Insurance Report on Problems and Prospects of General Insurance in Bangladesh

Internship Report on
Problem and Prospect of general insurance A case study of Eastland

Insurance Ltd.
Problems and Prospects of General
Insurance in
Bangladesh
Submitted by
WWW.ASSIGNMENTPOINT.COM
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CHAPTER
# 1
INTRODUCTION
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1.0 Introduction
Insurance is essentially a collective endeavor under which a large number of individuals
agree to share the loss which a few of them would incur in future. This means insurance
protects those unfortunates who suffer heavy financial impact of anticipated misfortunes
by distributing the loss among many who are exposed to the risk of similar misfortunes.
General insurance is a type of insurance in which one person makes regular payments so
that he receives a sum of money different types of accidental loss. The process insurance
has been evolved to safeguard the interests of people from uncertainty by providing
certainty of payment at a given contingency. The insurance principle comes to be more
and more used and useful in modern affairs. Not only does it serve the loss / damage of
any losses it also provide financial benefits to the individual for death or at the end of a
time period .
1.1 Background of the study
This report has been prepared as requirement of the insurance and risk management
course. The report was based upon the overall insurance companys problems and course.
The report was based upon the overall insurance companys problem and prospects in
Bangladesh .I was duly approved by our course teacher Md. Mujibul Houque. This report
will help us to know the insurance business problem and prospects
1.2 Objective of the study
The key objectives of the studies are to identify the problems and prospects of the
General insurance in Bangladesh. The other objectives of this study are to generate some
suggestions to overcome the problems identified so as to ensure smooth functioning and
growth of insurance. To know about the best practices of insurance of Bangladesh is also
another objective of this study.
1.3Literature Review
Uninsured risk leaves poor households vulnerable to serious or even catastrophic losses
from negative shocks. It also forces them to undertake costly strategies to manage their
incomes and assets in the face of risk, lowering mean incomes earned. Welfare costs due
to shocks and foregone profitable opportunities have been found to be substantial,
contributing to persistent poverty (Morduch, 1990; Dercon, 1996, 2004; Rosenzweig
and Binswanger, 1993; Elbers et al., 2007, Pan, 2008). Insurance has the potential to
reduce these welfare costs. By offering a payout when an insured loss occurs, it avoids
other costly ways of coping with the shock leaving future income earning opportunities
intact. Furthermore, the security linked to being insured can be expected to allow the
avoidance of costly risk-management strategies with positive impacts on poverty
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reduction. This literature review provides an overview of the current state of research on
Insurance identifies key knowledge gaps and develops a conceptual framework to inform
and organize the research agenda of the insurance Facility in the area of impact
evaluation, demand and supply issues. For the purpose of this review, Insurance is
defined in line with Churchill (2006) as an insurance that (i) operates by risk-pooling (ii)
is financed through regular premiums and is (iii) tailored to the poor who would
otherwise not be able to take out insurance. The main focus of the literature review is on
voluntary insurance1. Other ways through which individuals or the public sector can
insure against risks, such as precautionary savings, access to credit or through public
safety nets are therefore not treated in detail in this review. However, this leads already to
one key omission in the existing literature: generally, the benefits of insurance are not
compared to alternative mechanisms that may provide insurance- like benefits, possibly
in a more cost-effective way, such as savings, consumer or emergency credit, and public
safety nets.
Organization and private individuals take of insurance to protect them against possible
financial losses caused by a range of causes or unexpected factors. This means that
should the worst happen and these losses occur, they will receive financial compensation
from their insurance company. Therefore, insurance provides companies with financial
protection in the event of loss that could influence their operations. Individuals unwilling
or unable to handle their own funds have been pleased to find and outlet for their
investment in insurance policies. Endowment policies, multipurpose policies, deferred
annuities are certain better form of investment. An individual from his own capacity
cannot invest regularly with enough of security and profitability.
Many of the existing literatures reviewed above clearly indicate that the insurance in
Bangladesh has not yet stood on a solid footing. Many reasons are there for the
backwardness and underdevelopment of insurance in Bangladesh
In a journal Assistant professor of DIU mentioned some diversified problem and
prospect of insurance in Bangladesh, there he mentioned that our main problems of
insurance are lower per capita income , poor knowledge of agents , illiteracy , religious
superstition , lower awareness , low savings , lack of continuity, shortage of fund , lack of
remainder, negligence policy holder, restriction , poor services to consumers, image , red
tapism to obtain compensation , lack of new products , low return , traditional
marketing ,traditional insurance act, restrictive insurance act , nature of intangibility ,
inadequate training, advantage of psc, discriminatory attitude, lack of reliability, lack of
advertisement, inability to solve the problems, low quality service, dearth of underwriter,
lack of confidence, inadequate government support, undue promotion , fabricated
information give by the agents, limited operational areas, licensing difficulty, rigid
premium, backwards of mentality.
In an interview with daily sun, Sheikh Kabir Hossain , Chairman of the BIA said in
reply to the question about insurance sector that The insurance sector can play an
important role in the growth of the economy of the country as it can accelerate the
development process. The sector in other countries is much stronger with policy supports
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as
it
can
ensure
a
sustainable
development
of
the
economy.
The industry in our country lacks attention of the policy makers and the previous
governments neglected the sector, but the present government under the leadership of
Prime Minister Sheikh Hasina has given much attention to the insurance sector.
He said mentioned various thing to reply the question of it current condition of the
insurance business and highlighted some problems There are several problems in the
sector. Many of the companies are facing problems in issuing initial public offerings
(IPOs) as the paid-up capital of the companies has been raised under the new Insurance
Act. He also said that In the past, the paid-up capital for the general insurance
companies was Tk 150 million, which has now been increased to Tk 400 million, while
that for life insurance companies has been raised to Tk 300 million from Tk 75 million. It
is not possible for some of the new companies to raise their paid-up capital to the set
level and so they will face setback for going public. But the provision is not applicable
for the previously registered (SEC) have agreed to consider the case on condition. As per
the consent of the authorities, the insurance companies with previous level of paid-up
capital would be able to release IPO with the condition that they will only offer stock
dividends and bonus shares but not any cash dividends, so that their paid-up capital can
increase. The companies would be able to offer cash dividends after their paid-up capital
is increased to Tk 400 million for general insurers and Tk 300 million for life insurers.
Mr Kabir Hossain said abut its size and its growth that:
The size of the market for life insurance as of December 31, 2009 amounts to Tk
105.153 billion while that for general insurance to Tk 12.764 million. The investment of
the sector market in life insurance marked a 24 percent growth in 2009 compared to that
in 2008, while 12 percent in general insurance. The premium of 17 life insurance
companies totaled to Tk 45.957 billion in 2009 while the amount was Tk 35.97 in 2008,
reflecting a 27 per cent increase. The premium of 43 general insurance was Tk 13.80
billion in 2009, compared with Tk 12.58 in the previous year.
Here daily sun asked about the reason of peoples reluctance of insurance business and its
claim , in reply he mentioned that the insurance sector still lacks of peoples confidence.
Although there are guidelines for clearing the claims, but still people face sufferings as
the
process
is
much
lengthy
and
requires
more
time.
This is because of the procedure, as most of the insurance company re-insures with public
sector companies and as per the provision, the re-insurance companies conduct
monitoring of the accidents and surveyors of the re-insurance company prepare the
report. But, in most cases, the people do not inform the company on time and, for
example for car insurance, while the accident takes place, the owner of the car brings the
vehicle
to
the
garage
and
inform
the
insurance
company.
But the surveyors are supposed to visit the damages in the spots, which create problems
with the claim. Delay in paying claims happens as the surveyors need time to complete
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the procedure and the report needs to be approved by the SBC. We are trying to simplify
the procedure and it would be possible through digitizing the system.
If private companies come forward for re-insuring, then it would be possible to ease the
process. We are trying to encourage the private companies for re-insuring and they can do
it in joint venture. Some of the local insurance companies are re-insuring with foreign
firms
on
a
50-50
basis.
1.4 Methodology of the Study

