Exploring the role of insurance sector performance in driving economic growth in Bangladesh: A financial metrics perspective

Year 2025, Volume: 7 Issue: 2, 95 - 106

Md. Merazul Islam Md. Redwanuzzaman Masud Rana

Abstract

This study investigates the impact of insurance sector performance on economic growth in Bangladesh, using quantitative analysis of secondary data from 2009 to 2023. Data were collected from financial statements of insurance companies, reports from the Bangladesh Insurance Association (BIA), regulatory reports from the Insurance Development and Regulatory Authority (IDRA), and macroeconomic data from the Bangladesh Bureau of Statistics (BBS) and the World Bank. Key performance indicators analyzed include Claims Settlement Ratio (CSR), Management Expense Ratio (MER), Return on Investment (ROI), Investment to Total Assets Ratio (IOTAR), and Risk Retention Ratio (RRR), with GDP growth as the dependent variable. Multiple regression and time-series analyses reveal that CSR and ROI positively influence GDP, with CSR showing significant effects and ROI exhibiting marginal significance. Conversely, RRR negatively impacts GDP, suggesting that higher risk retention can hinder economic growth. MER and IOTAR do not show significant effects. The study emphasizes the need for improving claims settlement efficiency, maximizing returns on investment, and implementing effective risk management to support economic stability. The findings offer policy insights for strengthening the insurance sector’s role in fostering sustainable economic growth in Bangladesh.

Keywords

Insurance sector performance, Economic growth, Claims settlement ratio (CSR), Return on investment (ROI), Risk retention ratio (RRR)

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