scholarships to students
who want to study actuarial science, through a program called “PASS” program.
MetLife is also the largest employer of actuaries in our country.

Besides it regular activities, MetLife Bangladesh has been running different CSR
activities for the betterment of the society. Through MetLife Foundation, the company
has donated more than $14 million since 2013, which has directly impacted nearly 1.3
million lower and lower-middle income people. Moreover, MetLife Foundation, along
with Swisscontact, provided training to 17,000 garments workers on financial know-
hows and helped them open 67,000 new bank accounts. The company has also extended
its support to the society during the Covid-19 pandemic. In collaboration with SAJIDA
Foundation, MetLife donated more than 150,000 USD to aid families of frontline health
workers who died in the pandemic. Through Spreeha Bangladesh Foundation, the
company donated more than 90,000 USD for buying ventilators and other necessary
medical equipment for hospitals in our country ("MetLife Bangladesh Fact Sheet",
2022).

3.1 Company Mission

MetLife Bangladesh has set its company purpose to be able to help their clients in
navigating through life smoothly, despite the unexpected turn of events at different
times. The central theme of all their activities is caring for respecting their
policyholders. MetLife Bangladesh, as a company, wants to reflect this value on their
brand identity, their actions, as well as, their impact on the society.

Page | 11
 3.2 Main Products Overview

Different people buy life insurance products for different reasons. Some buy them to
secure their families’ future, some buy them to financially protect themselves from
accidental disability, and others may buy them for retirement savings. MetLife
Bangladesh has to offer different life insurance products to meet different needs of their
customers. There are different types of Life, Accident and Health Insurance products
available in the company’s portfolio. All these policies can be categorized into three
broad spectra, which are- “Life Insurance Policy”, “Savings and Retirements Plan” and
“Accident and Health care Plan”.
Many different insurance products are available under each of these broad spectrums,
which can fulfill the different personal and family needs of their customers.

Figure 3.1: Main/Popular products of MetLife Bangladesh.

3.2.1 Life Insurance Policy: Life insurance policies are usually bought to provide
financial security to the family after the policyholder’s death. This helps many families
to maintain their standard of living even after the death of the bread earner. However,
some life insurance policies are designed for other purposes, such as- to provide for
your children’s education or to secure your partner’s retirement. “Education Process
Plan (EPP) Plus” and “Three Payment Plan (3PP) Plus” are two of the major life
insurance products offered by MetLife Bangladesh.

Page | 12
A) The Product Overview of EPP Plus:
• EPP Plus plan can be bought for different terms ranging from 10 to 25
years.
• The face amount of the policy will be paid to the policyholder’s child,
once the insurance policy is matured.
• In the unfortunate even of client’s death, protects the child's financial
future by paying out a monthly sum of 1% of the face amount every
month for his/her education till the maturity of the policy. The policy
also provides for a waiver of all future premiums in order to keep the
policy active and in-force.
• If the policyholder dies during the policy term, MetLife Bangladesh will pay
1% of the policy’s face amount each month until the maturity of the policy, so
that the child can continue his/her studies. “Waiver of Premium” option is also
available- which means that all future premiums will be waived after death of
the policyholder.
• This policy provides accidental death or injury coverage for policyholders, to
cater to the financial needs of their families after any such unfortunate events.
• In exchange for some extra charge, customers can also avail “Rider” benefits
which provides financial protection in the case of disability due to accident or
illness.
• The premium amounts paid for life insurance policies such as- EPP Plus, are tax
deductible in general.

B) The Product Overview of 3PP Plus:

3PP stands for “3 Payment Plan”, this is because the policy makes 3 payments
in total. The 3PP Plus plan is available for various terms such as- 15 years, 18
years, 21 years and 24 years. The following characteristics make it a very
popular product for MetLife clients:
• The first payment of this policy is made after 1/3rd of the policy term is
over, with 25% of the face amount. Another 25% payment is made after
2/3rd of the policy term, the final payment comes at the end of the plan.

Page | 13
 Policyholders can use these periodic payments for specific long-term
goals.
• At the end of the policy term, the policyholder gets 50% of the face
amount, as well as maturity bonuses.
• If the policyholder dies during the policy term, the nominees get the full
amount of the face value plus bonuses. Please note that no deductions
are made, even if partial payments have been made before.
• Policyholders can also avail up to 85% of the face amount as loans.
• Paid premiums for this policy are tax deductible.
• “Personal Accident Coverage” is also available if the policyholder faces
death, disability or injury from accidents during the policy term.

3.2.2 Savings and Retirement Plan: The company offers a wide range of
insurance products for savings. By buying these insurance policies and paying
premiums regularly, clients can prepare for their retirement age even during the prime
of their lives. “Income Growth Plan (IGP)” and “DPS Super Policy” are main savings
products offered by MetLife Bangladesh.

