1.

History Of Insurance In Bangladesh:

The origin of insurance is lost in antiquity. However, there is no evidence that insurance in its present form was practice prior to the twelfth century. A brief chronological historical development of the various branches of insurance is given below: *Marine Insurance: Marine is the oldest form of insurance and came first in the list. This type of insurance probably began in northern Italy sometime during the 12th& 13thcentury and gradually the concept was rather transferred to or taken over by the United Kingdom. During the 13th/ 14thcentury the Italian merchants went to UK and along with the merchandise carried with them the trading customs including the concept of marine insurance. Marine insurance as such was not being practiced as a separate specialized entity during that time since it were the merchants who used to transact marine insurance business side by side with their general trading activities Fire insurance : After marine insurance fire insurance developed in present form. It had been observed in Anglo-section Guild form for the first time where the victims of the fire hazards were given personal assistance by providing necessaries of life. It15 had been originated in Germany in the beginning of sixteenth century. The fire insurance got momentum in England after the great fire in 1666 when the fire losses were tremendous. Life insurance : The third in the list of development is the life insurance business. The earliest policy of which there is a record dates back to 1583. During this period only short term polices were used be issued meaning that only at the death of the life assured during the term period the money was to be paid. On

survival nothing was payable. In 1693 Halley introduced the mortality table giving a definite value to risk of death. In 1974, the life Assurance Act was passed in the British parliament requiring the presence of insurable interest before one could effect a life policy on the life of another. All these gradually gave life assurance a sound, systematic and scientific basis as we see in the present day.2.3 Development of Insurance in Bangladesh Insurance is not a new idea or proposition to the people of Bangladesh Current pattern of Insurance in Bangladesh:
After the emergence of the Peoples Republic of Bangladesh in 1971, the government nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95.By virtue of this order, all companies and organization transacting all types of insurance business in Bangladesh came under this nationalization order. This was followed by creation of five insurance companies in the life and non-life sector. Further changes were brought on 14th May,1973. Through the enactment of Insurance Corporation Act VI, 1973 which led to creation of two corporations namely Sadharan Bima Corporation for general insurance and, Jiban BimaCorporation for life insurance in Bangladesh. In other words Sadharan Bima Corporation (SBC)emerged on 14th May, 1973 under the Insurance Corporation Act (Act No. VI) Of 1973 as theonly state owned organization to deal with all classes of general insurance & reinsurance business emanating in Bangladesh. Thereafter SBC was acting as the sole insurer of general Insurance till 1984. Bangladesh Government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. The private sector availed the opportunity promptly and came forward to establish private insurance companies through promulgation of the Insurance Corporations (Amendment) Ordinance (LI of 1984) 1984.The Insurance Market in Bangladesh now consists of two stateowned corporations, forty three and seventeen private sector general & life insurance companies respectively, a total of 62insurance companies.

Thus the insurance sector in Bangladesh has grown up substantially and deepened remarkably with number of companies in both life and general segments. With the expansion of size of the insurance market, the volume of assets of the industry has also increased substantially. SBC is entitled to 50% of public sector business. Insurance Corporation (Amendment) Act 1990 provides that fifty percent of all insurance business relating to any public property or to any risk or liability appertaining to any public property shall be placed with the SBC and the remaining fifty percent of such business may be placed with this corporation or with any other insurers in Bangladesh. 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. In respect of reinsurance, the same act provides that fifty percent of a companys reinsurance business must be placed with the Sadharan Bima Corporation and remaining fifty percent may beer insured either with this Corporation or with any insurer in Bangladesh or abroad. At present, nearly all the companys place 100% of their reinsurance business with the SBC. Role of private insurance companies in the economic development of Bangladesh: Formation of capital & increase of investment: Insurance companies receive premiums from insured persons. These premiums increase national capitals. By investing the se capitals, national productions increase. Reduce of hindrance of risk: every sorts of business consists of risks. These risks are more hazardous in Bangladesh. Insurance companies minimize these risks by giving privileges on loss. Maintenance of national wealth: insurance companies not only secure financial facts, but also influence people to take necessary steps to avoid risks. Distribution of risks: insurance companies deal with lots of insured people. So risks are being distributed among them.

 Extension of business: By taking all uncertain business risk insurance companies extended the field of business in our country. Insurance gives the assurance of indemnity and help to collect the capital to 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 Problems And Prospects Of Insurance In Bangladesh are: PROSPECTS : 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 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. 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. 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 problem regarding taking insurance policy.

