EM 530: Insurance & Risk Management

Presentation on:
Reconstruction and Re-innovation of Insurance Company
in Bangladesh
for Converting it into a Profitable Industry
Contents

The main objective of this presentation is to understand:

 Current Scenario of Insurance Business in Bangladesh
 Problems of Insurance Business in Bangladesh
 Prospects of Insurance Business in Bangladesh
 Recommendations & Conclusion.
Current Scenario of Insurance Business in Bangladesh

Md. Rafiqul Akhter Saikat

(ID: 3-17-35-071)

Department of Management
Faculty of Business Studies
Summer 2018
 Current Scenario of
Insurance Business in Bangladesh
At present, there are 46 general (non-life)
Life Insurance Companies
insurance and 20 life insurance companies
are operating in Bangladesh. Public Sector Bangladesh Jiban Bima
Corporation
General (Non-life) Insurance Companies Private Sector (Foreign) MetLife Bangladesh
Public Sector Bangladesh Sadharan LIC Bangladesh Ltd
Bima Corporation Private Sector (Local) Chartered Life Insurance
Private Sector Agrani Insurance Company Ltd.
Company Ltd. Fareast Islami Life
Islami Insurance Insurance Co. Ltd.
Bangladesh Ltd. Pragati Life Insurance
Janata Insurance Ltd
Company Ltd. Rupali Life Insurance
Pioneer Insurance Company Ltd.
Company Ltd. Sandhani Life Insurance
United Insurance Company Ltd.
Company Ltd.
 Current Scenario of
Insurance Business in Bangladesh

• Table 2.2 shows that during the last

decade the average net premium of
Bangladesh insurance companies was
about Tk.24811.49 million.
 Current Scenario of
Insurance Business in Bangladesh

• Table 2.3 shows that Life insurance

premiums constituted Tk.17685.12
million and General insurance
constituted Tk.7126.37 million.
 Current Scenario of
Insurance Business in Bangladesh

• The growth of non-life insurance

premiums in Bangladesh has sharply
dropped, registering below 1% for 2015
despite growing nearly 10% in 2014.

• Data from the Insurance Development

and Regulatory Authority showed that
Bangladesh’s 45 non-life insurers earned
BDT32.25 billion in premiums for 2015,
growing just 0.97% compared to 2014’s
figure, which was BDT31.95 billion.
Problems of Insurance Business in Bangladesh

Kazi Md. Yasin Ullah

(ID: 3-15-31-031)

Department of Management
Faculty of Business Studies
Summer 2018
 Problems of Insurance Business
in Bangladesh

1. Lack of Public Faith: 3. Poor Economic

Unqualified & Inexperienced
Agents are responsible for poor
public image & public confidence.
4. Centralization Policy:
Most of the insurance companies
are located in urban areas. They
think that they have better
opportunities for their business in
cities ignoring the large number of
our population in rural areas.
2. Lack of Public Awareness: Conditions:
Mass Illiteracy & Lack of Knowledge on
A major part of the people in
the Benefits of Insurance hinders the this country live under extreme
growth of the insurance sector. poverty. It is quite impossible
for them to save money for
future need.
5. Excessive Management Expense:
Most of the second and third generation insurance
companies are facing the problem of excessive
management due to having 10 or more tiers in the
field level for competition. This is unsustainable in
the long-run.
 Problems of Insurance Business
in Bangladesh