A) The Product Overview of Income Growth Plan Policy:

• This policy is unique in the way that it provides for both savings and financial
protection needs.
• The terms of this policy can go up to 30 years.
• Clients have the option of choosing small premium amounts with longer terms,
if they want to make the tradeoff to match with their payout capacity.
• The term of this policy can be divided into two phases. The first phase is during
the first 7 years of the policy. The second phase starts from the 8th year of the
policy and lasts till the end of the term.
• During the first phase of the policy, premiums paid are accumulated in the
policyholder’s account. After the end of the first phase, a dividend is offered on
the accumulated amount, which can go up to 40% of the cash value.

Page | 14
 • The cash value and dividends accumulated in the policyholder’s account are
transferred into another account called “IPA” (Investment & Protection
Account) during the second phase.
• During the second phase, the policy becomes more flexible. During this period,
policyholders have the option of changing their policy premium or face amount
subject to the terms and condition.
• After the policy matures, the policyholder can withdraw the amount
accumulated in the Investment & Protection Account. Or they can choose to
convert the policy into a life-time pension scheme.
• The premium amounts paid for life insurance policies such as- IGP are tax
deductible in general.

• Personal accident coverages facilities are provided under this insurance policy.

B) The Product Overview of DPS Super Policy:

Under the DPS Super Policy, there are three packages that customers can choose from:

Package Benefits
Maturity Value + Life Coverage Benefit +
Accidental Coverage + Critical Illness
DPS Super – Gold Benefits & Waiver of Premium

Maturity Value + Life Coverage Benefit +

DPS Super – Silver Accidental Coverage

Maturity Value + Accidental Coverage

DPS Super – Bronze

DPS Super – Gold Plan:

The benefits provided under this insurance policy are as follows –
• A high amount of maturity value that can fulfill the financial needs of the
policyholder or his/her family.

Page | 15
 • Upon death of the policyholder, the beneficiaries would receive death benefits
equal to the face amount (we can be calculated the face amount by multiplying
annual premium amounts by the policy term).
• If the policyholder is subjected Permanent Total Disability (PTD) due to an
accident, he/she is entitled to double benefits. Alternatively, three times the face
amount will be paid in the case of Accidental Death. Again, if there is
dismemberment due to any accident, the policyholder may be entitled up to
three times the face amount based on the type and severity of loss
• The policyholder is entitled to 50% to 100% payment of face amount if he/she
is diagnosed with any of the 8 critical illnesses mentioned in the policy terms
and conditions.
• If the policyholder chooses to avail Family Protection Rider- Disability for an
additional rider fee, his/her premiums will be waived in the case of any
accidental disability.

DPS Super – Silver Plan:

• The following facilities are provided under this plan –

• Attractive amounts are promised as face value for DPS Super Silver plans.
• Upon death of the policyholder, the beneficiaries would receive death benefits
equal to the face amount (we can calculated the face amount by multiplying
annual premium amounts by the policy term).
• Benefits for Accidental Death or Permanent Total Disability or Dismemberment
are similar to DPS Gold.

DPS Super – Bronze Plan:

Facilities provided under this plan are –
• Attractive Maturity Value for policyholders
• Upon death of the policyholder, beneficiaries would receive amounts equal to
the face value or total premiums paid, whichever is higher.

Page | 16
 • In the case of Accidental Death or PTD, benefits may reach up to 2 times the
face amount. For accidental dismemberment, total payout may reach up to 3
times the face amount.

3.3 Structure of the Actuarial Department

The Actuarial department of Bangladesh currently has 4 employees. The Head of the
Department is an Actuary and Assistant Director of the company. Under his
supervision, there is one Assistant Manager, one Senior Executive and one Executive
working in the department. The Head of Actuarial Department reports directly to the
Regional Actuary 0f MetLife, Inc. who is in charge of the South Asian region. The
Regional Actuary reports to the Chief Actuary of MetLife, Inc. The Head of the
Actuarial Department also indirectly reports to and works closely with the CFO of
MetLife Bangladesh. During my internship tenure, I worked under the supervision of
the Senior Manager of the department.

Figure 3.2: Structure of the Actuarial Department at MetLife Bangladesh.

Page | 17
 4.0 Analysis of the Actuarial Function at MetLife Bangladesh

4.1 Activities of Actuarial Department at MetLife Bangladesh

4.1.1 Statutory Valuation and Profit Distribution:

Calculating Account Values:

During my placement with the Actuarial team at MetLife Bangladesh, I have only
worked with the valuation of universal life insurance policies. So, in this report, I have
only discussed about calculating account values for universal life insurance policies.

According to insurance law, insurance companies are required to update their

policyholders’ account value regularly. Account value is the balance of account in a
month where Net Premium and Investment Earning is credited, and cost of insurance
and other deductions are made by the company.
While calculating a policyholder’s account value, a lot of factors are taken into
consideration, such as- gross premium, credited interests, premium charge, cost of
insurance fees, administration expenses etc.