Problems
1. LOW PER CAPITAL 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 capital 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. 2. POOR KNOWLEDGE OF AGENTS: The marketing of insurance is greatly hampered in the remote village of Bangladesh where the agents are appointed from respected locality. This is because; educated young people are seemed to be reluctant to become insurance agents. Such agents cannot play efficient role in convincing a prospective policyholder. 3 ILLETERACY: 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. RELIGIOUS SUPERSTITION: Religious attitude of the people also stands against efficient insurance. The religious people believe that the future is uncertain, it is in the hand of Allah and they do not think it necessary to buy life insurance policy for them. 5. 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. 6.. 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 deemed to sufficient for the payment of premiums. This factor discourages many to buy life insurance policy. 8. SHORTAGE OF FUND : Most of the policyholders cannot continue their policies owing to price spiral and shortage of fund.

2. http://www.thefinancialexpress-bd.com/index.php?ref=MjBfMDRfMTJfMTNfMV81MV8xNjYxMjI=

3.

Consistent with the privatisation policy the world over, the Government of Bangladesh took a decision in 1984

to allow operation of insurance companies in the private sector side by side with state-owned Sadharan Bima Corporation and Jiban Bima Corporation. As a result, a number of companies in the private sector came into being in 1985 and the necessity of forming an Association was keenly felt. The representatives of the private insurance companies at a meeting held in early 1985 decided that an Association should be formed with all the companies, both life and non-life, as members. Following the decision, Bangladesh Insurance Association was formed under the companies' Act 1913 and registered with the Registrar of Joint Stock Companies on 25th April' 1988 with 13 insurance companies, including 3 in life, operating at that time in the private sector in the country as members. The total number of members stands now at 60 (43 general and 17 life). The objectives for which the Association has been formed are to promote, support and protect the interests and welfare of the member companies, to help develop the healthy growth of insurance business in the country, to act on behalf of its members both collectively and individually in any matter affecting their interest, to issue tariffs and regulate rating of risks, to approach the government from time to time to take such steps as may be deemed expedient in the interests of the insurance industry as a whole, to provide facilities to enable persons engaged in insurance to acquire higher skill and to cultivate internationally recognized legal and ethical practices in the conduct of insurance business. The Association is run by an Executive Committee consisting of 15 members (10 general and 5 life) including 1 Chairman & 1 Vice-Chairman. The Association has 6 Sub-Committees namely a) Disciplinary Sub-Committee, b) Life Sub-Committee, c) Re-insurance Sub-Committee, d) Research Development and Training Sub-Committee, e) Technical Sub-Committee and f) Publicity Sub-Committee to assist the Executive Committee as and when necessary. The Secretary General is the Chief Executive of the Association and in performing his duties he is assisted by other well trained officers and staff. The Bangladesh Insurance Association has been ceaselessly working for the promotion of the insurance industry and to protect the interests of the member companies since its inception. The problems from time to time are discussed in the meetings of the Executive Committee and various Sub-Committees, and whenever necessary these are taken up with the Government and appropriate authorities to resolve the issues. Bangladesh Insurance Association is the member of the different bodies, such as the Federation of the Bangladesh Chamber of Commerce & Industry (FBCCI), International Chamber of Commerce-Bangladesh (ICCB), Bangladesh Employer's Federation. BIA Chairman represents BIA in different bodies like Dhaka Stock Exchange, Federation of Bangladesh Chamber of Commerce & Industry (FBCCI), International Chamber of Commerce-Bangladesh (ICCB) and Bangladesh Insurance Academy. BIA organizes in house training programmes for the officers of the member companies both Basic & Short Courses to augment the working knowledge of the officers working in the desk. BIA also organizes seminars on important current issues for growing insurance awareness among the People. Bangladesh Insurance Association recently signed a memorandum of Understanding (MOU) with Malaysian Insurance Institute (MII). This is the first step by the BIA in its endauvour to train up officers in technical education of world class standard.

Problem of Insurance:

Growing cost of business is another problem that insurance companies are

facing now-a-days. Government tax, house rent, utility charge, commission fee and cost of stationeries are growing day by day. But their businesses are not growing so fast with that rate. Besides, policyholders are not willing to pay too much premium with growing cost that is hampering the strategies of insurance companies, Mollah said. So, they are facing difficulties in running their business efficiently. In order to meet the challenges, the Insurance Act 2010 and IDRA Act 2010 have been enacted and the new acts have made a promise to bring the positive changes and looking forward for the beginning of globally competitive modern insurance sector in Bangladesh

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http://www.lawyersnjurists.com/articles-reports-journals/bank-and-financial-institutes/problems-

prospect-insurance-business-bangladesh/