7. Poor Risk Management: 8. Tax Constraints:

6. Lack of Marketing Most of the sample insurance companies The high corporate tax
Policy: have used traditional methods in evaluating restricts the growth of the
Management is not taking comprehensive risk. The shortage of skilled insurance sector. Now the
initiative to increase their and experienced professionals making the insurance companies pay a
marketing expansion. They insurance companies unable to underwrite corporate tax rate of 42.5
spend very less in and manage their risks on a scientific basis. percent which is higher
advertisement, which is not than in other countries.
sufficient for increasing
business development. 9. Political Instability:
Political instability is a serious problem
for the insurance business.
 Problems of Insurance Business
in Bangladesh (Continued)
10. Lack of Supervision
from the Government: 11. Reinsurance:
Lack of surveillance from controlling At present the insurance law requires
agency of government encourages that all general insurance companies
many insurance companies to follow must compulsorily place 50% of their
some unethical practices like delay in reinsurance with SBC
claim settlement, harassment to
policy holders and showing fake 12. Lack of Training for the
financial statement.
Employees:
Spread of insurance business in Bangladesh
13. Lack of Qualified Officials: failed for lack of proper training of the
Most of the agents are not properly employees, especially the field employees of
trained and they do not know the right insurance companies.
process to catch potential policy holders.
 Problems of Insurance Business
in Bangladesh (Continued)
14. Absence of Business 15. Lack of Motivational Program
Ethics: towards Public:
• Some insurance companies create
The people of the country fail to understand or
harassment to the policy holders
believe that insurance policy makes their life risk
when they want back their money
free. So there remains lack of motivation.
after death or maturity.
• Besides this, some field officials
also often try to give false
information to the people for 16. Lack of Information:
buying a policy. • Lack of information about the
insurance policies and benefits.
17. Insufficient Service: • Lack of adequate arrangement to
Insurance people failed to provide make the people understand about
better services to the mass people of different policies, opportunities,
the country. That’s why the people benefits etc.
who want to take the insurance
policy they lose their interest from
insurance.
Prospects of Insurance Business in Bangladesh

Md Shafayat Ullah Bhuiya

(ID: 3-15-31-053)

Department of Management
Faculty of Business Studies
Summer 2018
 Prospects of Insurance Business in Bangladesh

1. Large Population: 4. Social Security:

2. Economic expansion: 3. Dependency on agriculture:

 Business
risks

Economic
opportunities

As a developing
nation, balance is
must
Prospect supporting components in Bangladesh

– Developing country
– EPZ expansions
– Govt. Plans on insurance expansion
– Global business diversion
– Geographical advantage on business
Recommendations & Conclusion

Muhammad Maruf Ahmed

(ID: 3-15-30-018)

Department of Management
Faculty of Business Studies
Summer 2018
 Recommendations & Conclusion
1. Regain Popularity with
Appropriate Marketing
Strategy:
To regain and maintain a positive
public image, the insurance companies
should practice appropriate marketing
strategy and provide better service to
its customers.
4. Arrangement of Training
Programs:
Relevant authorities in collaboration
with supportive agencies should
provide training to the insurance
related personnel for improving the
insurance business in the country.
Bangladesh Insurance Academy (BIA)
should arrange training program on
regular basis.
2. Developing Professional 3. Establishment
Code of Ethics: of R&D Cell:
Insurance companies should try to In response to the
opportunities of growing
develop professional ethics among its
personnel. Government should have a market, the insurance
regulatory body for the surveillance companies should expand
on insurance companies their market by identifying
and providing responsive
services.
5.Investment:
The collected premium should be invested in
large and beneficial sectors so that insurance
companies can return their clients the expected
gain timely. In this respect, they should
progressively come forward to invest heavily in
profitable earning sectors such as real estate,
health, education, leasing, share market and other
money markets.
 Recommendations & Conclusion

6. Legal Reforms: 7. Monitoring: 8. Recruitment

The existing law allow the only two
public sector insurance companies to do
all government insurance business. Also,
according to current insurance rules
only these two public sector insurance
companies can do reinsurance business.
This restriction need to be withdrawn so
that the private insurance companies can
do reinsurance business.
The office of the
Controller of Insurance
should be strengthened
with expert professional
people aiming at efficient
handling of the affairs of
the insurance companies.
Strategies:
Insurance companies need to
modify their recruitment
strategies with increased focus
on the marketing and sales
training because insurance
being a service industry it
requires a special attention.

9. Claim Settlement: 10. Removing Multi-Tier Fake Agents:

Claim settlement procedure
should be made easy, transparent
and improved by the insurance
companies.
Unnecessary multi-tier organizational set up should be
replaced by one tier. This is essential for reducing the
management expenses. Fake agents or dummy agents
who indulge in malpractices should be eliminated and
selection of agents should be unbiased.
THANK YOU
EVERYONE!