PREMIER UNIVERSITY

Faculty of Business Studies,

Chittagong
Assignment On
Insurance In Bangladesh
Course Code: FIN 457
Course Title: Insurance & Risk Management
Submitted To
Ms. Fatema Afreen
Lecturer
Department of Finance
Premier University, Chittagong.
Submitted By
Name ID
Anantara Das 1603410109186

Department: Finance

Section: B

Semester: 7th
Submission Date: 10th July 2020
1.1 Introduction:

Insurance is a system of spreading the risk of one to the shoulders of many and
which is a legal contract between two parties ,where insurer ,who ensure to pay
compensation against loss arising out of particular risk & insured , who pay fixed
amount of premium to get compensation against loss arising out of the risk.
According to M.N.Mishra ,”Insurance is defined as a cooperative device to spread
the loss caused by a particular risk over a number of persons who are exposed to
it & who agree to ensure themselves against that risk”. However, not all risks are
insurable. If an insurance company would have difficulty calculating the likelihood
that a loss would occur because of some risk, it is reluctant to insure against that
risk. Risks of this type are generally called uninsurable risks.
TYPES OF INSURANCE
• Home insurance
• Health
• Disability
• Casualty
• Life
• Property
• Liability
• Credit
• Insurance financing vehicles

From the above explanation, we can find the following characteristics which are,
generally, observed in the case of life, marine, fire, and general insurances:

1. Sharing of Risk

Insurance is a device to share the financial losses which might befall on an

individual or his family on the happening of a specified event.
 2. Co-operative Device

The most important feature of every insurance plan is the co-operation of a large
number of persons who, in effect, agree to share the financial loss arising due to a
particular risk that is insured.

3. Value of Risk

The risk is evaluated before insuring to charge the amount of share of an insured,
herein called, consideration or premium. There are several methods of evaluation
of risks.

4. Payment at Contingency

The payment is made at a certain contingency insured. If the contingency occurs,

payment is made.

5. Payment of Fortuitous Losses

Another characteristic of insurance is the payment of fortuitous losses. A

fortuitous loss is one that is unforeseen and unexpected and occurs as a result of
chance. In other words, the loss must be accidental.

There are many many types of insurance organization like: a)self-insurance,

b)Individual insurer, c)partnership ,d)joint stock companies, e)co-operative
insurance organization, f)state owned organization

1.2 Origin of the insurance In Bangladesh:

The British rule ended in the Indian sub-continents in the year 1947 from when
Bangladesh (the then East Pakistan) was a part of Pakistan(the then West
Pakistan).During that period, there were 49 insurers operating in then East
Pakistan with offices in Dhaka and Chittagong; but their reporting was to the
principal offices located in the West Pakistan. Subsequently Bangladesh achieved
independence in 1971 from Pakistan. Just after 02 years of independence
abolishing all insurance companies of the country under provisions of insurance

corporation Act 1973, the government of Bangladesh has set up two corporation

a) Shadharon Bima Corporation (SBC) & b) Jibon Bima Corporation (JBC) to deal
with Non-Life & Life insurance respectively. Thereafter Insurance Corporation Act
1973 was amended to allow private insurance companies to operate side by side
with these two state-owned corporation, providing direct insurance to the
policyholder, & reinsurance to private insurers being functional under the
auspices of Insurance (Amendment) Ordinance, 1984. The two foreign life
insurance companies are Taiyo Summit Life Insurance Company and Life
Insurance Company (LIC) set to get license for doing insurance business in
Bangladesh.

Table1

Insurance Company In Bangladesh (2019)

Ownership Non-life Life Total

Government owned 1 1 2

Private sector 45 29 74
Foreign 0 2 2
Total 46 32 78

An Overview of Bangladesh Insurance Industry Despite the challenging

environment, year 2017 ended with a positive note for the insurance industry of
Bangladesh where the total Gross Premium generated from life and non-life
insurance sectors collectively recorded a growth of 7.90% (2016 : 4.04%) and the
premium income amounted to BDT 11,179.89 crores (2016: BDT 10361.33 Crores)
 (Table 6 and Chart 3). In 2017, the global life and non-life insurance premiums
recorded a growth of 2.9% and 5.4% respectively and it is notable that emerging
markets, in particular emerging Asia, was the main driver of global premium
growth in both long term and general insurance sectors (Sigma 2017).
In the year 2018,78 insurance company has earned the gross premium amount of
BDT 103.84 billion equivalent to USD 1.22 billion . The premium development
diagram from 2012-2017 is as under.

Table 2:Premium Income & Growth Rate of the Insurance Industry

Year Gross Premium (BDT Crore) Growth - (%)

Life Non-Life Life & Non Life Life Non-life Life & Non Life
2012 6587.10 2167.27 8754.37 5.31 10.16 6.47
2013 6839.71 2292.80 9132.51 3.83 5.79 4.32
2014 7076.32 2445.71 9522.03 3.46 6.67 4.27
2015 7316.09 2643.01 9959.10 3.39 8.07 4.59
2016 7588.45 2772.88 10361.33 3.72 4.91 4.04
2017 8198.46 2981.43 11179.89 8.04 7.52 7.90

1.3 List of Insurance Companies in Bangladesh:

1. Public Sector (Life):
 Jiban Bima Corporation (JBC)
2. Public Sector (Non-Life):
 Sadharan Bima Corporation (SBC)