History Of Insurance Business In Bangladesh:

History Of Insurance In Bangladesh:

The origin of insurance is lost in antiquity. However, there is no evidence that insurance in its present form was practice prior to the twelfth century. A brief chronological historical development of the various branches of insurance is given below:

*Marine Insurance:

Marine is the oldest form of insurance and came first in the list. This type of insurance probably began in northern Italy sometime during the 12th& 13thcentury and gradually the concept was rather transferred to or taken over by the United Kingdom. During the 13th/ 14thcentury the Italian merchants went to UK and along with the merchandise carried with them the trading customs including the concept of marine insurance. Marine insurance as such was not being practiced as a separate specialized entity during that time since it were the merchants who used to transact marine insurance business side by side with their general trading activities

Fire insurance :

After marine insurance fire insurance developed in present form. It had been observed in Anglo-section Guild form for the first time where the victims of the fire hazards were given personal assistance by providing necessaries of life. It15  had been originated in Germany in the beginning of sixteenth century. The fire insurance got momentum in England after the great fire in 1666 when the fire losses were tremendous.

Life insurance :

The third in the list of development is the life insurance business. The earliest policy of which there is a record dates back to 1583. During this period only short term polices were used be issued meaning that only at the death of the life assured during the term period the money was to be paid. On survival nothing was payable. In 1693 Halley introduced the mortality table giving a definite value to risk of death. In 1974, the life Assurance Act was passed in the British parliament requiring the presence of insurable interest before one could effect a life policy on the life of another. All these gradually gave life assurance a sound, systematic and scientific basis as we see in the present day.2.3 Development of Insurance in Bangladesh Insurance is not a new idea or proposition to the people of Bangladesh

Current pattern of Insurance in Bangladesh:

After the emergence of the People’s Republic of Bangladesh in 1971, the government nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95.By virtue of this order, all companies and organization transacting all types of insurance business in Bangladesh came under this nationalization order. This was followed by creation of five insurance companies in the life and non-life sector. Further changes were brought on 14th May,1973. Through the enactment of Insurance Corporation Act VI, 1973 which led to creation of two corporations namely Sadharan Bima Corporation for general insurance and, Jiban BimaCorporation for life insurance in Bangladesh. In other words Sadharan Bima Corporation (SBC)emerged on 14th May, 1973 under the Insurance Corporation Act (Act No. VI) Of 1973 as theonly state owned organization to deal with all classes of general insurance & re-insurance business emanating in Bangladesh. Thereafter SBC was acting as the sole insurer of general Insurance till 1984. Bangladesh Government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. The private sector availed the opportunity promptly and came forward to establish private insurance companies through promulgation of the Insurance Corporations (Amendment) Ordinance (LI of 1984) 1984.The Insurance Market in Bangladesh now consists of two state-owned corporations, forty three and seventeen private sector general & life insurance companies respectively, a total of 62insurance companies.

Thus the insurance sector in Bangladesh has grown up substantially and deepened remarkably with number of companies in both life and general segments. With the expansion of size of the insurance market, the volume of assets of the industry has also increased substantially. SBC is entitled to 50% of public sector business. Insurance Corporation (Amendment) Act 1990 provides that fifty percent of all insurance business relating to any public property or to any risk or liability appertaining to any public property shall be placed with the SBC and the remaining fifty percent of such business may be placed with this corporation or with any other insurers in Bangladesh. But for practical reason and in agreement with the Insurance Association of Bangladesh SBC underwrites all the public sector business and 50% of that business is distributed among the existing 43 private general insurance companies equally under National Co-insurance Scheme. In respect of reinsurance, the same act provides that fifty percent of a company’s reinsurance business must be placed with the Sadharan Bima Corporation and remaining fifty percent may beer insured either with this Corporation or with any insurer in Bangladesh or abroad. At present, nearly all the company’s place 100% of their reinsurance business with the SBC.

Role of private insurance companies in the economic development of Bangladesh:

—  Formation of capital & increase of investment: Insurance companies receive premiums from insured persons. These premiums increase national capitals. By investing the se capitals, national productions increase.

—  Reduce of hindrance of risk: every sorts of business consists of risks. These risks are more hazardous in Bangladesh. Insurance companies minimize these risks by giving privileges on loss.

—  Maintenance of national wealth: insurance companies not only secure financial facts, but also influence people to take necessary steps to avoid risks.

