The Rationality of Distrust: Institutional Credibility and the Property Insurance Gap in Bangladesh (International Journal For Multidisciplinary Research)

Summary

• Residential property insurance penetration in Bangladesh stands at a low 0.33% of nominal GDP.p.1
• In FY24-25, Bangladesh recorded insurance penetration of BDT 0.33% of nominal GDP, representing BDT 18534 crore against a nominal GDP of BDT 5552753 crore.p.5
• A primary survey of 101 homeowners revealed that 75.2% (76 respondents) expressed no interest in purchasing residential property insurance.p.6
• Among homeowners interested in buying property insurance, 75.0% (18 out of 24) reported that trust in insurer claim settlement was a prerequisite.p.10

Key insights

1. Institutional distrust in claim settlement serves as the primary structural gatekeeper preventing property insurance adoption in Bangladesh.p.2
2. Demographic factors such as age, gender, and property status show near-zero point-biserial correlation with insurance purchase interest.p.11
3. Administrative friction and documentation complexity demoralise potential buyers, yielding a high mean discouragement score of 3.54 out of 5.p.9
4. Standard maximum likelihood estimation failed due to complete data separation, requiring Firth's Penalised Likelihood regression to achieve model convergence.p.11
5. Premium subsidies and awareness campaigns remain insufficient to drive adoption as long as underlying institutional mistrust persists.p.1
6. The study proposes a three-pillar policy framework comprising mandatory claims ratio disclosure, digital claims sandbox integration, and formal Takaful regulation.p.1