INTERNSHIP PROJECT REPORT

ON
ROLE OF LIFE INSURANCE COMPANY IN THE ECONOMIC
DEVELOPMENT OF BANGALDESH AND FINANCIAL CONTROL SYSTEM:
A STUDY ON JIBAN BIMA COROPORATION.

(This internship Project report is submitted for the partial

fulfillment of the Degree of Master of Business
Administration with a major in Finance)

SUPERVISED BY
MR. MD. SHAHIDUL ISLAM
MBA Program Director
School of Business, UITS.

PREPARD BY
A.K.M. NAZRUL CHOWDHURY
Program : MBA
ID No. : 08435034
Batch : 15th
Major : Finance & Accounting

University of Information Technology &

Sciences

1
 LETTER OF SUBMISSION

25 February, 2010

To
Mr. Md. Shahidul Islam
MBA Program Director
School of Business,
University of Information Technology and Science (UITS).

Subject: Submission of Internship Report Project.

Dear Sir,

I have the honor to inform you that I have completed my internship

project report on “Role Of Life Insurance Company in the Economic
Development of Bangladesh and Financial Control System: A study
of Jiban Bima Corporation” for the purpose of partial fulfillment for
the degree of Masters of Business Administration with a major in
Finance and Accounting.

As your valuable suggestions and guidance, I have tried my best to

prepare the report properly. I have tried my best to prepare the
report properly. I sincerely believe that you will find this report very
significant and informative.

I therefore, pray and hope that you would be kind enough to accept
this report and oblige thereby extends your co-operation and
advice.

Sincerely yours

A.K.M. NAZRUL CHOWDHURY

Program : MBA
ID No. : 08435034
Batch : 15th
Major : Finance & Accounting
University of Information Technology and Science, Chittagong.

2
 ACKNOWLEGEMENT

At the very beginning I would like to express my gratitude to

my supervisor Mr. Md. Shahidul Islam, MBA Program Director,
School of Business Faculty, University of Information
Technology and Science, Chittagong for his proper guidance,
inevitable help, counseling and special attention at difference
phase of preparing this report.

In addition, I am most grateful to the management of Jiban

Bima Corporation for their co-operation and friendly inspiration
in completing the thesis report successfully.

Finally, I am deeply indebted my parents for their sacrifices

and encouragement for completion of my MBA course and for
preparing this report.

3
 PREFACE

Assignment is the inseparable part of university education. It is

the combination of university education and practical
knowledge. Realizing the above facts, faculty of business
administration, University of Information Technology and
Science, Chittagong has taken an initiative to include a
comprehensive assignment programs for MBA students. I have
prepared my assignment on the basis of experience and
activities that I have observed and performed during my whole
service life. I have tried my level best to submit this
assignment and overcoming the limitation.

4
 EXECUTIVE SUMMARY

The economy of Bangladesh is in the process of a transition

from a predominantly agrarian to a quasi-industrial and service
economy. Economy and financial industry go together and are
inseparable. So, it is a great pleasure for me that I have been
completed report on Jiban Bima Corporation. My Internship
report contains all the information about my work experience
with Jiban Bima Corporation(JBC), which was established in
1990. My learning experience with JBC being with my joining
form 21-12-1999. I Shall try to discuss and include
introduction, history, objective, status, mission and financial
analysis etc.

Jiban Bima Corporation has been playing an important role in

the economic development of the country. They generated
employments four hundreds of people in the projects and
industries establish under their finance.

At the end, the following steps are recommended on overall

basis for the further advancement and enlistment of JBC.

5
 TABLE OF CONTENT

Page No.