To prepare the thesis both primary and secondary methods are use.
Secondary sources of data have been used for data requirement of the thesis. To collect
the secondary sources of data, internet and different articles published in the journals and
magazines have been used
Secondary sources are:
Text book s on insurance
Insurance journals
Reference books on insurance
Annual report of insurance
Internet books
Annual report of insurance
Primary Sources:
The primary data were collected through interview with aid of an interview schedule. A
total number of 10 respondents randomly selected were interviewed. The sample
respondents comprised of 2 insurers from life insurance, 5 policyholders and 3 nonpolicyholders.
All the data have been analyzed and compared based on Eastland Insurance Company
Ltd.
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1.5 Rational of the study

Insurance is a very significant risk handling mechanism and it contributes a key part of
financial infrastructure of a country. It not only indemnifies the policyholders at the
occurrence of an insured event but also plays a pivotal role in saving and investment.
Therefore, a sound environment of insurance business is indispensable for a country like
Bangladesh where the rate of saving and investing are very scanty. To guarantee a sound
field of insurance business, the problems retarding the growth of insurance business
should be identified and solved. In recent time there is no mentionable study on the
growth and development in the General insurance of Bangladesh. Although this has a
bright prospect for our country. To consider this situation it is our right attempt in the
present context. This will help to identify the problems of General insurance in
Bangladesh, as well as the remedial measure for the problems.
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CHAPTER#2
GENERAL CONCEPT OF INSURANCE AND HISTORY OF

INSURANCE
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2.1 Concepts of insurance in brief

Insurance is a co-operative device to spread the risk over a number of persons who are
insured against the risk to share the loss of each member of the society on the basis of the
society on the basis of probability of loss to their risk.
Insurance is a contract whereby a certain sum of the money as a premium is paid in
consideration of the insurers incurring the risk of paying a large sum upon a given
contingency.
2.1 .1Principles of insurance
Insurance is based upon the two following principles:
2.1.2 Principles of co-operation
In insurance the loss is shared by a group of people who are willing to co-operate.
2.1.3 Principles of probability
The loss in the shape of premium can be distributed only on the basis of theory of
probability. The probability tells what the chances of losses are and what will be the
amount of losses.
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2.2 History of Insurance

History of insurance refers to the development of a modern laws and market in insurance
against risks. In some sense we can say that insurance appears simultaneously with the
appearance of human society. We know of two types of economies in human societies:
money economies (with markets, money, financial instruments and so on) and nonmoney or natural economies (without money, markets, financial instruments and so on).
The second type is a more ancient form than the first. In such an economy and
community, we can see insurance in the form of people helping each other. For example,
if a house burns down, the members of the community help build a new one. Should the
same thing happen to one's neighbor, the other neighbors must help, otherwise, neighbors
will not receive help in the future.
Separate insurance contracts (i.e., insurance policies not bundled with loans or other
kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools
backed by pledges of landed estates. These new insurance contracts allowed insurance to
be separated from investment, a separation of roles that first proved useful in marine
insurance. Insurance became far more sophisticated in post-Renaissance Europe, and
specialized varieties developed.
Toward the end of the seventeenth century, London's growing importance as a centre for
trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd
opened a coffee house that became a popular haunt of ship owners, merchants, and ships
captains, and thereby a reliable source of the latest shipping news. It became the meeting
place for parties wishing to insure cargoes and ships, and those willing to underwrite such
ventures. Today, Lloyd's of London remains the leading market (note that it is not an
insurance company) for marine and other specialist types of insurance, but it works rather
differently than the more familiar kinds of insurance.
Insurance as we know it today can be traced to the Great Fire of London, which in 1666
devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an
office to insure buildings. In 1680, he established England's first fire insurance company,
"The Fire Office," to insure brick and frame homes.
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2.3 How insurance works

The concept behind insurance is that a group of people exposed to similar risk come
together and make contributions towards formation of a pool of funds. In case a person
actually suffers a loss on account of such risk, he is compensated out of the same pool of
funds. Contribution to the pool is made by a group of people sharing common risks and
collected by the insurance companies in the form of premiums.
2.4 Background of insurance business in Bangladesh

2.4.1
Resistance against colonial or autocratic regimes in the third world has often been led by
educated intelligentsia inspired by western ideas of nationalism and democracy has
played a dominant role. Most victorious nationalist movements have been in later years
reneged from their earlier commitments and few developing countries to day are
nationalist, socialist or democratic. But that is a different story.
When the Awami League cane to power in Bangladesh and the peoples party in Pakistan
in 1972.It was inevitable that nationalization a wide scale would take place, for both
parties had flaunted socialism as part of their political rhetoric. In Pakistan the
administrative mechanism for nationalization of banking, insurance and some industries
was carefully worked out by the bureaucracy under political leadership, and the takeover
in a feel swoop passed of smoothly. Heads of insurance companies, for instance, where
invited to tea at a Karachi Hotel. Where they told that while they were having teas the
head offices of their companies were being sealed and Government appointed
administrators were being put in charge. This was done to ensure that the assets of the
companies remained intact and no tempering with accounts, records and documents was
possible.
In Bangladesh an effective government machinery did no exist in the chaotic conditions
obtaining an independence following a bitter and brutal war industries was taken over
without any inventory, and erstwhile owners ,who were being dispossessed, were allowed
to administer their mills and factories till statutory corporations were established
2.4.2 Insurance in Bangladesh

Insurance is not a new business in Bangladesh. Almost a century back, during British rule
in India, some insurance companies started transacting business, both life and general, in
Bengal. Insurance business gained momentum in East Pakistan during 1947- 1971, when
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49 insurance companies transacted both life and general insurance schemes. These
companies were of various origins British, Australian, Indian, West Pakistani and local.
Ten insurance companies had their head offices in East Pakistan, 27 in West Pakistan, and
the rest elsewhere in the world. These were mostly limited liability companies. Some of
these companies were specialized in dealing in a particular class of business, while others
were composite companies that dealt in more than one class of business. The government
of Bangladesh nationalized insurance industry in 1972 by the
Bangladesh Insurance (Nationalization) Order 1972. By virtue of this order, save and
except postal life insurance and foreign life insurance companies, all 49 insurance
companies and organizations transacting insurance business in the country were placed in
the public sector under five corporations. These corporations were: the Jatiya Bima
Corporation, Tista Bima Corporation, Karnafuli Bima Corporation, Rupsa Jiban Bima
Corporation, and Surma Jiban Bima Corporation. The Jatiya Bima Corporation was an
apex corporation only to supervise and control the activities of the other insurance
corporations, which were responsible for underwriting. Tista and Karnafuli Bima
Corporations were for general insurance and Rupsa and Surma for life insurance. The
specialist life companies or the 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.
After independence of Bangladesh, insurance industry was nationalized. Subsequently
through the enactment of Insurance Corporation Act VI, 1973, two corporations namely
Sadharan Bima Corporation (SBC) for general insurance and, Jiban Bima Corporation for
life insurance were established in Bangladesh. SBC was acting as the sole insurer of
general insurance till 1984. Between 1985 to 1988 first generation of private general
insurance companies were emerged as Bangladesh Government allowed the private
sector to conduct business in all areas of insurance for the first time in 1984. A total of 16
private general insurance companies were registered in that phase. In 1996 another 8
private general insurance companies were registered. The third generation of private
general insurance companies, which included 18 companies, came into operation between
1999 and 2001. The general insurance market in Bangladesh now consists of 43 private
sector insurance companies and 1 state owned insurance company. Insurance Corporation
(amendment) Act 1990 provides that 50% 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 50% 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.
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2.5 Present position of insurance business in Bangladesh

In Bangladesh, the Insurance business, after and early stage of dislocation, adventure
and experimentation through half a century has now being established as a nascent
industry distributed between the public and private sectors. Insurance business
evolved in the Indian subcontinent late in nineteenth century when several business
companies started their business and a few Christian missionaries began to operate
mutual funds to serve their own community members. From Bangladesh perspective
insurance business was not a promising sector in its early age but it is getting its pace
day by day with the growth of overall economic condition of the country.
The privatization policy adopted in the 1980s paved the way for a number of insurers
to emerge in the private sector. This resulted in a substantial growth of premium
incomes, competition, improvement in services, and introduction of newer types of
business
in
wider
fields
hither
to
untapped.
Up to 2000, the government has given permission to 19 general insurance companies
and 10 life insurance companies in the private sector. Insurers of the country now
conduct almost all types of general and life insurance, except crop insurance and
export credit guarantee insurance, which are available only with the Shadharan Bima
Corporation. Numerous institutions, associations and professional groups work to
promote the development of insurance business in Bangladesh. Prominent among
them is the Bangladesh Insurance Association (formed on 25 May 1988) having 30
members. It aims at promoting, supporting and protecting the interests and welfare of
the member companies. Another example is Bangladesh insurance academy.
Surveyors and insurance agents occupy a prominent position in the insurance market
of Bangladesh. The system of professional brokers has not yet developed in
Bangladesh. A total of 60 insurance companies are operating in Bangladesh till date.
Of these companies, 57 are private, two state-owned and one is foreign.
Insurance Directorate, under the Ministry of Commerce, is the regulatory-body of the
country's insurance sector. At present there are 44 general insurance
running in Bangladesh. Many other private companies are about to commence
companies
2.6 Growth of Insurance in Bangladesh

