Life Insurance Underwriting in Bangladesh: A Comprehensive Analysis of Practices, Challenges, and Opportunities

In Bangladesh, life insurance underwriting has continued to be progressively developed over time and has contributed to securing the financial stability of insurers and the development of this sector. Data used in the underwriting, which assesses the risk profile of applicants, directly determines premium rates, policy terms, and the long-term success of insurance providers. The study intends to present comprehensive insight into life insurance underwriting practices in Bangladesh, furnishing insights on prominent risk factors, challenges, regulators, and relevant opportunities for enhancement. The study outlines how the life insurance market works today, and what role demographics, health, lifestyle, and socio-economic variables play in underwriting decisions; and offers some recommendations for improving the efficiency and accessibility of the sector in the future.

Introduction

In Bangladesh, life insurance is a developing field with a rising need to provide financial security and protection from risk (Toshmurzaevich, 2020; Shamsuddinet al., 2022). Underwriting, which is the process used to determine whether an applicant is eligible for insurance coverage and can afford the insurance premium, will depend on health, lifestyle, and financial factors (Toshmurzaevich, 2020; Aggour & Cheetham, 2005; Maieret al., 2019). Despite being crucial, underwriting in the country faces multiple issues, including old-fashioned risk assessment approaches, little authentic health data, and regulatory bottlenecks. Nonetheless, the industry has begun transitioning toward digitalization and data analytics to improve underwriting efficiency.

This paper provides an in-depth analysis of Bangladesh's life insurance underwriting process, examining key risk factors, regulatory frameworks, challenges, and technological advancements shaping the industry.

Methodology

In a qualitative style, this study used secondary data, including industry reports, academic journal articles, as well as case studies, on life insurance companies in Bangladesh. It discusses challenges and advancements in the insurance industry, based on reports from IDRA, Jiban Bima Corporation, National Life Insurance, MetLife, Delta Life Insurance, Popular Life, and research studies related to underwriting practices.

Overview of the Life Insurance Market in Bangladesh

The life insurance sector in Bangladesh is relatively underdeveloped compared to global standards (Alam, 2019). As of recent years, the market penetration of life insurance remains low, with a small proportion of the population covered by insurance policies (Insurance Development and Regulatory Authority (IDRA), 2023). Several domestic and international players operate in the market, offering a variety of products, including term life, whole life, and endowment policies.

The life insurance business is regulated under the supervision of the Bangladesh Insurance Regulatory and Development Authority (IDRA) (Alam, 2019). Yet, the industry still faces challenges such as low awareness, poor consumer understanding of insurance products, a lack of skilled manpower, and an over-reliance on manual underwriting processes (Insurance Development and Regulatory Authority (IDRA), 2023).

The sector comprises 36 life insurance companies. The most prominent are Jiban Bima Corporation (JBC)—the only state-owned life insurer—along with Delta Life Insurance, Pragati Life Insurance, MetLife Bangladesh, and National Life Insurance.

Meanwhile, the gross written premium for 2022 stood at 11,393.09 crore, while that for 2023 stood at 12,273.49 crore (Insurance Development and Regulatory Authority (IDRA), 2023) which is furnished in Table I.