Chapter 1 : Introduction 08

Background of the
1.1
study
1.2 Objective of study
Methodology of the
1.3
study
1.4 Scope of the study

1.5 Limitation of the study

1.6 Problem Statement

Chapter 2 : History of Insurance 13

Industry

2.1 Introduction

2.2 History & Development of Insurance

Development of Insurance in
2.3
Bangladesh
Implication of five forces model (By Michael E. Porter) in insurance
2.4
industry of Bangladesh

Chapter 3 : Bangladesh Insurance 21

Academy

Chapter 4 : Company overview & Financial Control System of Jiban 2

Bima Corporation (JBC) 3

4.1 Company Overview

(a) Corporate Information

(b) Vision, Mission, Objective

(c) JBC’s products and

Services Policies
4.2 Financial Control System

(a)Marketing & the Process of Create a

Policy
(b)Risk Management

(c) Settlement of Claim

6
 (d)Customer Service

(e)Human Resource Development

Process
(f) Information & Communication Technology in
Operation
(g)Information Policy

(h)Research & Development and

Training
(i) Corporate Social Responsibilities

(j) Cash flow Statement

(k)Statistics of Business Performance

(l) Credit Rating

(m) Five Years at a glance of JBC

Chapter 5 : Role of Life Insurance Company in the

Economic Development
of Bangladesh 39
Contribution of
5.1
Economy
5.2 Contribution in Society
5.3 Development in Economy & Society
Tax Payment System of JBC & Revenue to the
5.4
Government
5.5 Customer Service & Satisfaction

Chapter 6 : SWOT Analysis of JBC 45

Chapter 7 : Findings & Recommendation 47

7.1 Findings
7.2 Recommendation
7.3 Conclusion

Reference 50

7
CHAPTER 1 : Introduction

1.1 Background of the Study

1.2 Objective of Study

1.3 Methodology of the Study

1.4 Scope of the Study

1.5 Limitation of the Study

1.6 Problem Statement

8
To provide the qualified executives a strong foundation in the
concepts principles and techniques of modern business
administration and to train, develop a new generation of
managerial leaders capable of coping with every changing
business University of Information Technology and Science,
Chittagong has taken an initiative to include a comprehensive
assignment programs of MBA students.

1.1 Background of the Report

This report has been prepared as a requirement of the

insurance and risk management course. The report was based
upon the overall insurance company’s problems and prospects
in Bangladesh. I was duly approved by our Course Supervisor
Md. Shahidul Islam. This report will help us know about the
insurance business problems and prospects in Bangladesh.

Insurance is a system of spreading the risk of one to the

shoulders of many. It can be defined as a co-operative device
to spread the loss caused by a particular risk over a number of
persons who are exposed to it and who agree to ensure
themselves against that risk. It is a contract whereby the
insurers, on receipt of a consideration known as premium,
agree to indemnify the insured against losses arising out of
certain specified unforeseen contingencies or perils insured
against. It can play an important role in a country’s economy.
It is an old form of financial practice of sharing risk, which was
introduced in this area in mid-18th century.

1.2 Objective of Study

The main objective is to know the overall position of this

sector. Some objectives of this report are given below:

 To know an overall idea about insurance industry in

Bangladesh

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  To get proper information about the organization (JIBAN
BIMA CORPORATION)

 To find out the uses of insurance to society

 To know how to insurance companies involve in economic

growth

1.3 Methodology of the Study

In order to complete this report, I made the following steps:

 Selecting the goal

 Collecting data from primary & secondary resource

Primary data have been collected from head to head

interview some important employees of this organization.

Secondary data have been collected from internet, different

books, various journals and annual report of this organization.

 Data Processing & Analysis

Collected data were examined and analyzed by

manipulation.

 Recommendation & Conclusion.

1.4 Scope of Study

By using this study, any individual would be able to have an

idea about the principles & procedures of setting up a life
insurance policy, the performance of JBC and the impact of
insurance business in our society.

1.5 Limitation of the Study

The study arranged for three months duration. As a service

holder, it was difficult to manage time for study enough. So
some limitations are common at the time of program. But I

10
 have tried my level best, to find out the opportunity of work,
overcoming the limitation. The main limitations are as
follows:

 Time constraints for the study needed documents,

data information are not easily available.

 The official and respective persons are very busy with

their assigned job.

1.6 Problem Statement

In a developing country like Bangladesh, insurance

companies are playing a very important role in the
economy. Though insurance industry has very prospect in
the economy but for some reasons it’s totally failed to
achieve its goal. If we want to know the reasons behind this
hen we should look forward the following according to
Bangladesh General Insurance Company Ltd.