The insurance industry in Bangladesh continued to achieved a moderate growth in 20092010 . per capita spending on insurance is still less than $3 while insurance penetration ,
measured on premium as a percentage of GDP, also below 1 percent.
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The total premium income from private sector life insurance companies rose from TK
35794.53 million in 2008 to TK 45957 million in 2009 registering growth of 27.75%
The gross premium income of private sector non life insurance companies also increased
from TK11163.03 million in 2008 to TK 12284.22 million in 2009 registering the growth
of 10.93%.
The life fund of the private sector insurance companies increased to TK 105,153.96
million in 2009 from TK 80863.15 million in 2008 registering the growth of 30.04 %.
The total investment of the private sector life insurance companies rose from TK
67,151.19 million in 2008 to TK 87053.53 million in 2009 registering an increase of
29.64%. The total investment of private sector non life insurance companies stood at
TK.12764.15 million in 2008 registering a growth of 13.21 %.
The total asset of the private sector life insurance companies stood at TK 118020.14
million in 2009 against the TK. 91,367.73 million in 2008 registering a growth of
29.17%.
The total asset of private sector non life insurance company stood at TK32, 376.63
million in 2009 against TK. 22756 million in 2008 registering a growth of 43.59 percent.
It is hoped that the newly established insurance Regulatory Authority will help to
modernize and bring the insurance laws and rules of Bangladesh in line with international
standards and also help bring more discipline in the sector.
The Bangladesh Insurance Association strongly feels that professionalism modern
management and sales techniques and new products development are necessary for the
growth and progress of the industry.
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CHAPTER #3
PROFILE OF EAST LAND
I N S U RA N C E C O M PA N Y LT D .
3.1 Company Profile

Eastland Insurance Company Ltd:
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Eastland Insurance Company Ltd. being sponsored by a group of entrepreneur exposed to

various
economic
sectors
including
financial
institutions,
Trading,
garments,
Pharmaceuticals, Press, Construction, Cold Storage etc., started its journey as one of the
first generation General Insurance Companies in the private sector from 5th November,
1986. Eastland was listed as a public limited company with Dhaka Stock Exchange
(DSE) in 1994 and its Tk.30 million shares with 40% premium were over-subscribed by
more than 12 times! Ever since, its performance remained steady with average annual
growth rate of 20% over the last 5 years.
The total Asset of the Company is over Tk. 1104 million having Reserve base of about
Tk. 554 million and investment portfolio Tk. 825 million. The company has so far settled
claims amounting to Tk. 997.44 million and has been paying 'double digit' Dividends to
its shareholders ever since its inception plus stock Bonus in recent times.
The fundamental principle followed by the company from the very inception was to
maintain dynamism in its business policy as well as competitive edge in the market
through service innovation and obtaining best bargain from the global market of
reinsurance. Eastland is equally alive to its Corporate Social Responsibility (CSR). The
company stepped into 25 years of its successful operation on the 5th of November, 2010
and it has by now attained the height of sound financial strength and enviable goodwill,
thus being categorized among the Top-Ten' in the general insurance sector. The
Management of the company is a combination of astute executives with wealth of
experience of the Industry as well as young and dynamic leaders of to day; to meet the
challenges of to-morrow;
Eastland has been offering comprehensive range of insurance packages from its 23
branches throughout Bangladesh, which include: Fire, Marine, Hull, Motor, Industrial All
Risks, Engineering, Aviation, Personal Accident, Medi-claim and Miscellaneous risks.
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Eastland is a proud insurer of host of clients ranging from distinguished individuals to big
trading firms, Banks & Financial Institutions as well as large national & multinational
companies.
The company is living up to its promised slogan: The name you have learnt to Trust by
upholding its personalized services in both Sunny & Rainy days! As such, Eastland's
name has been embedded in the hearts of thousands of its clients.
Registered Name
: Eastland Insurance Company Limited
Registered office
: 13 Dilkusha C/A, Dhaka 1000,

Bangladesh.
Paid up Capital
: Tk. 276.06 Million
Authorized Capital
: Tk. 500 Million
Incorporation
: November 05, 1986
Commencement of Business
: November 05, 1986
Credit Rating Grade
: AA-
Listing with Dhaka Stock Exchange (DSE)
: 1994
Listing with Chittagong Stock Exchange (CSE)
: 1994
Allotment of Public Share
: 1994
Face Value Per Share
: Tk. 100
Earning Per Share (EPS)
: Tk. 61.65
Average Annual Growth over the last 5 years
: 20%
Total Asset of the Company
: Over Tk. 1104 million
Reserve Base
: About Tk. 554 million
Investment Portfolio
: Tk. 824.94 million
Number of Branches
: 23
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Eastland is the proud sponsor of 02 (two) reputed Non-Banking Financial Institutions

namely Industrial & Infrastructure Development Finance Company Ltd. (IIDFC) and
National Housing Finance & Investment Ltd. led by prominent Banks, Insurance
Companies and the renowned Business houses of the country as follows:
Industrial & Infrastructure Development Finance Company Ltd(IIDFC), a public limited
company was incorporated on 19 December, 2000 as a non-banking development
financial institution under companies Act 1994 and the financial institution Act 1993 to
boost investment specially in the spectrum of industrial and infrastructure development
with its registered office at Chamber Building (6th Floor), 122-124, Motijheel C/A,
Dhaka-1000.
Authorized capital
: BDT. 1,000,000,000
Paid up capital
: BDT. 3,28,780,000
Sponsors of IIDFC are:

Eastland Insurance Company Ltd.
Janata Bank Ltd.
Invest Corporation of Bangladesh (ICB)
AB Bank Ltd.
Bank Asia Ltd.
BRAC Bank Ltd.
The City Bank Ltd.
Mutual Trust Bank Ltd.
National Bank Ltd.
One Bank Ltd.
Southeast Bank Ltd.
Sonali Bank Ltd
National Life Insurance Co. Ltd.
Pragati Insurance Ltd.
Mr. Md. Matiul Islam
National Housing Finance and Investments Limited, a public limited company was
incorporated on August 18, 1998 as a non-banking development financial institution
under Companies Act 1994 with registered office at 109, Bir Uttam C.R Datta Road (ExSonargaon Road), National Plaza (7th & 8th Floor), Dhaka-1205
Authorized capital
: BDT 2,000 million
Paid up capital
: BDT 520 million

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Sponsors of National Housing Finance and Investments Limited are :

Eastland Insurance Company Ltd.
National Bank Ltd.
United Commercial Bank Ltd.
Eastern Insurance Company Ltd.
IFIC Bank Ltd.
Jibon Bima Corporation
National Life Insurance Company Ltd.
Pragati Insurance Ltd.
Reliance Insurance Ltd.
Sadharan Bima Corporation
Bangladesh Lamps Ltd.
Borak Travels (Pvt.) Ltd.
HRC Bangladesh Ltd.
Shaw Wallace Bangladesh Ltd.
Square Pharmaceuticals Ltd.
Unicorn Equities Ltd.
Overseas Investor Forum (UK)
Overseas Investors Forum (Zambia)
Summit Industrial and Mercantile Corporation (Pvt.) Ltd.
Chairmans Profile
Mr. Mahbubur Rahman, Chairman is an eminent business person in Bangladesh. He is the
President of International Chamber of Commerce (ICC) Bangladesh, the world business
organization, Member, Business Advisory Council (BAC) of the United Nations
Economic and Social Commission for Asia and the Pacific (UNESCAP) Bangkok,
Member, Board of Governors, Institute of Business Administration (IBA), University of
Dhaka, Member of the Board of Bangladesh Open University (B0U) and Dhaka Stock
Exchange Limited. He is the chairman and CEO of
ETBL Holdings Limited
Eastern Trading Bangladesh Limited