Gross premium is the total amount which is paid by the policyholders as periodic
premium payments.
Credited interest is the amount which is credited to the policyholders’ account.
Premium charge is a fee charged by the insurer to cover their sales agents’ commission
fees.
Cost of insurance is a type of fee associated with life insurance policies that is charged
by insurers in exchange for protection against mortality or morbidity. There are
different factors that determine the amount of the cost of insurance fee, such as- age,
pre-existing illnesses, history of medical conditions etc. The most important factor is
the age of the policyholder. The older the policyholder, the higher is the cost of
insurance. This is because a person’s probability of mortality or morbidity increases

Page | 18
with age. So, the probability of paying out a death/ critical illness benefit is higher with
an older policyholder. Hence, higher return or “cost of insurance” is charged to justify
that increased risk.
Administration expenses is a fee charged by the insurer to cover the stuff salaries and
overhead expenses required to process the insurance policies.

The calculation of account value is subject to a lot of variables. Actuaries have to

carefully incorporate a lot of data points in these calculations, some of which are as
follows:
a. Type of Insurance Product: Each insurance product has a different benefit
structure. The underlying benefit structure and schedule of benefit payout needs to be
considered while calculating each policy account.

b. Terms and Conditions of Policy Contract: Terms and conditions of each policy
determine the impact of contingency obligations on the policyholder account.

c. Age and Gender: Policyholder age and gender are critical factors for determining
cost of insurance charges for each policy.

d. Face Amount: Face amount of a life insurance policy is the documented amount to
be paid to the life insurance policyholder as death benefit.

e. Term of the Policy: Term of the policy is the time period over which the insurance
company is obliged to cover the policyholder upon regular payment of premiums.

f. Office Premium Amount: Office premium is the total premium paid for the base
policy as well as the additional riders.

g. Bonuses Paid: Insurance companies are required by law to share a certain percentage
of their profits with the policyholders, which is added to the policyholder account as
annual and terminal bonuses. Companies announce a bonus rate on their policies each
year according to the profits made in that year.

Page | 19
h. Reinsurance Effect: Actuaries need to take into account the risk that has been
transferred to reinsurers for a certain policy. This should have an impact on the cost of
insurance rates.

i. Administration Expenses: Policy acquisition costs, premium charge, renewal charge

etc. may vary across different types of policies and need to be carefully matched while
calculating account values.

Profit Distribution:
An insurance company operating in Bangladesh cannot keep all of the profits it makes.
According to section 82 of the Insurance Act 2010 of our constitution, insurance
companies are required to pay at least 90% of their profits to the policyholders as
bonuses. The rest can be transferred to shareholders as profits.
The actuarial department contributes to calculating the profits for MetLife Bangladesh,
which is later distributed as shareholder profits and policyholder liabilities (or bonuses).
In a very simplified model, the profit of an insurance company is the net income (net
premium revenue plus investment revenue minus expenses) in excess of its reserves.
The “Reserve” account is a special type of financial account which is unique to the
insurance business. The actuarial department is in charge of calculating this reserve
account, which is later used in profit calculations.

Calculating Reserve:
Actuarial reserve represents the minimum amount of capital an insurer is required by
law to hold for ensuring regular payment of benefits to its policyholders.
A life insurance policy that is in force or is currently activated, might have different
outcomes. The policy might become lapsed, surrendered, claimed or it might reach
maturity. This implies that the insurance companies do not have to pay benefits to all
their policyholders in one given year. For this reason, the total benefits of all the
policyholders of an insurance company is not considered as the “Policyholder Liability”
of that company. The insurance company has to make probabilistic guesses about
number of policies that might be lapsed, surrendered, claimed or matured in the
following year by following a standard, regulator-approved statistical approach.

Page | 20
So, actuaries need to make a schedule of forecasted lapses, claims, policy surrenders
and maturities for all their policies and create a forecasted cash outflow schedule for
policyholders. These cash flows are discounted to calculate Net Present Value in the
current time period.
The actuaries also have to create a schedule for forecasted premium revenue for all their
life insurance policies. These are considered as cash inflows, which are also discounted
to Net Present Value. The cash outflow NPV in excess of the cash inflow NPV is
considered as the “Reserve” account. The principle of calculating the reserve account
is shown in the following figure.

Figure 4.1: Calculating reserves for a life insurance company

(Riaman, Susanti, Supriatna & Ruchjana, 2017).

Reserve account is essentially a fund held by the insurer to ensure that the company has
adequate solvency to payout its claims and benefits. For Bangladesh, the IDRA
enforces required mandates to ensure that the insurance companies follow proper
methods in calculating their reserves and maintaining them.