In this report the major problems in performing insurance

business has been classified into some major criteria which
are social, economic, political, legal and other reasons. The
actual problems are discussed in detail within these
criterions.

1.6.1 Social 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
people don’t 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.

1.6.2 Economic Problems

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 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.

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.

1.6.3 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.

12
1.6.4 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 to catch
potential people to make their policy holders. Therefore
these field level agents are unable to fulfill their target and
act as a constraint in the insurance business.

13
CHAPTER 2: HISTORY OF INSURANCE INDUSTRY

2.1 Introduction

2.2 History & Development of Insurance

2.3 Development of Insurance in Bangladesh

2.4 Implication of five forces model (By Michael E.

Porter) in insurance industry of Bangladesh.

14
2.1 Introduction
Insurance is a system of spreading the risk of one onto the
shoulders of many. Whilst it becomes somewhat impossible
for a man to bear of himself 100% loss to his own property
or interest arising out of an unforeseen contingency,
insurance is a method or process which distributes the
burden of the loss on a number of persons within the group
formed for this particular purpose.

2.2 History & Development of Insurance

The origin of insurance is lost in antiquity. However, there is
no evidence that insurance in its present form was practiced
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 & 13th century and gradually the
concept was rather transferred to or taken over by the
United Kingdom. During the 13th / 14th century 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. It

15
 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. About half a century back, during the British rule
in the then India, some insurance companies started
transacting insurance business, particularly life in this part of
the world. Since 1947 until 1971 insurance business gained
momentum in this part of what was then known as East
Pakistan. There were about 49 companies transacting both
life and general insurance business. These companies were of
various origins, Viz, British, Australian, Indian, West Pakistani
and East Pakistani. Except a few companies these were

16
mostly limited liability companies acting under a free
competitive economy.

With the emergence of the People’s Republic of Bangladesh,

the government in order to make available the fruit of
liberation to the general mass, nationalized the insurance
industry in 1972 by presidential order no 95 more specially
known as the Bangladesh insurance (Nationalization) order
1972.

17
By virtue of the order, save and except postal life insurance
and foreign life insurance companies (other than the
Pakistani companies), all companies and organizations
transacting all types of insurance business in this country
came under this nationalization. Five insurance corporations
were basically established, Viz.

i) Jatiya Bima Corporation

ii) Teesta Bima Corporation

iii) Karnaphuli Bima Corporation

iv) Rupsa Jibon Bima Corporation

v) Surma Jiban Bima Corporation

The Jatiya Bima Corporation was not an underwriting

corporation, actually, it was a central corporation to supervise
and control the activities of the remaining four subsidiary
corporations. As per this order Teesta and Karnaphuli were
made responsible for general insurance business and Rupsa
and Surma were made responsible for life insurance business.
All the existing 49 companies were merged with this 4
corporation whilst life companies or the life portion of a
composite company joined the Rupsa and Surma, the general
companies or the general portion of a composite company
joined the Teesta and Karnaphuli.

Formation of two corporations

Although the basic idea behind creating 2 corporations in

each main branch was to encourage competition even under
a nationalized system, it was observed soon that the
unnecessary administration expenses for maintaining these
two corporations in each front and arr apex institution.

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Therefore, on 14th May, 1973 the structural arrangement
under nationalization was changed vide act VI 1973.

The previous 5 corporation were abolished and instead 2

corporations were established, Viz.

i) Sadharan Bima Corporation

For transacting general insurance business only. The two

general insurance corporations were merged under it.

ii) Jibon Bima Corporation

For transacting life insurance business only. The two life

insurance corporations were merged under it. In the
sector, postal life insurance business and corporation of
life business by foreign companies (other than Pakistan)
are still permitted as before.

This is the present structure under which the insurance

business in transacted in this country.

Insurance is not altogether a new idea in this country, but

some how it could not flourish much. Now however, there
is enough provision for tapping the untapped resource
and potentialities. During the Pakistan or Pre-Pakistan
period this market was basically a production market
dealing only in limited conventional types of insurance
business both in life and general. Consideration used to
be missing as to what type of policy would suit best the
requirement of the people. Hence, even though there was
tremendous growth prospect, it never gained momentum
in the past. Lake of proper technical know-how of the
insurance personnel and the general ignorance of the
public as to the importance of insurance business were

19
 also partly responsible for extremely slow growth of
insurance activities in the past.