Table I. The Gross Premium & Market Share of Life Insurance Companies

Organization name	2022		2023
	Gross premium (crore)	Market share	Gross premium (crore)	Market share
Jiban bima corporation	780.06	6.85	789.98	6.44
Metlife alico	3090.07	27.12	3202.28	26.09
National life	1615.86	14.18	1860.02	15.15
Delta life	848.49	7.45	926.22	7.55
Sonalife	614.28	5.39	831.76	6.78
Popular life	675.74	5.93	676.74	5.51
Alpha islami life insurance	153.61	1.35	211.84	1.73
Astha life insurance	19.52	0.17	28.91	0.24
Baira life ins	2.49	0.02	3.75	0.03
Best life insurance	17.50	0.15	22.83	0.19
Chartered life insurance	74.72	0.66	100.73	0.82
Daimond life insurance	17.93	0.16	15.13	0.12
Bangol islami	45.39	0.40	60.60	0.49
Fareast islami life insurance	638.79	5.61	602.60	4.91
Golden life insurance	41.13	0.36	36.04	0.29
Guardian life	465.56	4.09	571.19	4.65
Homeland life insurance	53.26	0.47	61.52	0.50
Jamuna life	27.00	0.24	33.19	0.27
LIC Bangladesh	17.24	0.15	18.06	0.15
Meghna life insurance	391.93	3.44	381.14	3.11
Mercentile life	52.62	0.46	41.74	0.34
Padma islami life	31.67	0.28	21.25	0.17
Pragati life	481.76	4.23	539.52	4.40
Prime islami life	414.68	3.64	405.15	3.30
Progressive life	43.04	0.38	36.74	0.30
Protective islami life	48.88	0.43	50.24	0.41
Rupali life insurance	212.06	1.86	233.15	1.90
Sandhani life insurance	238.99	2.10	242.13	1.97
Sawdesh life insurance	12.33	0.11	7.01	0.06
Sunflower life insurance	62.24	0.55	63.22	0.52
Sunlife insurance	93.30	0.82	51.84	0.42
Trust islami life insurance	37.47	0.33	51.12	0.42
Zenith islami life insurance	30.34	0.27	30.03	0.24
NRB islamic life insurance	29.71	0.26	46.25	0.38
Akij takaful life	13.47	0.12	20.15	0.16
Total	11393.09		12273.49

Underwriting Types: Commonly used in Bangladesh

Medical Underwriting

Medical underwriting evaluates an applicant’s health status to calculate their mortality risk. It includes examining medical history, present health condition, and lifestyle behaviours (Toshmurzaevich, 2020; Maieret al., 2019).

Professional Underwriting

Professional underwriting takes a close look at the level of risk involved for the potential insured (or who the insured person is) regarding the professional activity, and to what degree said activity is heavily dependent on risk (Maieret al., 2019). The role that his profession, experience, qualifications,  working conditions, amenities, environment (date of accident or natural disaster), and business trips play is examined. Some professions carry bigger risks than others, affecting premium rates (Toshmurzaevich, 2020).

Lifestyle Underwriting

Lifestyle underwriting—housing, living conditions, environment, marital status (married/single/elderly), involved in dangerous sports, lifestyle risks, incidents that may contract infectious diseases (including AIDS) due to entertainment (Insurance Development and Regulatory Authority (IDRA), 2023).

This includes personal habits, hobbies, and occupational risks that may affect life expectancy (Insurance Development and Regulatory Authority (IDRA), 2023).

Financial Underwriting

For life insurance, a financial underwriting is a review of the potential insured’s financial status. The financial underwriting is carried out to ensure the life insurance policy (particularly the amount insured and the insurance premium) offered to the proposed insured is in line with that person’s solvency and financial requirements. This is how the real income of the insured can be assessed, and the risk of non-sale of insurance policies can be reduced (Toshmurzaevich, 2020).

Financial underwriting makes sure the amount of life insurance coverage you apply for is appropriate for your income, assets, and financial obligations.

Moral and Criminal Underwriting

Moral and Criminal underwriting–evaluation of the risks associated with the unconditional ties of potential insurance with the criminal world, inclination to fraud or fraudulent insurance, and legitimacy of income (Toshmurzaevich, 2020).

Above all, the main factor behind the underwriting process in life insurance is that it consists of the simultaneous assessment of the level of risk and is performed comprehensively. But, according to risk, medical underwriting is the key stage of risk assessment because if the state of health of the potential insured doesn't fit, the next stages of the underwriting process won't make sense at all.

Key Risk Factors in Life Insurance Underwriting

The underwriting process in Bangladesh is significantly impacted by the following factors.