Page | 21
4.1.2 US GAAP Valuation:

MetLife Bangladesh is a registered insurance company in Bangladesh, but it is also a

subsidiary of an US-based insurance firm. Hence, the company needs to make two
versions of its financial statements following both countries’ regulations. For financial
reporting purposes, Bangladesh uses the IFRS 17 guideline, but the United States uses
the GAAP guideline. There are some financial reporting methods which are applicable
under GAAP guidelines, such as- Deferred Acquisition Costs, Unearned Revenue
Liability, Policyholder Dividend Liability etc. The actuarial department ensures that
these methods are properly applied for financial reporting.

Deferred Acquisition Cost is an accounting method used by American insurance

companies. This method entails that insurance companies distribute the policy
acquisition costs over the term of the policy. Applying this method allows insurance
companies to reduce the first-year strain of their insurance policies’ profitability. This
has a smoothening effect on the company’s profit figures from year to year, reducing
the volatility in company profitability.

4.1.3 Value of New Business Calculation:

The actuarial department also calculates the Value of New Businesses (VNB) metric
for each quarter- which is essentially the present value of future expected profits arising
from the sale of new insurance policies. VNB metric is used in reviewing the
performance of different insurance products of the company. VNB of existing insurance
products is calculated every quarter, against which the performance of these products
is measured.

If any product performs poorly for some reason, the actuarial department suggests
corrective measures, such as- product repricing, improvement of terms and conditions,
or even retirement of unprofitable products.

Page | 22
4.1.4 Experience Studies:

Actuaries partake in the development of financial and statistical models that help
insurance companies make crucial business decisions. A lot of variables go into these
mathematical models which are called assumptions. Some common assumptions that
go into actuarial models are- present value discount rate, policyholder contribution
rates, income growth rates, inflation rates, mortality rates, workers’ retirement ages,
disabled retirement ages, interest rates etc.
These “assumption” values are estimated through a rigorous process of statistical
inference. Actuaries analyze empirical data and predict the values of these assumptions.
This empirical analysis or “Experience Studies” is important since it underlies the
accuracy of actuarial models used by the insurance company.
The actuarial department of MetLife Bangladesh analyzes its policyholder data and
other empirical macroeconomic data as part of its experience studies.

4.1.5 Product Reviews:

One of the key responsibilities of the actuarial department of MetLife Bangladesh is to

conduct product reviews. Between 2010 and 2018, MetLife Bangladesh has launched
3 new insurance products as reported in an IRDA report. Name of these products are as
follows:
1. Critical Illness Insurance with Return of Premium (CI ROP)
2. Single Deposit Protection Scheme (SDPS)
3. Service Insurance Plan
These products were approved by the IRDA on 1 December 2013. However, before
filing for the approval of any new insurance product, the actuarial department of
MetLife Bangladesh conducts an internal appraisal or review of these products.

The actuarial department conducts these product reviews on behalf of the CFO and the
Appointed Actuary of the company. These product reviews are conducted to determine
potential profitability of new insurance products and to do a final check before
launching.

Page | 23
4.1.6 Financial and Actuarial Modelling:

The actuarial department of MetLife Bangladesh develops actuarial models for key
business projects and KPIs. These models are used for the valuation/ review of new or
existing insurance policies. They are used to compare company performance to other
competitors in the market.
Moreover, actuarial models are used to test various contingent scenarios, determine the
cost of new projects, calculate budgets, and allocate company resources.

4.1.7 Actuarial Reviews and Opinions:

The actuarial department has to work in close contact with other departments of
MetLife Bangladesh. Actuaries need to provide advice and support to almost all the
departments in an insurance company. The role of actuaries can be thought of as a
central operation, with impacts on all the other activities of the company.

4.2...Liaison Between Actuarial Department and Other

Departments

Let us briefly discuss about how the actuarial department and other key departments of
MetLife Bangladesh collaborate among themselves to accomplish their business
objectives:

a) Financial Controller’s Team: The financial statements of an insurance company

have two scopes of discussion- actual cash transactions and accrued balances; and
future liabilities. Calculations regarding future liabilities of the company are mostly
dealt by the actuarial department, which goes into the financial statements. Hence, the
actuarial department needs to closely work with the financial controller’s team.

Page | 24
b) Investment Team: The actuarial department helps the investment team in the
process of asset-liability matching. Insurance company’s funds need to be invested in
the manner so as to provide adequate returns to meet liabilities arising for the company.
Return schedules need to be matched with liabilities schedule. The investment team
needs to work in collaboration with the actuarial department to match these schedules.

c) Procurement Team: The actuarial department provides advice to the procurement

team to control administration expenses.

d) Disbursement Team: Actuaries provides critical advice regarding- claim payments,

agent commission payments, and all other payments outside the company.

e) Financial Planning and Analysis: The Financial Planning and Analysis department
sets financial targets for other departments in the company. The actuarial department
helps them in translating those targets in key performance indicators such as- number
of policies sold, incremental cash flow generated etc. The financial planning and
analysis department wants to communicate the targets they have set as actionable items,
so that it is easy for all the other departments to identify the right course of action and
to self-evaluate their progress along the way. This is what the actuarial department helps
them to do.

f) Products Team: The products team designs suitable insurance products for the
clients that fulfill the needs of the clients, at the same time, make business sense for the
company. The products team also needs to employ actuaries to conduct calculations
related to VNB analysis. The actuarial department can provide them crucial support in
this regard.

g) Adhoc Projects: The company management often takes up infrastructure

development projects across the company. An important part of such infrastructure
development is upgrading database management systems. The actuarial department
provides necessary support during such upgradation projects.