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ETBL Development & Construction Limited
ETBL Securities & Exchange Limited
ETBL Technologies Limited
Progressive Investment Limited
Century Cold Storage Limited
Sheba Bangladesh Foundation
Chairman
International Publications Limited

(Publishers: The Daily Financial Express)
Bangladesh International Arbitration Centre (BIAC)

He is the former Chairman of National Bank Ltd. and National Bank foundation,
former President of Federation of Bangladesh Chambers of Commerce and
Industry (FBCCI) and Dhaka Chamber of Commerce and Industry (DCCI).
Besides, he is associated with host of Social Organizations at home and abroad.
The Board of Eastland Insurance consists of twenty Directors, among them, thirteen are
sponsors, six are from Shareholders and the remaining one is an independent.
Mr. Mahbubur Rahman
Mr. A.K.M. Humayun Kabir
Proprietor
Chemo Pharma Trading Agency
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Partner
M. Rahman & Co.
Mrs. Hameeda Rahman
Director
ETBL Holdings Limited
Eastern Trading Bangladesh Limited
ETBL Development & Construction Limited
ETBL Securities & Exchange Limited
Progressive Investment Limited
Mr. Moazzem Hossain
Managing Director
Pioneer Rope Mfg. Co. Limited
Director
Rahman Enterprise Limited
Holy Crescent Hospital Limited
Hotel Saymen Limited Coxs Bazar
Mr. Md. Harunor Rashid Khan
Proprietor
Trade International
Mr. Nazrul Islam
Trading, Importer & Distributor.
Mr. Nizamuddin Ahmed
Director
Lexel Knitwear Limited
Sunnex Limited
Mr. Saidur Rahman
Director
Shinko Electro Plus
Sunnex Limited
Mr. Saiful Islam
Managing Director
Jamsons Makers & Packers Limited
Director
Islam & Company Limited
Babu Edibles Limited
Nishi Green Fields Limited
Mrs. Tahmina Ahmed
House maker
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Mr. Sanjidur Rahman
Managing Director
Chandpur Jute Balers Limited
Eastern Overseas Limited
Mrs.Taslima Akhtar
Director
Social Investment Bank Limited
Union Fisheries
Mrs. Monira Yeasmin
Director
Monico Plastic Industry
Heera Jewelers Limited
Mr. Golam Mahmood
Proprietor
Media Wave
Mrs. Hasina Ahmed
House maker
Mrs. Kamrun Nessa
Director
Alhaj Mohd. Arshad Ali
Chairman
Dhaka Ink Company Limited
Managing Director
The Merchants Limited
Elite Printing & Packages Limited
Mr. Nasiruddin Ahmed
Trading, Business Consultant
Begum Shams Ara Sabir
House maker
Mission:
To create and deliver risk solutions and services that makes our clients risk-free and
successful.
To be among its peers in the market by providing fastest personalized services to the
clients through utmost good faith, good conduct, sincerity and integrity.
Vision:
To contribute actively for the betterment of the policyholders, shareholders and well
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Insurance Ltd.
being of the society at large through comprehensive insurance protection and creative
investment.
To double sales revenue over the next five years by providing maximum security for the
properties of the existing and potential clients
3.2 Management
Insurance is basically a technical business and dependent to a great extent on the quality
of techno-human resources available to form a management team. The company has in its
strength good number of highly qualified & experienced insurance personnel. The
operation of the company is being carried out by an experienced Management team with
wide exposure to insurance industry. Mr. M. Azmal Hoque, ACII, Managing Director
joined the company as Executive Director on February 1991 with a long job experience
in insurance business both at home and abroad. The Management team consists of the
following Executives:
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Insurance Ltd.
Executive Director
Mr. Ghulam Rahman
Mr. Shamsuzzaman
Head Office
Mr. Mia Fazle Karim, FCA
Chief Financial Officer (CFO), Head Office
Mr. Md. Jahangir Alam Khan
Regional Chief, Agrabad, Chittagong
Mr. Khawaza Manzer Nadeem
Head of Marketing, Principal Office
Assistant Managing Director
Mr. Enamul Islam Chowdhury
Regional Chief, Sylhet
Mr. Md. Nurul Amin
In-Charge, Nawabpur Branch
Mr. Md. Shafiul Alam Bhuiyan
In-Charge, Motijheel Branch
Mr. Md. Shamsul Hoque
Marketing, Principal Office
Mr. Md. Zakaria Chowdhury
Mr. Sk. Ahasan Habib
In-charge Underwriting, Head Office & Principal

Office
Mr. M. Golam Hafez
In-charge, Claims, Head Office
Mr. Md. Mazibur Rahman
In-charge Gulshan Branch
Senior Executive Vice President
Mr. Md. Ehsanul Hoque
Mr.Md.Tariful Islam
In-charge, Re-Insurance and BCD, Head

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Insurance Ltd.
Office
Mr. Md. Mosaraf Hossain
Executive Vice President
Mr. Sagir Ahmed
Accounts, Head Office
Mr. M. Abidur Rahman
Company Secretary
Mr. Abdul Malek
In-charge, Investment & Estt. Head Office
Mr. Kamrul Hasan Chowdhury
In-charge, Mohakhali Branch
Mr. Md. Zaglul Haider Khan
Mr. Md. Karimul Hoq
Mr. Tahur Ullah
Mr. Md. Ahsanul Hoque
Underwriting, Head Office
Mr. Humayun Kabir
Mr. Jamaluddin Chowdhury
In-charge, Sylhet Branch
Mr. Md. Monowar Hossain
In-charge, Narayangonj Branch
Mr. Md. Tajul Islam
Mr. Badsha Ismail Hoque
In-charge, Kawran Bazar Branch
Mr.Khurshed Ali Chowdhury
Marketing, Agrabad, Chittagong
Mr. Md. Mozammel Hoque
Mr. A.M.M. Nur Uddin
In-charge, IT, Head Office
Mr. Md. Ekramul Hoque
Accounts, Agrabad, Chittagong

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Insurance Ltd.
Mr. Md. Ashraf Haider
Marketing, Motijheel Branch
Mr. Ramendra Narayan Das
In-charge, Jubulee Road Branch, Chittagong
Mr. Abdul Baten Chowdhury
Marketing, Agrabad Branch, Chittagong
Mr. Md. Nurul Amin
Marketing, Sylhet Branch
Mr. S.M. Abdur Rob
Administration, Head Office
Mr. Shamsuddin Ahmed
In-charge, Audit/Inspection, Head Office
Mr. Md. Iqbal Majumder
Claims, Head Office
Mr. Mir Abdul Haye
Mr. Md. Abul Kashem
Mr. Md. Kutubuddin Ahmed

Chowdhury
Marketing, Agrabad Branch, Chittagong
Mr. Ehsan Mahmood
Marketing, Kawran Bazar Branch
Mr. Ahmed Sk. Saiful Islam
In-charge, Satkhira Branch
Mr. Azadur Rahman Mojumder
In-charge, Feni Branch
Mr. A.K.M. Azad
In-charge, Jessore Branch
Mr. Suklal Somoddar
In-charge, Khulna Branch
Mr. Abdur Rahman
In-charge, Malibagh Branch
Mr. Md. Abul Kalam
In-charge, Elephant Road Branch
Mr. M.G. Maruf Chowdhury
Marketing, Gulshan Branch
Mr. Tarafder Md Ruhul Quddus
Marketing, Nawabpur Branch
The activities of the company are being carried out through the various Departments
namely Marketing, Underwriting, Re-insurance, Claims, Administration, Branches
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Insurance Ltd.
Control Department, Finance & Accounts, Audit/Inspection & Legal matters, Shares &
Investment, Information Technology, Board Secretariat and Company affairs
3.3 Products and Services