Demographic Factors

Age

Age is one of the most significant factors in underwriting since most older people are viewed as a higher risk based on natural aging process and related health risks (Maieret al., 2019). Most insurers set age limits for eligibility, and coverage typically is more expensive the older the applicant (Toshmurzaevich, 2020).

Table II summarizes the age category of individuals as perceived by life underwriters and the perceived risk profile associated with it.

Table II. Risk Levels Across Age Groups

Age (Years)	Risk level	Remarks
18–25	Very low risk	Young and healthy, minimal mortality risk.
26–35	Low risk	Generally healthy, but risks slightly increase.
36–45	Moderate risk	Lifestyle factors start influencing risk
46–55	Increased risk	Higher chance of health conditions
56–65	High risk	Significant health risks begin to appear.
66–75	Extremely high risk	Very high risk

Sex

Women tend to live longer than men, and sex plays a role in mortality. Consequently, gender is frequently used in pricing models, with females commonly seeing reduced premiums (Maieret al., 2019).

Health and Medical History

The health status of the applicant is the primary factor in underwriting. Those with pre-existing conditions like heart disease, diabetes, or cancer may be considered higher-risk, which can mean more expensive premiums or being excluded from coverage. Family medical history is another factor, as inherited conditions may raise the risk for future health problems (Toshmurzaevich, 2020).

Body Mass Index (BMI)

Life insurance companies use Body Mass Index (BMI) to measure an applicant's health (Toshmurzaevich, 2020). BMI is calculated by taking a person’s body weight (kg) and dividing it by their height squared (m) (Joramet al., 2017). BMI is used by insurers to set premium rates, determine coverage eligibility, and whether additional medical testing is needed (Maieret al., 2019).

It can be calculated using the formula:

$$\begin{array}{r}BMI=weight\left(kg\right)/height{\left(m\right)}^2\end{array}$$

The risk associated with BMI as perceived by life underwriters in Table III.

Table III. The Risk Associated with BMI

BMI	Category	Risk level	Impact on life insurance
Below 18.5	Underweight	Moderate to High	Might result in slightly higher premiums.
18.5–24.9	Normal weight	Low	Optimal health condition. Standard premium rates apply.
25–29.9	Overweight	Moderate	Increased risk of heart disease, diabetes, and hypertension. Some insurers may charge slightly higher premiums
30–34.9	Obese (Class I)	High	Increased chances of chronic diseases. To be subjected to higher premiums or limited coverage
35–39.9	Obese (Class II)	Very high	Significant health risks. In response, insurers might place higher premiums, demand extra medical testing or cap coverage.
40+	Morbidly obese (Class III)	Extremely high	Insurers may refuse coverage because of serious health risks.

Blood Pressure

Blood pressure is also a major factor in life insurance underwriting (Maieret al., 2019), as it is an important indicator of heart health and overall risk of chronic conditions (Toshmurzaevich, 2020). When insurers underwrite your application,  they dig deep into your blood pressure readings and use them to determine:

Normal blood pressure is usually about 120/80 mmHg (Kannel, 1967). Insurers in Bangladesh typically code blood pressure as shown in Table IV.

Table IV. Blood Pressure Range and Underwriting Impact

No of observation	Blood pressure range	Underwriting impact
1	<120/80	Ideal–Preferred or Super Preferred rates are likely
2	120–129/<80	Still good–May retain Preferred status.
3	130–139/80–89	Mild hypertension–Standard or slightly substandard
4	140–159/90–99	Moderate–Can be rated, particularly if untreated.
5	160+/100+	probably table rated or declined.

Lifestyle and Occupation

Lifestyle factors such as smoking, alcohol consumption, and participation in hazardous activities (e.g., extreme sports) affect underwriting decisions (Toshmurzaevich, 2020). Similarly, occupations that expose individuals to greater risks, such as mining or aviation, often result in higher premiums or policy exclusions. Table V provides a summary of risk levels based on professions.

