Course Title:
Principles of Insurance & Takaful
Course Code:
FIN-4704
 Course Teacher:Md. Azizur Rahman
Lecturer ,DBA
International Islamic University Chittagong,
DC
We now…….
Noor Hossain Imran
E-mail: nimranbd@gmail.com
Out line of our presentation
01. History of Insurance In Bangladesh
02. Present Pattern of Insurance In Bangladesh
03. Role of Private Insurance Companies
04. Problems & Prospects of Insurance Business In
Bangladesh.
Marine is the oldest form of insurance, which was
introduced in Northern Italy sometime between
the 12th and 13th century. But the insurance
business got in late 17th century.
Insurance is not new business in Bangladesh.
Almost a century back, during British rule in India,
some insurance companies started transacting
business, both life and general, in Bangladesh
Insurance business gained momentum in East
Pakistan during 1947-1971, when 49 insurance
companies transacted both life and general
insurance schemes. These companies were of
various origins like British, Australian, Indian, West
Pakistan and local
Ten insurance companies had their head offices in
East Pakistan, 27 in West Pakistan, and rest
elsewhere in the world. These were mostly limited
liability companies.
The Government of Bangladesh nationalized
insurance industry in 1972 by the Bangladesh
Insurance (Nationalization) Order 1972.By virtue of
this order, saves and except postal life insurance and
foreign life insurance companies, all 49insurance
companies and organizations transacting insurance
business in the country were placed in the sector
under fie operations.
These operations were :the Jatiya Bima
Corporation,Tista Bima Corporation,Karnafuli Bima
Corporation,Rupsa Jibon Bima Corporation and
Surma Jibon Bima Corpporation.The Jatiya Bima
The Jatiya Bima Corporation was an apex
corporation only to supervise and control the
activities of the other insurance corporations
Tista and Karnafuli Bima Corporation were for
general insurance and Rupsa and Surma for life
insuance.The specialist life insurance companies or for
a life portion of a composite company joined the
Rupsa and Surma corporations while specialist general
insurance companies or the general portion of a
composite company joined The Tista and Karnafuli
corporations.
The basic idea behind the formation of four
underwriting corporations, two in each main branch of
life and general that Act 1973 two: the SADHARAN BIMA
CORPORATION for general business, and JIBAN BIMA
CORPORATION for life business.
The postal life insurance business and the life insurance
business by foreign companies were still allowed to
continue as before .In reality, however, only the
AMERICAN LIFE INSURANCE COMPANY.
After1973, general insurance business became the
sole responsibility of the Sadharan Bima Corporation.
Life insurance business was carried out by the Jibon
Bima Corporation, the American Life insurance
Company, and the Postal Life Insurance ,until1 994
The insurance corporations Act1973 were amended
in 1984 to allow insurance companies in the private
sector
The Act of 1984 made it a requirement for the private
sector insurance companies obtain 100% reinsurance
protection from the Sadharan Bima Corporation.This
virtually turned Sadharan Bima Corporation into a
reinsurance organization
Underwrite both public and private sector insurance
business in competition with the Sadharan Bima
Corporation, and The government modified the
system through promulgation of the Insurance
Corporation (Amendment) Act1990.The changes
allowed private sector insurance companies to
underwrite 50% for public50% with any reinsure of
their choice, at home or aboard, keeping the remaining
for placement with the Sadharan Bima corporation.
Summary
East Pakistan during 1947-1971
The Government of Bangladesh nationalized insurance
industry in 1972 by the Bangladesh Insurance (Nationalization)
Order 1972.
49 work in the Jatiya Bima Corporation,Tista Bima
Corporation,Karnafuli Bima Corporation,Rupsa Jibon Bima
Corporation and Surma Jibon Bima Corpporation.The Jatiya Bima
The Jatiya Bima Corporation was an apex corporation only
to supervise and control the activities of the other insurance
corporatio
The postal life insurance business and the life insurance
business by foreign companies were still allowed to continue
as before .In reality, however, only the AMERICAN LIFE
INSURANCE COMPANY
Tista and Karnafuli Bima Corporation were for general insurance
Rupsa and Surma for life insuance
two in each main branch of life and general that Act 1973 two:
the SADHARAN BIMA CORPORATION for general business, and
JIBAN BIMA CORPORATION for life business.
After1973, general insurance business became the sole
responsibility of the Sadharan Bima Corporation. Life insurance
business was carried out by the Jibon Bima Corporation, the
American Life insurance Company, and the Postal Life Insurance
,until1 994
The insurance corporations Act1973 were amended in
1984
underwrite in private sector insurance 1984 100% Act1990 50%
After the emergence of the People’s Republic of Bangladesh in
1971, the governmentnationalized the insurance industry along with
the banks in 1972 by Presidential Order No. 95. Insurance business in
Bangladesh came under this nationalization order.
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 Insurance Market in Bangladesh now consists of two stateowned 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.
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 be reinsured 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
•Formation of capital & increase of investment: Insurance
companies receive premiums from insured persons. These
premiums increase national capitals. By investing these
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 launch 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.
•Increase of employment facilities: Insurance companies
help to expand the business by providing capital and
reducing risk. That’s why in this business organization
there are lot of employment opportunity are created.
•Increasing national income: Insurance companies
directly help to increase national income by developing
business sector and create employment opportunities in
our country.
Problem and prospect of insurance business in Bangladesh
1.Weak Economy: The development of insurance
business dependable to the development of economy
of deferent sectors. But in Bangladesh there are many
lacking to the development of economy.
2.Lack of capital: It needs to establish many branches
in different country. It requires lots of capital. But lack
of capital in our country.
3.Lower Rate Of Savings: In our country the average
income of our people is very low. Life insurance and
other insurance are mostly dependable on the saving
of the people. So it creates the Problems.
4.Weakness in Industrial Sector: BANGLADESH is an
agricultural country; the industrial sector of their
country is poor.
6.The Wrong Service-Quality Standards : arises when
there is a discrepancy between what managers
perceive that customers expect and the actual
standards that they (the managers) set for service
delivery.
7.The Service-Performance Gap: Organizational
policies and standards for service levels may be in
place, but is front line staff following them? A very
common gap in the service industry is the difference
between organizational service specifications and
actual levels of service delivery.
8.When Promises Do Not Match Delivery: Customers
perceive that organizations are delivering low-quality
service, because different between promise level and
delivery level.
9.The discrepancy between customer expectations
and their perceptions of the service delivered
10.The discrepancy between customer expectations
and employees’ perceptions: as a result of the
differences in the under standing of customer
expectations by front- line service providers.
Prospect………….
1.
Spread of insurance education: To make the
insurance business people should be made aware
about the helpless & necessity of insurance. For this
purpose effective steps must be taken to speared of
insurance education
2. Publicity & increase of awareness: Mass publicity
activities are very essential to overcome from
unwillingness wrong idea, doubt & unbelief of the people
this country.
3. Increase of training facilities: To continue the
insurance business effective
4. Formulation of effective Principles: Long term
formulation of effective principles is compulsory to
continue the insurance business successfully.
5. Uphold the interest of policy holder
6. Importance to the economic development:
Insurance business is depending on the development of
the different sector of economic .
7. Modernization of insurance Business: In this country
for developing insurance business modernization of
insurance business and necessity new ideas must be
added in this sector.