The insurance industry in Bangladesh, like many others, has been transformed by software adoption.

Despite a relatively small market, the country boasts 31 insurance companies, all utilizing software in their operations. However, concerns have been raised about the quality and efficiency of this software compared to international standards.

While insurance companies in developed nations leverage machine learning and artificial intelligence to attract customers and expand their networks, Bangladeshi insurers still rely heavily on underpaid agents.

This reliance on traditional methods may explain the low insurance penetration rate, with less than one percent of the population insured, and a minimal contribution to the national economy.

Industry experts suggest that adopting intelligent insurance software with machine learning capabilities could significantly improve coverage, efficiency, and transparency within the sector.

This transition could potentially revolutionize the insurance landscape in Bangladesh and drive substantial growth.

What does intelligent software mean?

Hasib Muammar, a software engineer who is currently working on developing intelligent software for the insurance sector emphasizing on  having a clear notion about what insurance software can do.

“Obviously, we first need to understand the actuarial table,” Hasib told Bangla Outlook..

Actuarial tables are a cornerstone of insurance and are a very basic form of machine learning.

“Take, for instance, mortality tables,” said Hasib, “These tables produce highly specific and shockingly accurate projections of how people born within a certain period will live.”

Hasib said that these projections don’t just materialize out of thin air. They are formed and refined by millions of data points and real life examples inputted into the tables and then evaluated on an aggregate level.

Explaining further, he said, if 1,000 individuals died at age 65 in the country, this information is incorporated into the software to predict the likely lifespan of an average person in Bangladesh..

“Think; how that will aid the life insurance company in deciding premium for certain insurance,” he said.

Hasib points out that most of the current insurance software in Bangladesh mainly functions as a transactional record keeper, limiting its capabilities to data storage.

Additionally, the few customized systems rely on outdated software models that merely process input data and produce results without fully utilizing the valuable information generated.

This traditional approach, designed for efficiency and workflow completion, ultimately proves inefficient as it leaves a wealth of data untouched, said Hasib.

“Also, the absence of machine learning at its core prevents the software from extracting and leveraging this information for purposes beyond its original intent,” he said.

Intelligent software can change everything

Hasib mentioned that intelligent software with machine learning capabilities transcends traditional limitations.

“Fortunately, local developers in Bangladesh are now able to create such software,” he said, adding that this intelligent software processes variables, performs calculations, and delivers tailored results based on specific needs.

For example, if the desired outcome is a list of uninsured car owners in Dhanmondi, the software can generate it with appropriate input data.

“Fortunately or unfortunately, Bangladesh's lack of stringent data privacy regulations means abundant data is available,” said Hasib.

Insurance companies in Bangladesh are still hesitant to invest heavily in IT due to concerns about the maturity of the digital environment and the potential return on investment in machine learning.

Some of the companies however have started embracing the full digital transformations.

MA Halim Sarkar, head of IT of Sandhani Life Insurance Company Ltd, revealed that Sandhani has decided to fully digitize the company's operations using intelligent software.

This transition would eliminate paper-based processes, marking a significant shift in an industry that heavily relies on paper documentation, he said.

Progress is pretty much evident in Sandhani, with computer-generated receipts replacing traditional money receipts.

“Another digitized change in our company can be seen in the case of bill payments which were manually calculated previously. Now this is totally automated; our computers are doing all the calculations and generating bills without making any errors and mistakes,” said Halim.

He however said that the installation of intelligent software will change the whole operation of the insurance industry in Bangladesh.

“Bangladeshi insurance companies house an overwhelming amount of raw data. Unfortunately, for many companies, it’s just stuck into a static vacuum. Intelligent software will add dynamics to it,” he said.