Table V. A Summary of Risk Levels Based on Professions

Occupation category	Risk level	Example of occupations	Remarks
Low-risk occupations	Minimal risk	Office workers, accountants, teachers.	Safe work environment, minimal health hazards.
Moderate -risk occupations	Medium risk	Drivers, salespersons, factory workers.	Moderate exposure to physical exertion or stress.
High-risk occupations	Increased risk	Construction workers, electricians, and pilots.	Exposure to dangerous environments and physical hazards.
Very high-risk occupations	Severe risk	Miners, oil rig workers, deep-sea fishermen.	Extreme working conditions, high injury and fatality rates.

Sum Assured

The coverage affects the insurer’s maximum payout. The higher the sum assured, the more the risk, and that may determine the decision (Toshmurzaevich, 2020).

Type of Policy

The type of insurance policy also affects the underwriting decision in life insurance. For example, term life policies have a defined duration, while whole life policies are permanent in nature, which influences risk assessments (Toshmurzaevich, 2020).

External Factors

Location-based risks (e.g., natural disaster-prone areas) and economic stability can be considered in underwriting, especially for life policies with large coverage amounts.

Insurer’s Guidelines

Insurers have specific guidelines based on their risk tolerance and business model (Macedo, 2009). These could include:

• Age limits: An insurer might not cover older individuals.

• Health thresholds: Some insurers will consider people with certain health conditions; others have tighter parameters.

• Occupation rules: Hazardous professions can increase premiums or be excluded.

• Financial stability: Part of underwriting, an insurer may evaluate an applicant's financial state to ensure the policyholder can pay the premium.

Socio-Economic Status

Underwriting decisions may also be affected by income levels and financial stability. Prospective policyholders with unstable financial history may be seen as higher risk, as they may find it inappropriate to keep up with premium payments (Joramet al., 2017).

Fraud and Misrepresentation

Many applications include misinformation about income and health status to qualify for lower premiums. Insurance agents also often influence policy issuance by bypassing underwriting rules (Maieret al., 2019).

Life Insurance Underwriting Procedures in Bangladesh

In Bangladesh, the life insurance underwriting process is a series of steps that insurers follow to assess and evaluate a policyholder's risk before providing coverage.

Bangladesh follows the standard underwriting process used globally, but faces some challenges specific to the health insurance sector. The key steps include application submission, risk assessment, and actual risk classification.

Application Submission

Underwriting starts with a customer submitting a life insurance application. The first application is through age, occupation, lifestyle, medical history, and the like.

Risk Assessment

Insurers assess risks based on:

• Medical examinations: Some insurers require a medical test, while others rely on self-reported health data.

• Family medical history: Applicants with hereditary diseases may face higher premiums.

• Occupation and lifestyle factors: Risky occupations (e.g., garment workers, construction laborers) may lead to higher premiums or exclusions.

Actuarial Risk Classification

Applicants are categorized into risk groups:

• Preferred: A small step down from preferred plus, preferred class policyholders enjoy lower premiums due to excellent health, but may have some subtle red flags like higher cholesterol (Macedo, 2009).

• Standard risk: Applicants with an average level of health, or some minuscule health issues, but still represent an acceptable level of risk. Normal individuals qualify for regular premiums (Macedo, 2009).

• Substandard risk: Those with minor health conditions or risky occupations, resulting in higher premiums. Applicants with substantial health problems or hazardous behaviors that increase their chances of filing a claim. A substandard risk in life insurance refers to applicants who pose the threat of death to a life insurer due to their being in poor health, engaging in dangerous occupations, having risky lifestyles, and so on (Macedo, 2009). The underwriter may take various actions, such as charging extra premiums, applying exclusions, imposing liens, or adding specific clauses.