Page | 25
5.0 Comparative Performance Analysis of Bangladeshi Life
Insurance Companies

In this section, we are going to compare financial properties of MetLife Bangladesh

with some other prominent life insurance companies of Bangladesh. We are also going
to compare these companies’ performance to the overall performance of the
Bangladeshi insurance industry. For the purpose of intercompany comparison, we have
chosen a state-owned company- Jiban Bima Corporation and two prominent life
insurance companies of Bangladesh- Delta Life Insurance Company Limited and
National Life Insurance Company Limited.

5.1 Comparison of Gross Premium Collected

For comparative performance analysis, we need to analyze empirical data of these

companies past operations. However, the most recent data that is available on the
IDRA’s website is Following are the gross premium collected by the mentioned
insurance companies in the year of 2019 (IDRA, 2019):

Company Gross Premium Percentage of Domestic

(Cr BDT)
MetLife Bangladesh 2896.53 30%
Delta Life Insurance 701.1 7%
Company Limited
National Life Insurance 1072.23 11%
Company Limited
Jiban Bima 566.15 6%
Corporation
Domestic Gross 9639.72 100%
Premium

As we can see from the above table, gross premium collection by all the companies in
Bangladesh for the year of 2019 was 9639.72 crore BDT. Within this figure 2896.53
crore BDT was generated by MetLife Bangladesh, which is nearly 30% of the total
premium earnings. Another prominent company, Delta Life Insurance company
captured nearly 7% of the market share. Another privately owned company, National
Page | 26
Life Insurance Company earned 1072.23 crore BDT in the same year with a 11%
market share. Compared to the private companies, state-owned Jiban Bima Corporation
performed poorly as it earned only 566.15 crore BDT with a 6% market share. This
analysis shows that privately owned companies, especially those which are properly
managed, are doing better than governmental organizations in terms of premiums
earned.

5.2 Comparison of Claims Settled

Number of claims settled is a really crucial metric for an insurance company’s

performance. Claim settlements are directly related to the positive confidence of the
clients. Following is the claim settlement amounts of chosen insurance companies for
the year of 2019 (IDRA, 2019):

Amount of
Company Claim (Cr Settled %
BDT)
MetLife Bangladesh 1746.07 94%
Delta Life Insurance 613.1 98%
Company Limited

National Life Insurance 1031.15 74%

Company Limited

Jiban Bima Corporation 409.49 84%

Domestic Total Claims 7380.12 88%

As we can see from the data, both MetLife Bangladesh and Delta Life Insurance were
able to keep their claim settlement percentages above the 90th percentile. However,
Jiban Bima Corporation and National Life Insurance could not cross the 90%
benchmark. Proper actuarial management helps insurance companies to maintain
adequate funds to meet their claims.

Page | 27
5.3 Comparison of Life Fund Size

A life insurance company’s financial performance can also be evaluated based on its
life fund size. Following is the life fund size of chosen life insurance companies in
Bangladesh (IDRA, 2019):

Life Fund Percentage of

Company
(Cr BDT) Domestic
MetLife Bangladesh 13771.77 40%
Delta Life Insurance Company
3985.23 12%
Limited

National Life Insurance

3668.45 11%
Company Limited
Jiban Bima Corporation 2023.86 6%
Domestic Total Life Fund 34444.97 100%

Once again, MetLife Bangladesh has the highest volume of life funds compared to other
companies. MetLife has around 40% of the total life funds existing n Bangladeshi
economy. Other private companies in this analysis, such as Delta Life and National Life
have performed much lower compared to MetLife in this regard. State-owned JBC is
further below the benchmark. Life fund size can be an effective indicator of customer
confidence for an insurance company.

6.0 Findings

Through the analysis of this report, we can see that the actuarial function has impact on
two of the most important aspects of the financial health of an insurance company-
profitability and solvency.

Impact on Profitability:

In a simplified model, the profit of an insurance company is determined through the

following formula: Profits = Net Premium Earnings- Reserves.

Page | 28
One of the key responsibilities of the actuarial department at MetLife Bangladesh is to
calculate the right amount of reserve for the company. Overstating required reserves
for the company would undermine the company’s profits.