Eastland Insurance Company Limited carries out all types of general insurance business
as per the Insurance Act, which includes Fire, Marine, Motor, Miscellaneous and
Engineering business. Existing product lines of the Company are as follows:
Fire Insurance
Riot and Strike (R&SD) Damage
Earthquake Damage
Flood Damage
Cyclone, Hurricane, Typhoon &Tornado Damage
Air Craft Damage
Explosion Damage
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Insurance Ltd.
Burning of forest, bush, jungle & the clearing of lands by fire Dam
We are also providing the following coverages:
Fire Special Package Insurance
Industrial All Risk Insurance (IAR)
Comprehensive Machinery Insurance (CMI)
Property All Risk (PAR)
Marine Insurances
Marine Cargo Insurance- Export & Import

According to recommendations of the United Nations Conference on Trade and
Development (UNCTAD), we are providing following coverage:
ICC-A (All Risks)
ICC-B
ICC-C
War & SRCC as additional coverage
We also provide Theft & Pilferage (TP) and Non-delivery coverage with ICC-B &
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Insurance Ltd.
Coverage. ICC-A covers all risks with some exceptions. Moreover, we are providing
Inland Transit coverage by Truck/Lorry/Rail/Burge/Country Boat as required by the
Insured.
Marine Hull Insurance:
Comprehensive cover on Hull & Machinery as per ITC Hull clause.
Total Loss only including Sue and Labor charge on Hull & Machinery.
Marine Country Boat.
Motor Insurance
Comprehensive coverage on:
Private Vehicle
Commercial Vehicle
Motor Cycle
Transit (Motor Trade
Act Liability/ Third Party Liability.
Miscellaneous insurance
All Risk Insurance (AR)
Air Travel Insurance (ATI)
Business Interruption (BI)/Loss of Profit Insurance
Contingency Liability Insurance (CLI
Cash-in-Safe Insurance (CIS)
Cash-in-Transit Insurance (CIT)
Cash-on- Counter Insurance (COC)

Insurance Ltd.
Cash-on-Premises Insurance (COP)
Commercial General Liability Insurance (CGL)
Employers Liability Insurance (EL)
Fidelity Guarantee Insurance (FG)
Overseas Mediclaim Insurance (OMI)
Product Liability Insurance (PDL)
Public Liability Insurance (PL)
Personal Accident Insurance (PA)
Workmens Compensation Insurance (WP)
Engineering Insurance
Contractors All Risk Insurance (CAR)
Erection All Risk Insurance (EAR)
Machinery Break-down Insurance (MBD)
Deterioration of Stock Insurance (DOS)
Electrical Equipment Insurance (EEI)
Boiler & Pressure Vessel Insurance (BPV)

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Insurance Ltd.
Contractors Plant & Machinery Insurance (CPM)
Specialized Product
We also provide the following specialized products:
Professional Indemnity Insurance policy
Household Comprehensive Insurance
Shopkeepers Insurance
Comprehensive General Liability Insurance
Cancellation and Abandonment Insurance for Games
Aviation
3.4 Branches
Eastland Insurance Company Limited has been operating its business through twentythree branches located at different commercially potential areas across the country.
Branches are mainly concentrated in Dhaka and Chittagong. Among the branches, 13 are
in Dhaka, 3 are in Chittagong, 5 are in Khulna and one branch each at Rajshahi and Sylh
Name of
Branches
Address
Telephone
Number
Principal
13, Dilkusha Commercial Area, Dhaka-1000.
PABX;
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Insurance Ltd.
9564600
(Auto Hunting)
Office
Imamgonj
85/1 (2nd floor),Chawk Moghaltuly Road, Dhaka.
7311624
Nawabpur
Road
120,Nawabpur Road (l st floor), Dhaka.
7114253
Motijheel
Shadhinata Bhaban (2nd floor),88, Motijheel C/A,

Dhaka.
9552433
Kawran Bazar
59,Kazi Nazrul Islam Avenue (2nd floor), Kawran

Bazar, Dhaka
8112063
Elephant Road
Minita Plaza, 54, New Elephant Road, (3rd

floor),Dhaka.
8627497
Malibagh
83/B, New Circular Road, Mouchak Tower (3rd floor),

9349849
Dhaka.
Mohakhali
G.P.GA-19 Mohakhali School Rd,(lst floor) Mohakhali,

8815436
Dhaka.
Gulshan
Islam Mansion(2nd floor),H-# 39,Rd.# 26,Gulshan

Circle-1, Dhaka-1212.
8852197
Narayangonj
52/1,Bangabandhu Road(lst floor), Narayangonj
7631937
Mymensingh
10, G.K.M.C. Shaha Road (1st floor) Choto Bazar,

Mymensingh
66766
Tangail
230/231 B.B.Girls School Road (Bara Pukur Par),

Tangail.
54910
Rajbari
Main Road, Rajbari Bazar, Rajbari
65761
Name of
Branches
Address
Telephone
Number
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Insurance Ltd.
Agrabad
Arup Bhaban (lst floor), 107 Agrabad C/A, Chittagong. 725660,713745
Jubilee Road
200/B,Jubilee Road, (2nd floor) Chittagong
613954
Feni
182, Al- Madina Market (1 st floor) ,Trunk Road, Feni
74415
Name of
Branches
Address
Telephone
Number
Khulna
127-128 Sir Iqbal Road (lst floor), Khulna
721615
Jessore
Municipal Market (1 st floor) 34, Mistri Khana Road,

Jessore
68851
Kushtia
12, Shah Nabi Baksha Street, (N.S.Road), Kushtia.
61982
Meherpur
K.N. Super Market (1st floor) 245 Main Road, Boro

Bazar, Meherpur
62981
Satkhira
Khan Market (2nd Floor) 2092 Main Road, Satkhira
63805
Name of
Branches
Address
Telephone
Number
Bogra
6, Thana Road (lst floor), Bogra.
66105
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Insurance Ltd.
Name of
Branches
Address
Telephone
Number
Sylhet
Shahir Plaza(2nd Floor), 2143, East Zinda Bazar, Sylhet.
718725,720498
3.5 Business Performance in 2010

Eastland insurance , one of the 1st generation company was established in 1986 and
stepped into 25 years of its successful operation. The company focused on enhancing
business in the targeted segments. It also focused on areas having best prospects of
business and profitability extending efficient services. While Eastland Insurance is
committed to bring about operational excellence in all tiers of the organization , it
emphasize the needs for further developing core business improving underwriting.
The comp worked to bilateral with clients that helped to increase business and
underwriting profitability significantly. Continuing affressive business policy in 2010
was highest ever sicne inception . The company earned gross premium of TK.485.63
million during the year as against Tk. 396.7 million in the previous year registering a
growth of 22.41% over the last year.
A brief class wise summary of operational performance for the year 2010 is furnished
below.
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Insurance Ltd.
Fire insurance
The company underwritten a total fire insurance premium of TK206174577/- including
an amount of3116693/- from the public sector . the net premium income stood at Tk
65625677/- after ceding reinsurance premium of Tk 140548900/- . During the year
2010 , total payment of claim was 44309793/- against whch recovery from re-insurance
came to Tk54132259/- including previous years recovery.
Marine Cargo Insurance
The total gross income from marine cargo business was Tk. 17213622/- including
premium of Tk 8919527/- from public sector. The net premium income of marine cargo
business stood at Tk. 138270790/- after ceding Tk. 33865432 on account of reinsurance
premium. During the year , net amount of claim for (Tk.688065/-) was paid on this
account.
Marine Insurance (Hull and Aviation)
In the year 2010, the total underwritten premium income from marine hull and aviation
insurance business was Tk 13580614/- including premium of Tk 522695/- from public
sector business. The net premium income came to Tk.4405792/- after ceding Tk.
9174822/- on account of re-insurance premium. During the year . net amount of claim for
TK688065/- was paid on this account.
Motor Insurance
From motor insurance business our total gross premium income was Tk.56266771/including public sector business of Tk.850774/- . After ceding reinsurance premium of
Tk. 1868388/- the net contribution to the revenue account was Tk.54398383/-. During the
year net amount of motor claims to the extent of Tk. 15760110/- was paid.
Miscellaneous Insurance
The total gross premium of miscellaneous business came to Tk. 37465177/- including Tk.
15407997/- from the public sector. In the year 2010, an amount of Tk. 28620238/- was
ceded on account of reinsurance premium. During the year, the net amount of claim for
Tk.3259449/- was paid on this account.
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Insurance Ltd.
3.6 Claims
Eastland maintains strong commitments to effective handling of claims and has the builtin reputation in the market for expeditious settlements of claims.
Eastland is always ready to extend personalized service to its valued clients and for
maintaining close relationship with them. When there is a substantial loss of the insured
properties, Eastland-Executives immediately rush there along with a Govt. licensed
surveyor and provide advice for minimization of loss as soon as they receive loss
information from the Insured and considering the severity of loss arrange on account
partial payment for immediate recovery of the Insureds loss on the basis of the
preliminary
Survey
Report.
For settlement of claims at the soonest possible time, simplest procedure and formalities
are followed and are being executed through the claim Depts., headed by a highly
motivated and long experienced Asst. Managing Director being assisted by other senior
personnel.
The company so far settled from the inception claims amounting to Tk. 997.44 million.
During the year 2010, it settled 340 number of claims for 79.11 million on account of
fire, Marine, Motor and Miscellaneous insurance.
Claims Settled during last five years:
Year
Taka in Million
2006
73.97
2007
71.35
2008
92.80
2009
73.73
2010
79.11
390.96
3.7 Investment
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Insurance Ltd.
Underwriting profit of nonlife insurance company is decreasing continuously due to high