• Declined risk: Applicants with serious health issues may be rejected for coverage. However, consumers might have difficulty obtaining life insurance or could pay exceptionally high premiums or even get denied if they do not meet the minimum health standards for being insured, or work in certain high-risk occupations (Macedo, 2009). Some risky professions are 1. Race Car Drivers 2. Stunt Performers (Stuntmen/Stuntwomen) 3. Test Pilots and Military Pilots 4. Firefighters, 5. Deep-Sea Fishermen 6. Miners (Coal, Gold or Other Hazardous Mining Jobs), 7. Construction Workers (Especially High-Rise and Crane Operators) 8. Oil Rig Workers, and so on.

Underwriting Decision

In life insurance underwriting, the decision-making process involves evaluating the applicant’s risk profile and determining whether to accept or reject an application, as well as calculating an appropriate premium. A life insurance decision equation is essentially a model that factors in various underwriting criteria to arrive at a decision. An underwriter may take various actions, such as accepting or rejecting, or adding extra premium or imposing liens, adding clauses, or reducing the sum assured.

If the risks posed (as perceived by life underwriters) were acceptable, the insurance company accepted the application; if the risks were unacceptable, the application was declined. The three common types of the underwriting process in Bangladesh.

Manual Underwriting Process

A traditional approach where a human underwriter reviews all application details manually to assess risk and make decisions (Aggour & Cheetham, 2005). In manual underwriting, underwriters generally make the following decisions:

• Accept the proposal at the standard rate.

• Accept the proposal with an additional premium.

• Accept the proposal with certain conditions.

• Accept the proposal by reducing the proposed sum assured and term.

• Postpone the proposal for a specified period.

• Decline the proposal.

Simplified Manual Underwriting Decision Equation

A general decision-making model for life insurance can be written as:

• D = Underwriting Decision (accept, reject, adjust premium, modify sum assured & terms, postpone)

• f = (Age, Gender, Health factors, Lifestyle factors, Family medical history, Sum assured, Type of policy, External factors, Insurer’s guidelines)

Numerical Underwriting Process (Score-Based Underwriting)

A scoring system is used, where different risk factors are assigned numerical values. The total score helps the underwriter decide whether to accept, reject, or rate the application (Maieret al., 2019).

A more refined version of this decision equation can be written as:

D = Risk Score- = $\sum _{\mathit{n}\mathit{=}\mathit{1}}^{\mathit{9}}\mathit{\text{WiXi}}$

where Wi = w1,w2,…,w9 are the weights assigned to each variable based on its importance in the underwriting process.

Xi = x1,x2,…,x9 are the variables

In Bangladesh, historical underwriting and claims data is collected, including all the listed variables (age, gender, health, etc.). Table VI shows the weights based on historical underwriting data (the best approach).

Table VI. Determine Weights (Wi)

No of observation	Variable (Xi)	Weight (Wi)	Comments
1	Age	0.15	Strong link with health risks
2	Gender	0.05	Weak/moderate link to risk
3	Health factors	0.25	Strongest predictor of risk
4	Lifestyles factors	0.15	High influence in some regions.
5	Family medical history	0.10	Genetic predispositions matter
6	Sum assured	0.10	Higher coverage, higher scrutiny
7	Type of policy	0.05	Moderate impact on risk profile
8	External factors	0.10	Economic, environmental, etc.
9	Insurer’s guidelines	0.05	Internal policy-driven weighting
Total Weights		1.00

The risk score is a calculated value used to assess whether an applicant falls within an acceptable risk range for life insurance coverage. For example, Mr. Arifur Rahman, a 45-year-old individual, is seeking to purchase an endowment policy with a coverage amount of one crore. He has some existing health issues, but is a non-smoker. His family medical history is considered moderate, and he resides in a coastal area.

Based on the based on historical underwriting data, the associated risk score is showed in Table VII.