—  Distribution of risks: insurance companies deal with lots of insured people. So risks are being distributed among them.

—  Extension of business: By taking all uncertain business risk insurance companies extended the field of business in our country. Insurance gives the assurance of indemnity and help to collect the capital to lunch a new business and expand the existing business.

—  Increase of awareness: As the maximum people of our country are illiterate so they have not much knowledge about the future life and what will do to enhance the living standard. Different types of advertisement, publicity and others awareness activities of insurance company which helps to increase the awareness of general people

v Problems And Prospects Of Insurance In Bangladesh are:

PROSPECTS :

Higher GDP :

The GDP of our country is increasing than the previous year’s which results in increase of per capita income. So this growing GDP and income holds bright prospects for insurance companies. The major problem is the incapability of our  people to pay the premium charged by the insurance companies any danger

Increased population:

               There is a big opportunity lies ahead for the insurance companies as the population of our country are increasing day by day. Although most of people of our country live under extreme poverty level and want to avoid insurance policy number of potential policy holders in Bangladesh is growing with growth of the population.

New business’s individual insurance:

There are so many new businesses starting every day and manufacturing sector is booming with global demand. Every business is insured under an insurance company to protect its company from any kind of accident.

Developing mass awareness about insurance:

People are now much more conscious about their safety. So they are encouraged to take an insurance policy for making their life free from any unexpected occurrence .Increase in literacy rate is helping predominantly to create awareness among the problem regarding taking insurance policy.

Problems

1.   LOW PER CAPITAL INCOME: Poor economic condition is considered to be the main reason for poor life insurance penetration in Bangladesh. The country has a very low per capital income and over 50% of our total population lives below the poverty line. Inability to save or negligible savings by a vast majority of population kept them away from the horizon of life insurance.

2.   POOR KNOWLEDGE OF AGENTS: The marketing of insurance is greatly hampered in the remote village of Bangladesh where the agents are appointed from respected locality. This is because; educated young people are seemed to be reluctant to become insurance agents. Such agents cannot play efficient role in convincing a prospective policyholder.

3   ILLETERACY: Mass illiteracy is another factor that adversely affects the marketing of insurance. About 70% of the population is floating in the sea of ignorance. Illiteracy leads one to think that the insurance is deception; it is no value in life. They cannot think rationality because they do not know what is insurance and what its importance as security for future.

4.   RELIGIOUS SUPERSTITION: Religious attitude of the people also stands against efficient insurance. The religious people believe that the future is uncertain, it is in the hand of Allah and they do not think it necessary to buy life insurance policy for them.

5.   LOW AWARENESS: Insurance awareness is poor. Agents are not skilled enough. These agents cannot perform their job properly to make the people aware of life insurance.

6..   LOW SAVINGS :People of Bangladesh have a very small saving potentially and thus have less or no disposable income. Almost the whole of the income is exhausted in the process of maintaining the day-to-day life. Thus they are left with little amount, which may not deemed to sufficient for the payment of premiums. This factor discourages many to buy life insurance policy.

8.   SHORTAGE OF FUND : Most of the policyholders cannot continue their policies owing to price spiral and shortage of fund.

ORGANISATION STRUCTURE OF SADHARAN BIMA CORPORATION

Under the statute, Sadharan Bima Corporation is run by a Board of Directors consisting of 7 members. The chairman and the directors of the Board including the Managing Directors are appointed by the Government. The Managing Director, being the chief executive, conducts and manages the affairs and business of the corporation in accordance with the provisions of the Act, regulations, Government instructions and the resolutions of the Board. He is also guided by the sound commercial principles and business practices.

The present organization structure of Sadharan Bima Corporation is given below:

—  1.Managing Director- Chief Executive

—  2. General Manager

—  3.Dupty General Manager

—  4.Asstt.General Manager

—  5. Manager

—  6. Deputy Manager

—  7. Asstt. Manager

—  8. Junior Officer

—  9. Office Staff

—  10. Total strength

CHART NO. 01

 ORGANISATION STRUCTURE OF JIBON BIMA CORPORATION

The Jiban Bima Corporation (JBC) is the lone state-owned life Insurance company in Bangladesh, which started its maiden journey on May 14,1973 with assets and liabilities worth TK. 15.70 crore (157 million) of defunt 37 life Insurance companies. Since its inception, JBC is working among the people of Bangladesh with two basic objectives: firstly, to cover the risks and raise savings habits among the people and secondly, create funds for the country’s economic development through innovative life insurance schemes.
Meanwhile, the life fund of Jiban Bima Corporation has shot up to TK. 988.35 crore (9.9 billion), up to the year 2008, which was only TK. 21.83 crore (218.3 million) in 1973. JBC has paid TK. 1580.9 crore (15.81 billion) against various claims, the highest such payments in the country’s life Insurance business. The JBC’s investment has reached TK. 909.1 crore (9.10 billion) from only TK. 19.7 crore (197 million) in 1973. The JBC has the largest network all over the country with 6 regional, 10 zonal, 64 sales and 365 branch offices.

ORGANIZATION OF JBC

 

CHART NO. 02

FUNCTIONS OF SBC:

1.  Reinsurance Services:
Sadharan Bima Corporation in its role as a re-insurer has lent support to the private insurance companies in Bangladesh in a big way. In view of the huge networth and retention capacity, SBC has accepted both treaty and facultative businesses from the private insurance companies.
SBC also accepts reinsurance business from overseas market through its intermediaries and as well as directly.

 2. Industrial development through equity participation:
   SBC plays a vital role in the industrial development of       Bangladesh. SBC is the sponsor shareholder of Investment Corporation of Bangladesh, Industrial Development and Leasing Company, National Tea Company Limited, National Housing Finance and Investment Ltd, Aramit Ltd, Central Depository BD Ltd.etc. SBC has huge amount of fixed deposit reserve with various commercial banks in Bangladesh.

3.Risk Improvement Services:

    SBC would always endeavor to deliver the best customer services for the fulfillment of insurance, reinsurance and risk management needs and problems to the insurance market in Bangladesh. On the other hand, SBC provides risk improvement services to its valued clients through Pre-underwriting inspection services. SBC has the opportunity to take the necessary help and advice from the foreign reinsurer regarding risk improvement techniques.

4. Human resources development for insurance industry:
To develop the human resource for the insurance industry in Bangladesh. SBC has arranged professional training for its officers & staffs both within the country and abroad. SBC also arranged professional training for the officers of the private insurance companies operating in Bangladesh.

FUNCTIONS OF JBC:

Schemes 

ž  Anticipated Endowment Insurance With Profit Plan-05

ž  Anticipated Endowment Insurance Without Profit Plan-25

ž  Child Endowment Insurance Without Profit Plan-47

ž  Child Protection Policy With Profits Plan-09

ž  Double Protection Insurance With Profit Plan-10

ž  Endowment Assurance With Profit Plan-03

ž  Endowment Assurance Without Profit Plan-23

ž  Grameen Jiban Bima With Profit Plan-91

ž  Granted Bonus Endowment Insurance Plan-48

ž  Group Endowment Assurance

ž  Group Term Insurance

ž  Joint Life Endowment Insurance With Profit Plan-08

ž  Marriage Endowment Policy Plan-07

ž  Money Back Term Insurance Policy Plan-50 (Without

Online Service:

}  Jiban Bima Corporation (JBC) is giving the policy information to the Policy Holders through online. Under this service, the Policy Holders will get the policy information, bonus information, paid-up information and payment history. The Policy Holder will be able to change their mailling address under this service. Only the registered Policy Holders will get Online Service.

    

Steps for Registration:-

}  Open web site of Jiban Bima Corporation using www.jbc.gov.bd.

}  In the web site, there is a area for Policy Holders named Only for Policy Holder. Under this there are two buttons Login and Registration.

}  Double click on Registration button. You will get a Subscription form. After filling up the related information, click on Submit button.

}  Within 72 hours you will get accepted or rejected mail. If the submitted information is correct, you will get accepted mail with User ID and Password that is used for viewing information related to Online Service.

REFERENCE

}  Risk of Insurance- Azizul Huq Chaudhury

}  Insurance- M.N. Mishra

}  www.sadharonbimacorporation.com

}  www.google.com (Search Engine)

}  www.wikipedia.com

}  www.jbc.gov.bd

}  www.fareastislamilife.com

}  www.popularlifebd.com

}  www.nlicbd.com

}  www.primeislamilife.com

}  www.sandhanilife.com