It should be remembered by the students that the insurance

industry had to pass through a number of difficult during the
initial stages after nationalization. However, the handicaps
were kept under constant review by the government on the
management of the industry and remedies are gradually being
implements to accelerate the growth and progress.

Year Establishment/Act Authority

1 March, P.O. 19/1972 Adoption of Ministry of
1972 Insurance Act in Bangladesh Commerce,
Bangladesh
8 March, P.O. 95/1972 Bangladesh
1972 Insurance (nationalization)
order 1972
26 March, P.O. 30/1972 Bangladesh
1972 Insurance (Emergency
provision) order 1972
1 Nov, P.O. 133/1972 Bangladesh
1972 Insurance (Nationalization &
Amendment) order 1972
30 Dec, P.O. 161/1972 Bangladesh
1972 Insurance
Corporation(Dissolution) order
1972
14 May, Ordinance 7/73/ Insurance

20
1972 Corporation ordinance 1973
Nov, 1973 Bangladesh Insurance Academy
1984 Private Insurance Company Act.
After 2008 Govt. Life Insurance in one &
private life insurance company
is 19.

2.4 Implication of five forces model (By Michael E. porter) in

insurance industry of Bangladesh.

Risk of entry by potential

competitor

Bargaining power Rivalry among Bargaining power

of suppliers establish firms of buyers

Threat of
substitute
products

Michael E. Porter of the Harvard School of Business

Administration developed a five forces model which helps the
business managers analyze the forces of the environment
within a specific industry context. In this respect, I like to make
discussion below in respect of insurance industry its
importance and implication in Bangladesh.

i) Risk of entry by potential competitors

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The change of entry by potential competitors depends on the
barriers to entry. The higher the barriers are, the lower is the
chance to entry by the potential competitors. In this respect,
Bangladesh government has not given permission to establish
any insurance company except ALICO. As such, the insurance
companies of Bangladesh are enjoying better facilities and
benefits, but to allow the foreign insurance companies are
dependable on the wishes of Bangladesh government. So our
own insurance companies are always remaining anxious if
Bangladesh government permits insurance companies of
foreign countries, then they will be in the face of hard
competition.

ii) Rivalry among establish companies

The extent of rivalry depends on the function of three factors,

such as, a) competitive structure, b) Demand conditions and
c) Exit barriers.

Competitive structure refers to the number and size of

companies in an industry. Structures vary from fragmented to
consolidate. Growing demand is good for existing companies
because it gives opportunities to the existing companies to
expand operation. Exit barriers could be economic, strategic
and even emotional. In the light of above discussion the
insurance companies of Bangladesh are better in their
competitive structure, demand condition, but the spoken in
the last exit least number of barrier.

iii) Bargaining power of Buyer

Buyers can be viewed as a competitive threat when they force

down prices or demand higher quality products and better
services. Alternatively weak buyers give a company the
opportunity to raise prices and earn greater profits. The
bargaining power of the policy holders of insurance companies
of Bangladesh are mostly limited. As such they are enjoying
better facilities.

iv) Bargaining power of supplier

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 Suppliers are most powerful in the following circumstances-

• When the product that suppliers sell has few

substitutes and is important to the company.

• When the company’s industry is not and important

customer to the suppliers. Above stated factors are not
a matter of thread for the insurance companies of
Bangladesh.

v) The threat of substitute products

When there are close substitutes, they pose strong

competitive threat. It results in reduction in price by limiting
profitability. In this regard the insurance companies of
Bangladesh are mostly in safe condition, As insurance is the
substitute of its own itself.