cost of operational and other expenses. Thus , growth of insurance company is vey much
dependent on its investment income because of decreasing trend of under writing profit.
It is therefore important to explore all possible avenues to raise the returns from
investments. Keeping this mind , a very dedicated team with the guidance by a
management committee headed by executive director has been playing an effective role
in the capital market grew by 23%to taka 824.94 million as cash dividend including
contribution of Tk 4.38 million as cash dividend from equity investment in National
Housing Finance and investment limited.
Break- up and total investment during the year were as under
Particulars
I.
Taka in million
National Bank Subordinated Bond
50.00
Bangladesh Bank Treasury Bond
4.50
III.
Debenture Beximcom
8.88
IV.
Fixed Deposit
II.
V.
VI.
326.51
Short Term Deposit
30/00
Share including equity holdings
405.05
Total
824.94
3.8 Government guidelines for formation of insurance company are:
(1)The intending sponsors must first submit an application in prescribed form to the
Chief Controller of Insurance for prior permission.
(2) After necessary scrutiny the Chief Controller shall forward the application with his
Recommendation to the Ministry of Commerce.
(3) After further scrutiny, the Ministry of Commerce shall submit its views to the Cabinet
Committee constituted for this purpose.
(4) The decision of the Committee, if affirmative, should be sent back to the Ministry of
Commerce which in turn should send it back to the Chief Controller of Insurance for
communicating the same to the sponsors.
(5) The sponsors would then be required to apply in a prescribed form to the Registrar of
Joint Stock Companies to get registration as a public liability company under the
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Insurance Ltd.
Companies Act. Memorandum and Articles of Association duly approved by the

Controller of Insurance would have to be submitted with the application.
(6) Once the registration process was completed the sponsors would have to obtain
permission of the Securities and Exchange Commission to issue share capital.
(7) Reinsurance arrangements would have to be made at this stage.
(8) After all the above requirements were fulfilled the license to commence business
under the Insurance Act 1938 is to be obtained from the Chief Controller of Insurance.
Application can only be made subject to government announcements in this regard
CHAPTER # 4
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Insurance Ltd.
PROBLEM AND PROSPECT OF

G E N E RA L I N S U RA N C E I N
BANGLADESH
4.1 Problems of General insurance in Bangladesh

In a developing country like Bangladesh, insurance companies are playing a very
important role in economy. Though insurance industry has a very prospect in the
economy but for some reasons it is totally failed to achieve its goal. If we want to know
the reasons behind this then we should look forward the following according to Eastland
Insurance Company Ltd.
The problems have been categorized in different levels and they are; social, economical.
political, legal and others problem
5.1.1Social Problems :
Less Public awareness
A vast majority of people especially in rural areas are left outside the insurance coverage.
This mainly results from the unawareness among the people. Even a large portion of
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Insurance Ltd.
people dont have the minimum idea of insurance. People are not aware of the benefits
from the insurance policy and a great number of people believe that insurance business is
nothing but cheating and assume that insurance policy is quite unnecessary. This negative
attitude from the people is lessening the importance of absorbing insurance policy in a
large extent.
Centralization
Most of the insurance companies in our country are located in urban areas and there are
few branches in rural areas. They think that they might have better scope for performing
their business as the economic condition of the urban is better than the rural areas. They
dont think that the large number of our population reside in rural areas and if branches are
expanded in rural areas then the business can thrive if proper motivation policy is taken to
aware the mass people of the rural areas. Thus this centralization policy acts as an
obstruction for the growth of insurance business in our country.
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.
Illiteracy
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.
4.1.2 Economic Problems :
Poor economic conditions
Bangladesh is one of the poorest countries in the world and most of the people in this
country live under extreme poverty level. All of these people fight hard to earn their
livelihood and are marginal in relation to the expenditure with the income. It is quite
impossible for them to save some money for future need. Therefore they are quite unable
to give the amount to the insurer which is called as premium and regarded as safety or
precautionary measures against any accident. The number of people who can bear the
premium to the insurance company is very few in regard to those mentioned above.
Therefore the overall poor economic condition is creating obstacle to flourish the
insurance business in Bangladesh.
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Insurance Ltd.
Poor financial position of the insurance companies

Most of the insurance companies of our country are facing financial problems. Recently
government is trying to take initiative to close some of the insurance companies because
they are not maintaining the minimum standards. They are investing their money in poor
securities and business which is vulnerable regarding getting back the money with profit.
As a result most of the insurance companies are suffering from loss years after years and
for poor financial condition the insurance companies are also unable to expand their
branch which is a barrier for the growth of insurance business in Bangladesh.
Higher cost of business
Growing cost of business is another problem that insurance companies are facing now a
day. They urge that government tax, house rent, utility, commission fee, stationeries are
growing day by day. But their businesses are not growing so fast with that rate. Besides
this the policy holders are not willing to pay too much premium with growing6
Lower per capita 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 capita 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.
Problems of economic bases and effective principle

Before independence insurance business was control by private company. But after
independence maximum insurance company take over by the government. For that
reason government changed the company management, policy and applies new rules
and regulations which system was very tricky and uncomfortable for the mass people.
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
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Insurance Ltd.
deemed to sufficient for the payment of premiums. This factor discourages many to buy
life insurance policy.
4.1.3 Political problems :
Political instability
Political instability is a major problem in Bangladesh. For the instability in politics, many
disruptive situations are often created which are bad for any businesses. The people who
operate various businesses in our country often experience various types of
inconvenience in running their business. Insurance business is not an exception 0of this.
Political instability and inconsistency of political courses are a serious problem for the
insurance business.
Lack of supervision from the government
Lack of surveillance from government ministry encourages many insurance companies to
follow some unethical practices like make harassment to policy holder and showing less
in the financial statement. This not only destroying the reputation of the well known
insurance companies but also creates negative impact in the mind of the people about
insurance. Besides this government sometimes impose some conflicting rules and
regulation without discussing with insurance companies governing body. It creates
conflict among insurance companies with government and act as one of the main
hindrances of growing insurance business.
Problem of planning and administration

After the change of the government, the whole planning and administrative measures are
changed which is the main constraint for long term plans. Without long term planning
any permanent development or solution of existing problems are impossible.
4.1.4 Legal Problems
Too much complexity
To take an insurance policy there are great number of rules and regulations which
must be compelled by the insured person. And into those rules a vast number of
Insurance Ltd.
complexities is present there. Therefore the people are discouraged to take insurance
policy because they think that the complexities will create extra pressure on their
mind which may hamper other jobs.
Licensing Difficulties:
Almost all the insurers and policyholders criticized the licensing system for insurance
companies. They identified it as a major constrain behind the commencement of new
insurance business. Insurance companies opined that the government does not evaluate
their documents of application with due consideration and unnecessarily delays of
approval. In many cases the government in all regimes gives restriction to those
applicants who have political relationship or maintain liaison. This dirty role of
government not only encourages corruption but also hinders proper growth of insurance
business.
Traditional Insurance Act
The present insurance act was enacted more than half a century back. Many amendments
have been made though since then but the basic character of the act has remained
virtually unchanged. This act does not suit the needs of life insurance in the present day
in Bangladesh. The all pervasive stringent regulatory functions carried and exercised by
the office of the controller of Insurance (CI) is not consisted with the market
liberalization policy of the government. In its present form, the act is obstructing, rather
than helping, healthy growth of life insurance in the company.
4.1.5 Other problems