Table VII. The Risk Score

No of observation	Variable	Risk score
1	Age	0.6
2	Gender	Male (0.6)
3	Health	0.70
4	Lifestyles	0.30
5	Family medical history	0.20
6	Sum assured	0.80
7	Type of policy	0.70
8	External factors	0.90
9	Insurer’s guidelines	0.20

Risk Score = - = $\sum _{\mathit{n}\mathit{=}\mathit{1}}^{\mathit{9}}\mathit{\text{WiXi}}$

$$\begin{array}{rl}RiskScore& =0.15\times 0.6+0.05\times 0.6+0.25\times 0.7+0.15\\ & \times 0.3+0.1\times 0.2+0.1\times 0.8+0.05\times 0.7\\ & +0.1\times 0.9+0.05\times 0.2\\ & =0.09+0.03+0.175+0.045+0.02+0.08\\ & +0.035+0.09+0.01=0.585\left(outof1\right)\end{array}$$

The risk score ranges from 0 to 1, with 1 indicating the highest risk and 0 the lowest. Based on the risk score, the underwriter makes decisions as outlined in Table VIII, which summarizes the score-to-decision mapping.

Table VIII. Map Score to Underwriting Decision

Score range	Decision
0.0–0.30	Preferred rate
0.31–0.50	Standard rate
0.51–0.60	Rated (extra premium)
0.61–0.70	Accept with certain conditions or reduce the sum assured and term.
0.71+	Decline or Further investigation

Digital (Automated) Underwriting

Uses AI, algorithms, and data analytics to assess risk instantly, often without human intervention. Pulls data from electronic health records, financial sources, etc. (Aggour & Cheetham, 2005). Digital (automated) underwriting is gradually being adopted in Bangladesh’s insurance sector, though its implementation is still in early stages compared to more developed markets. The Insurance Sector Development Project (BSDP), supported by the World Bank, is working to develop an automated underwriting system for two government insurance organizations: Jiban Bima Corporation and Sadharan Bima Corporation.

How do Underwriters Minimize Substandard Risk?

Insurance underwriters manage substandard risks by adjusting the terms of the policy to protect the insurer from excessive losses. The main strategies include:

• Charging Higher Premiums: Underwriters apply a rating system where substandard applicants pay extra premiums based on the severity of their risk.

• Policy Exclusions: Insurers can also exclude cover for certain causes of death, based on risk factors posed by the applicant.

• Limiting Coverage Amount: Insurers may offer a lower death benefit than requested to reduce potential losses.

• Offering graded death benefit policies: Some policies (especially for very high-risk individuals) include a waiting period before full benefits are paid. If the policyholder dies within the first few years, only a partial payout or refund of premiums occurs.

• Requiring medical improvement or lifestyle changes: Some insurers may postpone applications and ask the applicant to improve their health. Lifestyle improvements like quitting smoking, losing weight, or controlling a medical condition may help reduce risk.

• Using reinsurance: Insurers may transfer part of the risk to a reinsurance company, which helps them manage high-risk policies (Pashkova, 2022).

• Imposing liens: Lien in the life insurance refers to a restriction on the full death benefit payout, often used for high-risk applicants. Liens are applied when an insurer wants to limit its financial exposure for applicants with serious health risks. Lien has two types: (a) Constant lien, and (b) Diminishing lien:

• Constant Lien: In a constant lien, a fixed percentage of the sum assured (death benefit) is held throughout the life of the policy. The remaining percentage of the sum assured will now only be paid out to the insured’s beneficiaries.

• Diminishing Lien: A diminishing lien is a high initial lien percentage (restriction) that decreases over time. It is payable although the full sum assured is expected after a certain period. For instance, if the underwriter applies 80% of the lien. The scenario is given in Table IX.

