INSURANCE IN BANGLADESH

BACKGROUND

Bangladesh has long history of insurance traced back to British rule.Under the Insurance Corporation Act VI 1973, two corporations were

established. Sadharan Bima Corporation Jiban Bima Corporation

In 1984, government allowed private sector in insurance industry.

BACKGROUND

Year Events1947-1971 49 Insurance companies from various nations transacted

1972 The insurance industry was nationalized.

1972

49 insurance companies placed into public sector under these 5 insurance corporation.

Jatiya BimaCorporation, Tista Bima Corporation Karnafuli Bima Corporation Rupsa Jibon Bima Surma Jibon Bima Corpporation

1973 Insurance Corporation Act VI, 1973. Followingthe Act, in place of five corporations the government formed two:

Sadharanbima corporation Jiban bima corporation1984 By amendment of Act, private insurance companies were allowed to

operate1985-1988 16 private companies established.

1996 8 private companies registered.1999-2001 18 companies were established.

PRESENT SITUATION

Private companies providing almost all insurance services excluding Crop Insurance & Export Credit Guarantee Insurance.

According to the statistics of Bangladesh Insurance Association (BIA), the total premium income of private sector life insurance companies rose from Tk. 62,429 million in 2013 to Tk. 66,879 million in 2014.

The gross premium income of non-life private sector insurance companies increased from Tk. 21,038 million in 2013 to Tk. 22,670 million in 2014 with a growth rate of 7.76%

*Source: Insurance Development & Regulatory Authority Bangladesh

INSURANCE ACTS

The Insurance Act 1938The Insurance Rules 1958The Insurance (Amendment) Ordinance 1984Insurance Regulations 1990Insurance Ordinance 2008Insurance Act 2010Insurance Development and Regulatory Authority Act 2010Asian Reinsurance Corporation Act 2013

INSURANCE COMPANIES IN BD

77 Insurance Companies29 Private life

insurance45 Non life insurance

1 Foreign Insurance2 State owned insurance

LIST OF LIFE INSURANCE COMPANIES IN BD

o American Life Insurance Companies

STATISTICS

LIFE AND NONLIFE INSURANCE PREMIUMS, 2014(U.S. $ millions)

*Source: Swiss Re, sigma, No. 4/2015.

  Direct premiums written

Life premiums 966Nonlife premiums (1) $349Percent of total world

premiums0.03%

Total premiums $1,315

STATISTICS

Leading nonlife insurance companies  Gross written premiums

Company BDT Mn USD MnSadharan Bima Corporation  2,212.0 27.0

Rupali Insurance Co Ltd  759.5 9.3Reliance Insurance Limited  1,486.3 18.2

Pragati Insurance Ltd  1,151.3 14.1Pioneer Insurance Co Ltd  1,701.3 20.8Phoenix Insurance Co Ltd  614.6 7.5

Green Delta Insurance Co Ltd  2,601.4 31.8Eastland Insurance Co Ltd  650.1 7.9Continental Insurance Ltd  451.2 5.5Bangladesh Gen Ins Co Ltd  591.5 7.2

Source: Axco Insurance Information Services.

STATISTICS

Leading life insurance companies  Gross written premiums

Company BDT Mn USD MnMetLife Alico 16,687.7 203.9

Fareast Islami Life  7,031.3 85.9National Life  7,025.1 85.8Popular Life  6,617.8 80.8Delta Life  5,085.6 62.1

Meghna Life  4,011.8 49.0Jiban Bima Corporation  3,199.9 39.1

Sandhani Life  2,249.0 27.5Prime Islami Life  2,071.3 25.3Progressive Life  1,714.1 20.9

Source: Axco Insurance Information Services.

SADHARAN BIMA CORPORATION

Established on 14th May, 1973 under the Insurance Corporation Act VI.Functions

Insuring public and private property risks. Liability insurance coverage. Reinsurance of the risk underwritten by private non-life insurers. Risk Improvement Services. Weather Index Based Insurance Solutions Industrial & Human Resources Development for Insurance Industry.

JIBAN BIMA CORPORATION

State-owned life Insurance company in Bangladesh, established at May 14, 1973.Functions

JBC offers 21 different types of life insurance schemes.Web ServicesOnline Premium PaymentBonus InformationTax Benifits/ RebatesBanglalink Insurance Pay Service

PROCEDURES OF FORMATION

Application to Chief

Controller of

Insurance

Forward to Ministry of Commerce & Cabinet Committee

Application to RJSC

Permission of Security

Exchange Commission

ROLE OF PRIVATE INSURANCE COMPANIES

Underwrites 50% of public property. Contribute in GDP Formation of capital & increase of investment Reduce of hindrance of risk Maintenance of national wealth Extension of business Increase of awareness Distribution of risks

PROBLEMS OF INSURANCE BUSINESS IN BD

Social Problems1. Less public awareness2. Centralization

Economic Problems1. Weak economy2. Poor financial position of the insurance companies2. Weakness in industrial sector3. Higher cost of business4. Problems of economic bases and effective principle

PROBLEMS CONTINUES……

• Political Problems:1. Political instability2. Lack of supervision from the government3. Problem of planning and administration(Govt. changes, planning and

administrative measures change)Legal problems:1. Too much complexity(A great number of rules and regulations which must be compelled by the insured person)

OTHER PROBLEMS......

• Lack of capital Delay in payments of claims• Lack of skilled staff Shortage of fund• Limitations of insurance knowledge Lower rate of savings• Lack of training Religious superstition• Insufficient service Red tapism to obtain compensation• Lack of exposure Low return• Absence of business ethics Lack of advertisement• Lack of information technology Discriminatory attirude• Traditional method Lack of confidence

SOLUTION

• Spread of insurance education• Publicity and increase of awareness• Increase of training facilities• Formulation of effective principles• Uphold the interest of policy holder• Importance to the economic development

SOLUTION

• Development of management • Modernization of insurance business• Government monitoring system• Modernized the insurance acts and ordinance• Emphasize on other sector development

WHY PEOPLE DO NOT DEMAND INSURANCE

The prospects fearsUnwillingness to change his buying habits

Dislike for some feature of the policyIncomplete understanding of what insurance will do

Fear of general business conditionsPersonal reason

Insurance is not cheapLack of trust and awareness

The road ahead

POTENTIAL OF INSURANCE BUSINESS IN BD

Increased populationHigher GDPNew business’s individual insuranceDeveloping mass awareness about insuranceMicro insuranceHealth & Marriage insuranceScope in non-traditional sectorScope of investment Development of new policyAgriculture & Education sector