23
 CHAPTER 3

BANGLADESH INSURANCE ACADEMY

24
Bangladesh Insurance Academy

In 1972 the govt. of the people’s republic of Bangladesh

nationalized all the insurance companies of the country. The
idea behind nationalization of insurance industry stemmed
from a broader sense of social service and safeguarding the
public interest. In the pre-liberation years much of insurance
business were done by the companies of former west Pakistan
origin, but little attention was given to the insurance education
or training facilities. As a result the insurance industry in
Bangladesh faced with and acute shortage of trained and
professionally educated personnel. In order to meet the
changing and growing demands for such personnel and to
make insurance industry a better service institution, the govt.
of People’s Republic of Bangladesh established the Bangladesh
Insurance Academy in November, 1973 with the following
objectives:

i) To promote, organize & import professional education in

insurance leading to degrees/Diplomas/certificates.

ii) To organize, conduct & promote research on problems of

insurance industry.

iii) To organize & conduct in service training for the officers

and employees of JBC and SBC and also employees of the
organizations are dealing in insurance.

iv) To facilitate, promote, encourage & poster publication of

research work and literature on matters of insurance
interest.

v) To establish and maintain close contact with experts and

similar institutions at home and abroad.

vi) To provide coaching facilities for the standard

examination like ACII, CLU etc.

vii) To award prized and rewards to persons who have

contributed to the cause of insurance education and
industry.

25
Chapter 4: Company overview and Financial Control System of
Jiban Bima Corporation (JBC).

26
4.1 Company overview

a) Corporate information

b) Vision, Mission, Objective

c) JBC’s products & services policies

4.2 Financial Control System

a) Marketing and the process of create a policy

b) Risk Management

c) Settlement of Claim

d) Customer Service

e) Human Resource Development Process

f) Information and communication Technology in

Operation

f) Information Policy

h) Research and Development and training

i) Corporation Social Responsibilities

j) Cash flow Statement

k) Statistic of Business performance

l) Credit Rating

j) Five years at a glance of JBC

27
A. JBC’s

Vision:

To establish ourselves as the unique service provider to the

policy holder at a large.

Mission:

1. To provide socio-economic security through insurance

mechanism among the target group.

2. Follow ethical standards in business.

OBJECTIVE:-

Knowledge:

To perfectly combine global expertise blended with local

knowledge to remain as pioneer Life insurer.

Care:

To provide a world class customer service, which is

responsive, personalized human and empathetic.

Honesty:

To ensure honesty and trust in every cornerstone through

integrity.

Excellence:

Aimed to be focused on the value of continuous improvement

of human resources and the organization by striving for the
highest standards of quality in every aspect of its modus
operandi.

28
B. JBC’s products and services policies:

The company was incorporated on 1973 and is mainly

engaged in ordinary life, group term insurance business. It
also operates in non traditional Micro life insurance business
under the name of Endowment, pension, child protection,
Marriage endowment policy etc.

JBC provides several type of policy to its customer. Generally

they divided their policy in two categories.

1. Individual

2. Groups

Individual policy

There is several type of life policy that JBC serves its individual
Customer. It depend on the basis of

a) Duration of policy

b) Method of premium payment

JBC’s most of the individual customers are service holder who

has a steady income. Company also prefer foreign employee,
businessman, Housewife if they have the ability to give
premium continuously.

Group Policy

JBC provides group policy mainly to the company’s worker or

Employee. Company provides service to its employee by giving
the service of Life Insurance.

29
Benefits given by company to its policyholder.

There is a several type of policy that company served to its

policy holder like extra care. These are:

a) Disability of protection Rider

b) Accident Indemnity Certificate

c) Accident Death Benefit

4.2 Financial Control System

a. Marketing & The process of create a policy

JBC serves policy by its agents. In this process agents first find
out a people who have a probability to take policy and then try
to convince him. If the person is satisfied then agent gives him
a policy form to make the policy.

Process of Formation of Life Insurance contract.

Offer of Proposal

Insurance company gives offer to a person with all information

that’s he need to know. If anybody wants to create a policy
collect a form of application as his wish and give a proposal to
the company to create a policy by this form.

Consideration of proposal

After this company consider this proposal. For this reason they
collect some information to justify the probability of risk of the
proposal.

Collection of Medical Report

30
In this step company collects all kinds of information about the
fitness of the person and collect medical certificate and test
report from him.

31
Collection of Agents Report

In this step company collects information from their company

agent.