Table IX. 80% Diminishing Lien

Year	Diminishing lien	Amount payable in case of death
1st Year	80% of the sum assured	20% of the sum assured
2nd Year	60% of the sum assured	40% of the sum assured
3rd Year	40% of the sum assured	60% of the sum assured
4th Year	20% of the sum assured	80% of the sum assured
5th Year	NIL	100% of the sum assured

• Adding clauses: In life insurance policies, there are various clauses that define specific terms, conditions, and exceptions. There are some clauses in use in life insurance of Bangladesh, such as minority clause, the pregnancy clause, and so on:

• Minority Clause: The minority clause in a life insurance policy typically refers to conditions related to beneficiaries who are minors (under the legal age of adulthood). It the death of the assured occurs before 18 years of age liability of the insurance company shall be limited to the return of all premiums paid to date, excluding the first year's premium, with 2% interest per annum.

• Pregnancy Clause: The pregnancy clause is a provision found in some life insurance policies that addresses issues related to pregnancy, particularly in the context of exclusions or waiting periods. In the event of death of the assured women taking place after her marriage within the policy term from the date of commencement of risk due to any cause directly or indirectly to first pregnancy, some renowned insurance organizations like Jiban Bima corporation’s liability shall be limited only to refund the premiums received without interest exclusive of first year premium with for extra premiums.

• Currency Restriction Clause: This clause defines the terms related to currency restrictions in the context of the life insurance policy, particularly if the policy involves international elements. If a policyholder lives in a country with a restricted currency, the insurance company may set a clause determining how premiums are paid or how the death benefit is provided in the event of a claim.

• Special Clause: Specific clause or else special clause used by the term special clause is basically a custom or additional provision in a life insurance policy that provides specific benefits or coverage not available in the general policy. Specific coverage may be included through a choice of clauses, e.g., additional coverage for types of accidental death, accidental disability coverage, critical illness coverage, or other exclusionary clauses as war, terrorism, or natural disaster.

Challenges in Life Insurance Underwriting in Bangladesh

Life insurance underwriting in Bangladesh faces numerous challenges:

• Lack of awareness and understanding: A large amount of people at Bangladesh still do not know the benefits of life insurance. The lack of awareness makes it difficult for insurers to educate potential customers and determine their needs accurately during the underwriting process (Toshmurzaevich, 2020).

• Reliance on traditional underwriting methods: Insurers in Bangladesh are still dependent on the traditional, manual process of underwriting. The eventual result is duplicity, time-reliant processing, and balancing examples in decision-making. The lack of automated tools for risk assessment hampers the sector's ability to scale and improve accuracy (Alam, 2019).

• Unhealthy competition: The entry of new life insurance companies into the market, the strengthening of the competitive environment pose new challenges for underwriters, including maintaining customer base while competitors actively implement dumping policies, further improving the quality of insurance services and profitability of insurance business level (Toshmurzaevich, 2020).

• Regulatory gaps: The industry is governed by the Bangladesh Insurance Regulatory and Development Authority (IDRA), but regulation and enforcement gaps have long been hampering the consistency of underwriting practices (Alam, 2019). There are no standard guidelines, which can affect the underwriting process across insurers.

• Lack of reliable health data: Access to medical records enables accurate underwriting. But since there is no national medical database in Bangladesh, insurers have to rely on self-reported health information, raising the risk of misrepresentation (Reza & Iqbal, 2007).

• Insurance fraud and misrepresentation: The insurance sector, especially, suffers from rampant insurance fraud, which takes a considerable toll on the efficiency of underwriting. The bad part is that some clients forge medical records to lose lower their premiums. With few fraud detection tools available, the underwriting process is often more difficult (Maieret al., 2019).

• Older practices of underwriting: Most of the global insurance companies have already adopted in their underwriting both AI (artificial intelligence) and big data analytics. But still, in Bangladesh, most of the insurers have been operating on manual processes (Toshmurzaevich, 2020).

•Shortage of skill underwriters: The shortage of skilled professionals continues to be a major deterrent to prudent underwriting (Toshmurzaevich, 2020; Reza & Iqbal, 2007).

• Limited actuarial talent: There is a significant shortage of trained actuaries and underwriters with global exposure (Toshmurzaevich, 2020).