The actuarial department is also responsible for underwriting and reviewing insurance
products, which entails determining justified prices for different policies. Unjustified
prices would reduce demand for insurance products, or otherwise reduce profitability
of the company.

The actuarial department also provides advise and support to the investment team by
providing actuarial models and risk analysis. By optimizing the risk profile of the
company’s investment portfolio, it helps the profitability of the company.

Impact on Solvency:

The actuarial department conducts experience studies and statistical analysis to make
assumptions on the mortality, morbidity or other outcomes of the policyholders. These
assumptions are used in determining an appropriate discount rate for future payouts of
the company. Based on the present value of potential future payouts, the reserves of the
company are calculated. In this way, the actuarial department ensures that MetLife
Bangladesh is able to payout all of its long-term liabilities.

Understating the reserves of an insurance company can increase the profitability in the
short term, but in the long run it would disrupt the ability to payout all the insurance
claims. Hence, actuaries need to maintain the delicate balance between profitability and
solvency by calculating the proper amount of reserve. The reputation of the insurance
company depends on the accuracy of the calculations conducted by the actuaries.

The existence of a functioning actuarial department is one of the key reasons behind
the success of MetLife Bangladesh. The company has outperformed all the other
insurance companies in terms of market share, gross premium earned and accumulated
funds. Percentage of settled claims, considering the huge size of its policyholder base,
is also satisfactory. This serves as indirect evidence for the effectiveness of the actuarial
department at MetLife.

Page | 29
7.0 Recommendations

1. MetLife Bangladesh’s investment portfolio is highly dependent on government

securities. According to informal sources, more than 90% of the company’s
investments are tied up into government debentures. According to MetLife’s
official announcement, it has more than 13,000 crore BDT worth of government
securities in its investment portfolio.
Though government bonds are considered to be risk-free, there are opportunity
costs associated with it. Government bonds are low risk, low return- which
means the funds could have earned more returns if invested elsewhere. One
example is- Delta Life Insurance Company Limited invested into high-value
real estates in the Gulshan area, which earns them considerable amount of
return. MetLife Bangladesh is missing out on such opportunities. Also,
investments into government bonds are susceptible to inflation rate and interest
rate risk. Considering the high inflation rates of Bangladesh, this can be a
serious concern of the company.
MetLife Bangladesh should consider diversifying its investment portfolio to
hedge itself against interest rate and inflationary risks. The Actuarial department
can help in identifying profitable investment opportunities with adequate
amounts of risk. This can help the company earn better returns.

2. The actuarial department at MetLife Bangladesh depends on regional actuaries

to supervise or give approval to all their activities. In other words, local
autonomy is limited. MetLife Bangladesh should build enough actuarial talents
locally, so that all actuarial decisions can be made locally. Actuarial work is
highly dependent on predictive assumptions, which are subject to
demographics/factors specific to the geographical location. Hence, local
actuaries would best understand the needs or characteristics of any population
or nation. So, MetLife Bangladesh should gradually move towards a system
where all actuarial decisions are made and approved (in general) by in-house
local actuaries.

Page | 30
3. Even though MetLife Bangladesh has been investing to build more actuarial
professionals in our country, there is still less actuaries in our country than there
should be. With around 62 insurance companies, our country doesn’t even have
more than 10 certified actuaries. So, the entire industry is running on a crisis of
skilled professionals. MetLife Bangladesh has already taken initiatives to attract
young students into this profession. They need to stick to this course of plan and
put in even more energy and resources for this purpose.

One of the main barriers for students who want to come into the actuarial
profession in Bangladesh is the uncertainty of employment. Most of the
insurance companies in our country do not employ or use actuaries for financial
management. This harms their business and profit margins; however, they do
not properly realize this fact. As a result, they do not adequately evaluate
actuarial professionals. This creates an uncertainty for actuarial students about
whether they would get employment opportunities in Bangladesh in their
relevant field, with the justified level of salaries and benefits at least. Actuarial
science is a very complex discipline, it takes a lot of effort, intelligence and
diligence to earn expertise in this line of study. So, it is only fair for actuarial
professionals to demand high salaries and benefits. If attractive benefits are not
offered to actuarial professionals, students would not be interested to choose
such a difficult line of study as a career.

Hence, it is the responsibility of both the regulator and the insurance companies
to build attractive career opportunities for students in this field. IDRA should
make it mandatory for Bangladeshi insurance companies to allocate a certain
portion of their budget for providing support to actuarial students. The
government should also make it compulsory for insurance companies to recruit
actuaries within a time frame. Moreover, governmental scholarships should be
made available for actuarial students, with the assurance of being employed in
future. IDRA itself lacks manpower and skilled actuaries. The regulatory body
should run its own scholarship program with assurance of employment after
completion of studies for actuarial students.

Page | 31
 However, insurance companies should not be waiting for governmental
initiative to develop the actuarial field. They should be supporting and
employing more and more actuaries for their own sakes.