Lack of qualified officials
Insurance companies perform their activities by recruiting marketing agent and they try to
convince the people to take a policy. Most of the cases the agents are not properly trained
and they dont know the right process make their policy holders. Therefore these field
level agents are unable to fulfill their target and act as a constraint in the insurance
business.
Traditional method
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Insurance Ltd.
Still Bangladesh insurance company using or follows traditional methods on

insurance policy. Where as foreign companies are using modern systems like
computerized system. Our local company does not want to change themselves.
Lack of training for the employees
Spread of insurance business in Bangladesh failed for lack of proper training by the
employees specially the field employees of insurance companies. Still there are not
enough training center to provide proper training regarding insurance activities for the
officials of insurance company. Though there is one insurance training center in
Bangladesh it totally failed to achieve its target in insurance field.
Lack of exposure
Another main problem in the country is that the media is unconcerned to send the
right message regarding insurance to the people. As a result a large portion of
population is completely unaware about the insurance policy. Another problem is that
the insurance company does not provide adequate information in the companys
websites which can fulfill the queries of their potential customers and satisfy
themselves to buy an insurance policy.
Absence of business ethics
Some insurance companies create harassment on the policy holders or sometimes on
the dependents of the policy holders when they want back their money after death or
maturity. The insurance companies show different causes in order to make delay to
return back the money at expected time. Sometimes they are eager to pay less than the
desired amount by creating various circumstances such as they try to say that the
disaster of the subject matter of the policy is not responsible due to their activities.
Besides this some field officials also create some illegal acts. They often try to give
false information to the people for buying a policy. And these kind of illegal acts
create bad reputation to the insurance companies and hindrance the overall insurance
business. Those who are harassed by the insurance companies discourage other not to
take an insurance policy.
Lack of motivation program towards public
According to Green Delta Life Insurance Company the people of our country are not
much motivated by the company to take insurance policy for safeguarding themselves
against any kind of risk. Almost every time they failed to understand the people that
insurance policy makes their life risk free all time. For lack of motivation among the
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Insurance Ltd.
mass people insurance companies are always lagging behind from their expected
target.
Lack of information technology
Another problem is that most of the time many of them do not use any web address,
which is essential for a large Leasing company. They can provide more information to its
client by using web site
Insufficient service
In Bangladesh insurance company people failed to provide better service to the mass
people thats why the people who want to take the insurance policy they loss their
interest from insurance. At same time in foreign country insurance workers goes to
customers house and offices regularly to aware themselves and influence them to
take insurance policy. In thats case Bangladesh insurance company people are not
that much expert.
Lack of marketing policy
One of the major problems in insurance company is lack of marketing policy.
Management is not taking initiative to increase their marketing expansion. They
provide tiny amount advertisement, which is not sufficient for increasing business
development.
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.
The discrepancy between employees perceptions and management perceptions

As a result of the differences in the under standing of customer expectations between
managers and service providers
Inadequate Training
In life insurance, for the sales personnel particularly, importance of training can not be
overemphasized. But unfortunately the present facilities for training, despite what the
Insurance academy is doing, are meager and not sufficient.
Low attractive offerings
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Insurance Ltd.
The offerings of much of the insurance companies are not so much attractive that they
can allure people to buy a life policy.
Lack of Advertisement
The lacking of proper advertisement and information about life insurance package are
also important factor for poor life insurance business.
Lack of Confidence
Lack of faith upon insurers is one of the fundamental reasons for which insurance
business cannot strong position in Bangladesh. Most of the respondents have said that
insurance in Bangladesh couldnt achieve the fullest faith of people. At one side,
insurance business is not well known to the general people and on the other side; the
known people are dubious about its service. Public image about services of insurance
companies is very poor. Majority of the insurance concerns and almost all non policyholders confessed this very frankly and counted it as a burning constraint behind the
progression of insurance business in Bangladesh. This feeling of distrust is very intense
in the case of life insurance as life insurance contract is usually made for a longer period
of time. The non-policy holders argued that the motive of insurance companies is to be a
millionaire over night.
Inadequate Government Support:
A good number of respondents held the government responsible for its little support for
the enrichment of insurance industry. Since the majority of people is uneducated and is
unaware about the benefits of insurance, the government has to take the responsibility for
wide publicity. But the government hardly performs this responsibility.
Ignorance about Claim Settlement Procedure

Ignorance about claim settlement procedure creates a drastic problem for the insurance
companies. Insurers viewed that many policyholders dont know the way of making the
claim. The only abuse the insurer for instant claim settlement. They also dont know the
requirements to be submitted to the insurers. But the insurers have to comply with the
formalities before settling the claim. The process usually delays due to the ignorance of
policyholders even though the policyholders hold the insurance companies responsible
for this delay.
Undue Promotion:
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Insurance Ltd.
A very commonly noticed problem in every employment area of Bangladesh is the undue
employment and promotion. Insurance sector is also not free from this infamy. A
significant number of respondents answered in favor of undue practice with regard to
promotion. Since majority of the insurance companies are in the hands of private owners,
the promotions sometimes depend on their willful decision. The performance of the job
holders is not properly appraise
4.2 Prospects of insurance business in Bangladesh

As well as the problems mentioned above, there are many good signs for the insurance
business in Bangladesh. The factors that can facilitate the insurance business in our
country are discussed below. These facts can be measured as the prospective fields for
insurance business in Bangladesh.
Higher GDP
The GDP of our country is increasing than the previous years 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. . With the growth in the income more and
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more people are now willing to take an insurance policy for safeguarding themselves
from 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. There is somewhat
relationship between growing populations with the number of public vehicle. As we
know all public vehicle must have an insurance policy. So growing population also
increase the motor insurance too. That is growth in population opens greater scope for
every kind of insurance business that results in growing prospect for insurance
companies.
New businesss 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. Therefore growing industry, mill,
factories are creating better scope for the insurance companies to flourish their business.
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 people regarding
taking insurance policy. Besides this insurance companies are also trying to eradicate the
negative attitude of people towards the insurance company by organizing various
programs such as seminars, programs including social responsibilities etc.
Micro insurance
Micro insurance can be a great prospective area for the insurance business in our country.
Most of the people of our country are unable to have costly and long term insurance
policies. Micro insurance can be provided to individual personnel or to small business
owners against little insurance premiums and with easy terms and conditions. When they
will afford to minimize their risks at a lower price, they will take that opportunity and
they will become to get used to it. This can cover a huge portion of the society who can
be a prospective target market for this business.
Development of new policy
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SBC has long been the sole reinsures in Bangladesh and private insurance companies
were statutorily compelled to place 100% of their reinsurance business with SBC. In
1990 the government amended the relevant provisions of the insurance Act allowing 50%
of all reinsurance of general insurance business to be placed compulsorily with SBC and
the rest to private reinsurance companies .About 70% of premium income from general
insurance business in Bangladesh is retained locally and the rest 30% goes to reinsures
abroad. Permissions to private insurance companies to act as reinsures will open up new
opportunities to them. This will initiate open competition between the SBC and
the private reinsures within the country and will reduce the reinsurance cost and increase
efficiency. This amendment of the existing rules can be another important policymaking
that will facilitate the insurance business in Bangladesh. The private insurance companies
can argue in favors of their capability to act as reinsures on the basis of the fact that the
total capital belonging to the government owned general insurance companies is Tk.
550million while the private sector insurance companies ownTk.2500 million.
Scope in non-traditional sector
Nowadays, along with traditional insurance services, they can offer various nontraditional insurance services to their customer. Target market of insurance company may
expand and they can offer different types of non-traditional insurance services such as
health insurance, personal accident insurance, travel insurance, burglary insurance and
pension scheme.
Scope of investment
Insurance companies can usually make more profit from investment activities than from
their regular insurance business. The private insurance companies are realizing this fact
and playing role in the financial market. Insurance companies are making large
investment in government bonds, ICB projects and in private sector business. There are
opportunities to enhance profit through effective and efficient money management by
employing capable and experienced personnel. Scope of investment expansion persists in
the areas leasing, housing, health and money market.
Service diversification
Insurance is not just a tool of risk coverage. It is also an attractive instrument of savings.
The mixture of risk coverage with savings gives the opportunity for innovative product
designing which means service diversification. In a dynamic insurance market one can
expect to see new products being promoted at regular intervals. So far very little efforts
have been taken to innovative and introduce need oriented insurance services in response
to existing threats. The prospect of the insurance business in various sectors that affect
our economy can be differentiated in the following way.
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4.3 The prospect of the insurance business in various sectors that affect
our economy can be differentiated in the following way.
Agriculture sector
The economy of Bangladesh is predominantly an agrarian one, with most people engage
in farming and fishing. The uncertainty of agriculture due to crop failure caused by
climate variation, drought, cyclone, flood and pests affects farmer income as well as
government revenue. Furthermore, in the last few years commercialization has occurred
in some sections of the agricultural sector. Increase in investment in the agricultural
sector is creating a new opportunity for insurance industry. Various agricultural insurance
services are becoming common these days. Demand for insurance protection against crop
loans, livestock loans, fisheries loans and equipment loans are also increasing day by day.
Business sector
Nowadays in Bangladesh the SME plays a important role in the economic development.
But they are deprived from taking loans from bank for large amount. If insurance
business focuses this section in Bangladesh they are able to contribute more in the
economy .Thus insurance business has a bright prospect in business sector in a
developing country like Bangladesh
Education sector:
Insurance companies can provide different types of scheme to expand education plan
insurance.
4.4 Role of private insurance companies in Bangladesh

