ORGANIZATION OF JIBON BIMA CORPOTATOION:

The jibon bima corporation is the lone state -owned life insurance company in
Bangladesh. Which started its maiden journey on May 14,1973 with assets and
liabilities worth TK 15.70 crore of Defunt 37 life insurance companies. Since its
inception, JBc is working among the people of Bangladesh with two basic
objectives: firstly, to cover the risk and raise savings habits among the people and
secondly , create funds for the country’s economic development through innovative
life insurance schemes.

Meanwhile, the life fund of jibon bima corporation has shot up to TK 1498.82 crore
up to the year 2013, which was only 21.83 crore in 197 3. JBC has paid TK 1580.9
crore against various claims, the highest such p ayments in country’s life insurance
business. The JBC’s investment has reached Tk 1411.28 crore from only 19.07 crore
in 1973. The JBC has the highest network all over the country with & regional,9
zonal, 68 sales and 354 branch offices. T

The corporation offers 21 different types of life insurance schemes. These are whole
life assurance, endowment assurance, child protection policy, children endowment,
anticipated endowment assurance, pension scheme policy, single payment policy,
mortgage protection policy, group term insurance policy, group endowment policy,
group variable endowment policy, group pension policy, grameen bima policy, joint
life endowment policy, and progressive premium policy.

FUNCTIONS OF JBC:
 JBC offer 21 different types of life insurance scheme.
 Web services
 Online premium payment
 Bonus information
 Tax benefit and rebates
 Banglalink insurance pay service
SHADARON BIMA CORPORATION:
Sadharan Bima Corporation (SBC) the lone government-owned commercial general insurance
institution was established on 14 May 1973 with an approved capital of Tk 50 million under the
Insurance Act, 1973. SBC, being the only state-owned organisation did monopoly business in the
field of insurance from its inception to 1984. As a part of the implementation process of the
government's privatisation policy, a few private insurance companies emerged in 1984 following
the promulgation of B-1 Ordinance which allowed private insurance business in Bangladesh for
the first time. These companies ware allowed to engage in insurance business with only private
enterprises but SBC had the right of 100% reinsurance. Later in 1990, the Insurance Corporation
(Amendment) Act was enacted. It allowed private insurance companies to deal with insurance of
public enterprises and the limit of their quota was fixed upto 50% of each concern. But the
changed policy created more complication and ultimately the government decided to restore the
authority of SBC for doing 100% insurance business of all public enterprises. However 50
percent of the premium earned from this sector was distributed equally among all private
insurance companies. The Insurance Corporation (Amendment) Act, 1990 allowed the private
insurance companies to make 50% reinsurance with private companies, both local and foreign.
The remaining 50% reinsurance had to do with SBC. The privatisation policy of the government
helped a lot to grow private insurance companies in the country. Since 1984, a total of 43 private
general insurance companies have been doing business successfully competing with SBC. The
Insurance Act, 2010 and the Insurance Development and Regulatory Authority Act, 2010, after
being effective have made the insurance market more vibrant and time-befitting.

The authorised capital of SBC was increased to 200 million taka in 1986 under the Insurance
Ordinance No 8. At present, it has an authorised capital of Tk 200 million and a paid up capital
of Tk 100 million. The government gives the full amount of capital.

The headquarters of Shadharan Bima Corparation is located in Dhaka. It has 88 offices including
6 zonal, two regional offices, and many branch and unit offices throughout the country.
According to the approved organogram these offices have 2,623 manpower including 955
regular staffs.

FUNCTIONS OF SHADARON BIMA CORPORATION:

 Insuring public and private property risks.
 Liability insurance coverage
 Reinsurance of the risk underwritten by private non-life insurers
 Risk improvement services
 Weather index based insurance Solutions
 Industrial and human resources for development for insurance industry.
PROBLEM AND PROSPECT OF GENERAL INSURANCE IN
BANGLADESH:

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

SOCIAL PROBLEMS :

Less Public awareness:

A vast majority of people especially in rural areas are left outside the insurancecoverage. This
mainly results from the unawareness among the people. Even a largeportion of people don’t have
the minimum idea of insurance. People are not aware ofthe benefits from the insurance policy
and a great number of people believe thatinsurance business is nothing but cheating and assume
that insurance policy is quiteunnecessary. This negative attitude from the people is lessening the
importance ofabsorbing insurance policy in a large extent.
Centralization:

Most of the insurance companies in our country are located in urban areas and thereare few
branches in rural areas. They think that they might have better scope forperforming their
business as the economic condition of the urban is better than therural areas. They don’t think
that the large number of our population reside in ruralareas and if branches are expanded in rural
areas then the business can thrive if propermotivation policy is taken to aware the mass people of
the rural areas. Thus thiscentralization policy acts as an obstruction for the growth of insurance
business in ourcountry.

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.

ECONOMIC PROBLEMS :

Poor economic conditions:

Bangladesh is one of the poorest countries in the world and most of the people in thiscountry live
under extreme poverty level. All of these people fight hard to earn theirlivelihood and are
marginal in relation to the expenditure with the income. It is quiteimpossible for them to save
some money for future need. Therefore they are quiteunable to give the amount to the insurer
which is called as premium and regarded assafety or precautionary measures against any
accident. The number of people who canbear the premium to the insurance company is very few
in regard to those mentionedabove. Therefore the overall poor economic condition is creating
obstacle to flourishthe insurance business in Bangladesh.

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 insurancecompanies because they are
not maintaining the minimum standards. They areinvesting their money in poor securities and
business which is vulnerable regardinggetting back the money with profit. As a result most of the
insurance companies aresuffering from loss years after years and for poor financial condition the
insurancecompanies are also unable to expand their branch which is a barrier for the growth
ofinsurance business in Bangladesh.

Higher cost of business:

Growing cost of business is another problem that insurance companies are facing nowa day.They
urge that government tax, house rent, utility, commission fee, stationeriesare 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 growing.

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 deemed to sufficient for the
payment of premiums. This factor discourages many to buy life insurance policy.

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. Thepeople who operate
various businesses in our country often experience various typesof inconvenience in running
their business. Insurance business is not an exception 0ofthis. Political instability and
inconsistency of political courses are a serious problemfor the insurance business.

Lack of supervision from the government:

Lack of surveillance from government ministry encourages many insurancecompanies to follow

some unethical practices like make harassment to policy holderand showing less in the financial
statement. This not only destroying the reputation ofthe well known insurance companies but
also creates negative impact in the mind ofthe people about insurance. Besides this government
sometimes impose someconflicting rules and regulation without discussing with insurance
companiesgoverning body. It creates conflict among insurance companies with government
andact 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 measuresare changed
which is the main constraint for long term plans. Without long termplanning any permanent
development or solution of existing problems are impossible.

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 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.
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 don’t 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:

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 company’s

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 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
that’s 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 customer’s house and
offices regularly to aware themselves and influence them to take insurance policy. In that’s 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 employee’s 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

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 couldn’t 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 policy-holders 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 don’t know the way of making the claim.
The only abuse the insurer for instant claim settlement. They also don’t 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:

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

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 year’s 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 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 business’s 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:

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 non-traditional
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.