4. Despite having high claim settlement rates, MetLife Bangladesh is lagging

behind in terms of lapsed policies. In IDRA’s 2017 Annual Report, 16
companies with high lapsed policies were specifically mentioned and the report
stated that the authorities would take strict disciplinary actions if these
companies didn’t reduce their lapsed policies. MetLife Bangladesh was listed
among one of those companies, as well. High lapsed policies may be caused by
the lack of proper understanding of policy terms and conditions by the policy
holders. Hence, MetLife should focus more on training their sales agents so that
they can properly communicate all the terms and conditions of policies to new
customers.
More investments need to be made for providing technological training and
insurance-related knowledge to sales agents. Moreover, an incentive system
should be introduced for sales agents that would reward them for generating
policies that do not lapse. The current incentive system only rewards generating
more sales, hence agents might be motivated to sell policies without properly
explaining the terms to the customers. Lowering the ratio of lapsed policies
would strengthen people’s trust on MetLife’s business.

5. While developing actuarial models, actuaries need to make some assumptions

related to mortality rates, morbidity rates etc. For this purpose, actuaries use
mortality tables, morbidity tables etc. which are basically tables of probability
of death/accident assigned to different age groups. These tables are essential
tools for developing actuarial models. However, these tables or assumptions are
based on experience studies. Unfortunately, there is a lack of research-based
data on the mortality rates/ morbidity rates of our country. Hence insurance
companies would have to use assumption tables that are outdated or
standardized for a wider region. All the insurance companies should collaborate
together, involving the government as well, to build a database of mortality or
morbidity in Bangladesh. This would help them generate assumption tables that

Page | 32
 are specific to Bangladesh and specific to the current point in time.

6. MetLife Bangladesh should increase its presence on digital platforms. Its

website, mobile apps, customer care hotlines and all the other customer
touchpoints need to be integrated and aligned to create an omni-channel
experience. Policyholders should be able to see the schedule of future account
values before purchasing a policy from their websites or other platforms. This
should help in reducing the number of lapsed policies as well.

7. MetLife Bangladesh should consider getting listed on Bangladeshi stock

exchanges. Getting listed will allow the company to raise funds more easily and
cheaply, which can be used to finance their expansion projects. Most
importantly, it will reduce the tax burdens imposed upon the company.
Currently, listed companies pay 7.5% less tax than non-listed companies in
Bangladesh. Being listed will require that the company’s financials be
published. Given the strong financial position of MetLife Bangladesh, this will
only increase people’s trust on the company and help increase its business.
Increased transparency will be beneficial for both the existing and new
policyholders. Also, since MetLife Bangladesh has a long-lasting reputation and
strong financial background, its stocks should be shielded from the price
volatility.
Since most of the company’s funds are invested into government securities,
there is low liquidity of its assets. This is because the secondary market of
government securities is not much efficient, with only a short number of
participants. If MetLife Bangladesh gets listed on the stock market, investments
of the foreign investors would be much more liquid. Also, there are lesser
controls on dividends than private profits to be remitted abroad. MetLife
Bangladesh has a lot of profits of its foreign investors stored in Bangladeshi
banks, any attempt to transfer them abroad rings red alarms in the regulatory
offices and makes newspaper headlines. Getting listed on the stock exchanges
would reduce this problem for the company.

Page | 33
 8. MetLife Bangladesh should focus more on their marketing efforts. Currently,
the company has revamped their social media presence through brand
sponsorships, 360-degree health app etc. However, they need to invest more to
increase their visibility among the general populace. Increase visibility can have
a positive impact on customer confidence, which is very crucial to life insurance
business. Marketing needs to be done not only to attract more sales, but also to
attract more talents to the insurance field.

Especially for the actuarial field, MetLife should create a platform/pool of

resources for students who are interested in actuarial science. Interested students
should be able to know about the opportunities in the actuarial field, to know
about the academic journey of actuaries, scope of work, costs, guidelines and
other information from this platform. Moreover, MetLife and other insurance
companies should focus on marketing and revamp their brand image and work
towards breaking the negative perception in people’s minds. This would further
reduce the barrier of actuarial education in Bangladesh.

8.0 Conclusion

The insurance industry of Bangladesh has a lot of potential to make significant

contribution to the country’s growth and development. However, the industry is
currently riddled with many problems. There is a lack of well-balanced policies to
regulate insurance companies, at the same time, the regulatory bodies are suffering from
shortages of manpower and skilled professionals. Due to these factors, insurance
industry has not yet been able to flourish in our country. Insurance penetration rate still
below 1% in our country, whereas developed countries have up and around 50%
penetration rates.