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.
Insurance Ltd.
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.
Increase of employment facilities:
Insurance companies help to expand the business by providing capital and reducing risk.
Thats 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
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CHAPTER # 5
R E C O M M E N DAT I O N
AND
C O N C LU S I O N
5.1 Recommendation for overcoming the problems:

In our country the problems that exist in insurance business can not be overcome over a
right .It needs long term planning. Besides making the people aware the insurance
businessman should come forward with govt. to make this business famous. Coming
from the existing problems following steps should be taken to make this business famous.
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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.
Publicity & increase of awareness: Mass publicity activities are very essential to
overcome from unwillingness wrong idea, doubt & unbelief of the people this
country. The people media can provide an effective help regarding country
interest.
Increase of training facilities: To continue the insurance business effective

standard training facilities must be arranged for the manager & workers who are
employed in this business.
Formulation of effective Principles: Long term formulation of effective principles

is compulsory to continue the insurance business successfully.
Uphold the interest of policy holder: Success of this type of business is depended
on the trust of insured persons. To gain the trust insurance companies should come
forward to compensate the real injured as soon as possible.
Importance to the economic development: Insurance business is depend on the

development of the different sector of economic .So insurance business can never
be developed by retaining the weak situation of the sectors including industry
commerce transportation.
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.
The insurance companies of Bangladesh should practice marketing through the

use of promotional tools such as advertising, sales promotion, public relation and
publicity, personal selling and direct marketing.
To regain and maintain a positive public image the insurance companies should
overcome the dissatisfaction in regards to services and claim settlements and
should maintain a service standard.
One of the basic requirements for the insurance industry to have sustained growth
is to enhance training facilities. Bangladesh Insurance Academy is providing
training facilities and professional education to those engaged in insurance
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business in the country. The syllabus, curriculum and training programs of the
academy need to be modified to meet the modern needs of the insurance industry..
The collected premium should be invested in large and beneficial sectors so that
insurance companies can return their clients expected return in timely
5.2 Key steps for Insurance in Bangladesh

There should be vigorous campaign throughout the country to make the people aware of
the utility and prospects of buying insurance. Bangladesh is a densely populated country
and most of the people in our country are poor. They would definitively go for insurance
for the security and the risks covered by the insurance. Therefore, the prospects of
Insurance are very high in Bangladesh if the following measures can be adopted.
First of all, there is no alternative of quality service. Insurance being a service rendering
entity must provide quick services. Policyholders are highly dissatisfied with service of
JBC and SBC. Due to poor quality services, public corporations are losing market. In
order to ensure their continuity, such corporation must pay adequate attention on their
quality of service. Private companies also need put their all out efforts to improve quality
of service so as to strengthen their position.
Secondly, the government should eliminate the difficulty in licensing procedure and
should not delay in the approval of new companies if all the requirements are fulfilled. It
will help not only to increase volume of business but also solve the problems of
unemployment.
Finally, the policy holders are very much worried about the settlement of claims.
Ordinary people also consider it main constraint. Therefore, instance companies should
settle the claims as quickly as possible to create a healthy public image. For this purpose
the claim settlement procedure can be simplified and the insurers can provide proper
written
guidelines
of
claim
settlement
to
the
policyholders.
If the above steps can be taken, more and more people in Bangladesh will be interested in
buying insurance
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5.3 Limitations of the Study

This study faced a number of problem and complexity during the operation that
ultimately limited its purposes thoroughly. The limitations of the study were as follow:
The time frame for this study was one of the major limitations. This kind
of studies essentially needs a secondary data collecting team for the
survey. Moreover such time frame doesnt allow the collection of all
necessary data from all the respondents.
It becomes too hard for us to collect necessary information and prepare a
standard report.
Without enough funds, these types of studies research cannot reach up to
the desired level.
It was very difficult to get the insurance companys confidential
information.
This thesis is mainly based on a single insurance company though it tried
to find out the general cases in insurance industry in Bangladesh.
5.4 Conclusion
At present insurance is too much important to the business and individual sector. Most of
the companies provide more or less same services. For this reason the competition is
increasing day by day between the insurance companies. On the other hand some new
insurance companies are going to start businesses in the competent market. BGIC need to
develop their some productive sectors. In present, a company cannot establish properly
without developing information technology. People search their desires requirement
through Internet so, insurance companies need to develop Web address to increase both
foreign and local investors. So we have discussed about both the problem and prospects
of insurance business in Bangladesh. The progress of insurance business depends on the
progress of economic condition .Insurance business also faces many problem. So if we
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develop economic condition as well as overcome the problems, it will help a lot to
flourish this business in our country.
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Internship Report on

Problem and Prospect of general insurance A case study of Eastland

1.4 Methodology of the Study

Text book s on insurance

Reference books on insurance

Annual report of insurance

Annual report of insurance

1.5 Rational of the study

GENERAL CONCEPT OF INSURANCE AND HISTORY OF

2.1 Concepts of insurance in brief

2.2 History of Insurance

2.3 How insurance works

2.4 Background of insurance business in Bangladesh

2.4.2 Insurance in Bangladesh

2.5 Present position of insurance business in Bangladesh

2.6 Growth of Insurance in Bangladesh

3.1 Company Profile

Eastland Insurance Company Ltd. being sponsored by a group of entrepreneur exposed to

: Eastland Insurance Company Limited

: 13 Dilkusha C/A, Dhaka 1000,

: Tk. 276.06 Million

: Tk. 500 Million

: November 05, 1986

: November 05, 1986

Credit Rating Grade

Listing with Dhaka Stock Exchange (DSE)

Listing with Chittagong Stock Exchange (CSE)

Allotment of Public Share

Face Value Per Share

Earning Per Share (EPS)

Average Annual Growth over the last 5 years

Total Asset of the Company

: Over Tk. 1104 million

: About Tk. 554 million

: Tk. 824.94 million

Eastland is the proud sponsor of 02 (two) reputed Non-Banking Financial Institutions

Sponsors of IIDFC are:

Janata Bank Ltd.

Invest Corporation of Bangladesh (ICB)

Bank Asia Ltd.

BRAC Bank Ltd.

The City Bank Ltd.

Mutual Trust Bank Ltd.

National Bank Ltd.

One Bank Ltd.

Southeast Bank Ltd.

Sonali Bank Ltd

National Life Insurance Co. Ltd.

Pragati Insurance Ltd.

Mr. Md. Matiul Islam

: BDT 2,000 million

: BDT 520 million

Sponsors of National Housing Finance and Investments Limited are :

National Bank Ltd.

United Commercial Bank Ltd.

Eastern Insurance Company Ltd.

IFIC Bank Ltd.

Jibon Bima Corporation

National Life Insurance Company Ltd.

Pragati Insurance Ltd.

Reliance Insurance Ltd.

Sadharan Bima Corporation