• Stop backdating of policy commencement dates and premium discount: This measure is a must with immediate effect and likely to save many companies from eating out the capital employed. The commencement date and risk date must be same or backdated for a short period time matching the date proposal registered with the company.

Opportunities for Improvement in Underwriting in Bangladesh

Despite challenges, technology is gradually transforming life insurance underwriting in Bangladesh:

• Digitalization of Underwriting: Combining machine learning capabilities with historical data presents a unique opportunity to change the status quo of underwriting in the life insurance sector. Implementing digital tools can streamline the underwriting process, enhance data accuracy, and improve customer experience (Aggour & Cheetham, 2005; Maieret al., 2019). There are 36 life insurance in Bangladesh. Jiban Bima Corporation and MetLife Bangladesh, have introduced automated underwriting systems. Some life insurance companies are also trying to introduce automated underwriting. Online applications and instant policy approvals are becoming popular.

• Digitization and Insurtech: Emergence of digital onboarding and policy issuance platforms. Integration of mobile payment systems like bKash and Nagad for premium collection.

• Mobile-Based Insurance Solutions: With high mobile phone penetration, insurers offer microinsurance policies through mobile platforms. Digital KYC (Know Your Customer) verification is improving underwriting transparency.

• Wearable Technology and Health Data Integration: Some insurance companies are working with healthtech startups to capture real-time health data. Wearable devices and fitness apps may allow for premium adjustments based on an individual’s state of health.

Recommendations

1. Strengthening Digital Health Databases: Establish a national digital health database that would allow insurers to access verified medical records, cutting misinformation and fraud.

2. Adoption of Artificial Intelligence and Predictive Analytics: AI-based underwriting can help lower errors (Erem Ceylan, 2022) while accelerating policy writing and improving fraud identification (Toshmurzaevich, 2020).

3. Enhancing Public Awareness and Trust: Insurance companies and regulatory bodies should launch financial literacy programs to educate the public on life insurance benefits and claim processes.

4. Policy Reforms for Greater Inclusion: Regulatory authorities must promote simplified underwriting models for low-income segments, which help make life insurance accessible to the masses.

5. Enhancing Skill Manpower: Life insurance organizations and the government can take the initiative to launch training and development programs. Insurers should invest in training and developing their underwriting teams to keep up with global best practices and emerging risk factors. Continuous professional development can help underwriters make more informed decisions (Toshmurzaevich, 2020).

6. Digital Transformation: The adoption of digital tools and automated underwriting systems can significantly improve efficiency and accuracy (Pashkova, 2022). Implementing predictive analytics and machine learning models can assist in evaluating risk factors more precisely and reduce human error (Turgaevaet al., 2023).

7. Public Awareness Campaigns: Insurance companies, along with regulatory authorities, should invest in public awareness campaigns to educate the population about the importance of life insurance. A better-informed public is likelier to trust the underwriting process and actively engage with insurers.

8. Regulatory Reform: The IDRA should implement more robust regulations and guidelines to standardize underwriting practices across insurers. This would ensure greater transparency, consistency, and fairness in the underwriting process.

9. Capacity Building: Develop training programs and certification for underwriters. Partner with universities and international organizations.

Conclusion

Life insurance underwriting in Bangladesh is crucial for ensuring the financial stability of insurers and the growth of the sector. Despite existing barriers, including low awareness, reliance on traditional practices, and regulatory deficiencies, there is ample room for growth. By adopting digital technologies, enhancing public awareness, and strengthening regulatory frameworks, Bangladesh can improve its underwriting processes and provide greater inclusivity and resilience for its life insurance market. With the country continuing to grow, such improvements will help not just insurers, but also provide financial protection to a wider section of society where it's needed. Developing a more resilient and adaptive underwriting system will require close collaboration between insurers, regulators, and technology providers. Through focused reforms, Bangladesh can establish a life insurance industry that is more inclusive and resilient in line with international best practices.

Conflict of Interest

Conflict of Interest: There are no conflicts of interest related to this research.