Bangladesh can turn around from this situation only if proper financial management
processes are followed at insurance companies. And to ensure that, actuaries need to be

Page | 34
employed. Actuarial science is a very specialized field of study that works with
probability and statistics related to insurance business. Actuaries provide critical
support by managing risks, designing financial products, suggesting investment areas,
maintaining proper funds etc. for the company. Unfortunately, there is an acute shortage
of trained actuaries in our country. However, neither the government, nor the private
companies are putting in adequate efforts to develop the actuarial field.

There are certain barriers that prevent young talents from entering the actuarial
profession. One of them is the negative perception about insurance companies among
the general people. Insurance companies must focus on reducing policy lapse ratios and
unsettled claim ratios to increase customer confidence and break the negative
perception. They should also focus more on marketing to increase visibility and build
customer confidence. Government needs to mandate insurance companies to hire a
certain number of actuaries within a given time frame. Moreover, governmental and
private scholarships need to be arranged for actuarial students, with guarantee of
employment upon completion of studies. All these efforts combined can improve the
insurance sector of our country and serve to create a significant impact on boosting out
country’s GDP.

Page | 35
 9.0 References

Ali, M., & Mahmud, S. (2022). Insurance penetration in Bangladesh fell in 2020.
Retrieved 3 March 2022, from https://www.tbsnews.net/economy/insurance-
penetration-bangladesh-fell-2020-286696

Bangladesh Bank. (2022). Bangladesh Bank. Retrieved 3 March 2022, from

https://www.bb.org.bd/en/index.php/financialactivity/regulator

BIA. (2022). Economic Contribution of the Insurance Industry. Retrieved 5 April 2022,
from https://biabd.org/economic-contribution-of-the-insurance-industry/
Global Newswire. (2021). Insights on the Life Insurance Providers Global Market to
2030 - Identify Growth Segments for Investment. Global Newswire. Retrieved from
https://www.globenewswire.com/news-
release/2021/08/04/2274671/28124/en/Insights-on-the-Life-Insurance-Providers-
Global-Market-to-2030-Identify-Growth-Segments-for-Investment.html

Halder, S. (2022). Insurance sector rebounds strongly. Retrieved 7 March 2022, from
https://www.thedailystar.net/business/economy/news/insurance-sector-rebounds-
strongly-2975321

Hoque, A., Sultana, S., & Kulsum, U. (2021). THE IMPACT OF COVID-19 ON THE
INSURANCE INDUSTRY OF BANGLADESH. Indian Journal Of Finance And
Banking, 73-85. doi: 10.46281/ijfb.v6i1.1243
IDRA. (2019). Analysis of Life Insurance Business Performance in Bangladesh Based
on 2017, 2018 and 1st Quarter of 2019 Data. Insurance Development and
Regulatory Authority.
Insurance penetration in Bangladesh fell in 2020. (2022). Retrieved 11 March 2022,
from https://www.tbsnews.net/economy/insurance-penetration-bangladesh-fell-
2020-286696

IRDA. (2018). IRDA Annual Report 2010-2018. Insurance Development and

Regulatory Authority, Bangladesh. Retrieved from
https://idra.portal.gov.bd/sites/default/files/files/idra.portal.gov.bd/notices/18ed1
76a_f211_4485_9d4c_5bcfdbdebf5c/Print%20English.pdf

Manik, E., & Mannan, A. (2022). An Investigation of the Awareness of the Life
Insurance Among the Hawkers in Dhaka City: The Prospects of
Microinsurance. European Journal Of Business And Management, 9(2).

MetLife Bangladesh Fact Sheet. (2022). Retrieved 4 March 2022, from

https://www.metlife.com.bd/content/dam/metlifecom/bd/PDFs/required-

Page | 36
 documents/metlifebangladeshfactsheet.pdf

PR Newswire. (2021). Global Life Insurance Market Report (2021 to 2030) - COVID-
19 Impact and Recovery. PR Newswire. Retrieved from
https://www.prnewswire.com/news-releases/global-life-insurance-market-report-
2021-to-2030---covid-19-impact-and-recovery-301344391.html

Riaman, Susanti, D., Supriatna, A., & Ruchjana, B. (2017). Calculation of benefit
reserves based on true m-thly benefit premiums. Journal Of Physics: Conference
Series, 893, 012029. doi: 10.1088/1742-6596/893/1/012029

Securities and Exchange Commission. (2022). Metlife Inc SEC Registration. Securities
and Exchange Commission, USA. Retrieved from
https://sec.report/CIK/0001099219

Statista. (2022). Largest life insurers by market cap 2022 | Statista. Retrieved 8 March
2022, from https://www.statista.com/statistics/376359/largest-life-insurance-
companies-by-market-cap/

Page | 37
10.0 Appendix

Annexure-1:

Source: (IRDA, 2018)

Annexure-2:

Source: (IRDA, 2018)

Page | A-1
Annexure-3:

Source: (IRDA, 2018)

Annexure-3:

Source: (IRDA, 2018)

Page | A-2