Collection of Extra Information

In this step the company collects more information if they

need. They collect information from the closer person of
propose, from the personal doctor of propose and from other
trustable source.

Prof of Age

To consider the proposal company need to justify the age of

the person. For this reason they collect the birth certificate and
other related documents of propose.

Selection of proposal

In this step company select the proposal by justifying all

information like medical certificate, birth certificate, agents
reports etc.

Acceptance of offer

In this step company accept the offer and announce the

amount of premium to propose.

Insurance of policy

In this step company collect money from the person and give
him the policy and the cover note.

32
b. Risk Management

Their risk management is a process of identifying, measuring,

analyzing, monitoring and controlling risks. In life insurance
business the factors which may affect the risk are usually
those factors which are affecting the mortality; they are also
called factors affecting longevity of a person.

These factors are-

a) Age
b) Physical condition
c) Personal History- 1) Health record, 2) Past habit, 3)
Previous occupation, 4) Insurance history.
d) Family History
e) Occupation
f) Residence
g) Present habits
h) Morals
i) Race and Nationality
j) Sex
k) Economic Status
l) Defense Service etc.
For this, they collect of above risks from various sources
because it is not possible to get all information from one
source and this are:

a) The proposal form

b) Medical Examiner’s Report
c) Agent’s Report
d) The Inspection Report
e) Private Friends Reports
f) Attending physicians
g) Medical Information Bureau
h) Neighbors and Business Associates
i) Commercial Credit investigation Bureau etc.

33
After collect the risks the company confirm to the following
principles in their risk management practices and then accept
the offer of proposal and announce the amount of premium to
propose.

a) To define risk profile on the basis of their risk tolerance.

b) To determine risks and analyze them from the beginning

with the help of their risk strategy.

c) To comply with regulatory requirement and guidelines for

risk management.

C. Settlement of Claim

Image and goodwill of the corporation largely depend on

early settlement of claims. JBC fulfill the claim in this
situation.

1. Payment of claim after certain period. That means

corporation fulfills the claim if the policy is matured. It may
be 10, 15, or 20 years.

2. Payment of claim after the death of insured: Company

pay insured money after the death of the policy holder
according to the contract of the policy here need—

a. Proof of age of the insured.

b. Proof of Death of the insured.

c. Succession certificate

d. Payment of Claim

3. Payment of Group claim of policy

Here corporation pay insured money if the policy is

matured other any accident will be occurred inability of
death according to the contract of the policy.

34
d. Customer Service

The reputation and progress off the corporation largely

depends on prompt and efficient services rendered to the
policyholders. Keeping this in view they have further
strengthened their servicing and computer departments for
rendering quick services to policyholders and marketing
personnel’s. In order to give easy access to their products and
to give best possible services to the customers, the company
offers personalized services by recruiting highly experienced
and customer focused professionals.

e. Human Resource Development process:

Sound and effective planning of human resources is the

key of success in the implementation of development projects
in any sector. This is why the issue of human resource
development is taken up at national level. The dedication,
skills and professionalism of the employees are factors that
contribute to the success of a company. But this company has
no better human resource development process. So in human
resource management, the company should focus on the
following areas:

1. Continuous training and acquiring of new skills.

2. Empowering people and creating a congenial work

environment.

3. Staff briefing.

4. Competitive compensation package.

5. High end-service benefits which include Gratuity,

contributory provident fund, Benevolent fund etc.

6. Liberal bonus policy.

7. Encouraging innovation

8. Quality employees.

9. Equal opportunity.

35
Bonded by common goals, each of the employees will truly
proud to be a member of JBC.

f. Information and communication Technology in

operation

Information technology explores the roles of information

system, which defines systems analysis and design and
outlines the responsibilities of system analysis. It introduces
system concept and outlines categories of business
information system. It appears a system development, which
provides the Information communication Technology (ICT) for
the purpose of global networks, Network Technology platform
of Jiban Bima Corporation has the following key features:

• Lightweight computer system

• Web site

• Contact Center

• Data warehouse and

• Simplified accounting system. Presently they are

providing with information based service on the
following items:

• System control/Development

• Software control

• Web Customer Service

g. Information policy

Jiban Bima corporation informs regulatory authorities, and the

public in an open, transparent and timely manner relating to
its operational performance and progress made towards
achievement of corporate goals. Equal treatment to all
shareholders is the guiding principle behind their partnership-
oriented approach. They practice and nurture an open dialogue
with their shareholders based on mutual respect and trust. The
most important tools for the outflow of information from the

36
company are annual reports, statements, media release,
disclosures to regulatory authorities, annual general meetings,
extra ordinary general meetings etc. Besides, companies
website: www.jbc.gov.bd is rich with corporate information.
This promotes an understanding of their objectives and
ensures a high degree of awareness about their company.

37
h. Research & Development and Training

In order to consolidate the existing position and cope with the

ever-increasing growth potentials, the company focuses on
making continuous investment in Research and Development
and Training to optimize operational efficiency. The company’s
human resources policy is to build up quality work force with
skills and professional expertise. The objectives of designing all
training programs are to bridge the gap between present level
of competence and desired level of competence of human
resources. The company is continually pursuing training
program of its employees by the high level executives.
Training programs both centrally and regionally through the
company’s training Department are being conducted regularly
for desk and development personnel.

In addition to this, executives are sent to various training

institutions Like Bangladesh Insurance Academy, Bangladesh
Insurance Association and other training institutions at home
and abroad.

The company is convinced that investments made by their in

recruiting executives and training of new and existing
employees will create the basis for the company to enhance its
national leadership role and to deal professionally with
increasing complexities in life insurance business that are
being faced in the present as well as those that are likely to
come up in the future.

38
i. Corporate Social Responsibility

In recent years, there has been growing recognition and

acceptance that the behavior of business houses is an
important factor in influence a wide range of social,
environmental, community and ethical issues. Their customers
want to be treated fairly. Their regulators want to be confident
that they operate within the logical and ethical standard with
fairness, transparency and honesty. Their staff members want
to be paid competitively and treated with respect. Their
shareholder want to be assured that they consider the risks
and opportunities while taking business decision and pay good
dividend every year.

The social spectrum under which they operate desires that

they carry on their business responsibility and positively
contribute to the society and the environment. They should
commit to responsible business practices and to a policy of
continuous improvement in applying sound environment and
social standards in their dealings with all their stakeholders.

39
j.
JIBAN BIMA CORPORATION
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008

Taka
Particular Notes
2007 2008
CASH FLOW FROM OPERATING
ACTIVITIES
Collection form Premium 1,708,024, 1,349,542,
240 043
Miscellaneous Income received 721,617 138,549
Payment for Claim (216,828,1 (156,104,5
67) 27)
Payment for Re-Insurance, (727,116,6 (703,148,7
Management expense and others 71) 21)
Income Tax paid/deducted (22,017,66 (10,639,24
3) 3)
Net Cash from operating 742,783,3 479,788,1
activities 56 01

CASH FLOW FROM INVESTING (32,542,65 (10,178,82

ACTIVITIES 5) 1)
Investment made in share 50,713,051 2,858,519
Proceeds from sales of Investment (81,500,00 (123,00,00
in share 0) 0)
Purchase of National Investment (279,725,1
--
Bond 58)
Purchase of BD. Govt. Treasury (16,573,54 (129,636,2
Bond 4) 91)
Acquisition of fixed Assets -- 96,778
Sale of Fixed Assets (38,617,96
70,000
4)
Loan against Policies paid (7,962,256
1,192,198
)
Loan against Policies realized 704,857 75,393,133
Interest, dividend & rents received 132,605,92
----
1
Net cash used in investing (237,209, (221,892,
activities 784) 448)

CASH FLOW FROM FINANCIAL

51,073 (25,631)
ACTIVITIES:
Dividend not claimed/(paid) 51073 (25,631)

40
Net cash used in financing
activities
Net increase in cash & cash 505,624,64 257,870,02
equivalents 5 2
Cash and cash equivalents at the
beginning
of the year 1,009,730, 751,860,27
300 8
Cash and cash equivalents at 1,515,354, 1,009,70,3
the end of 945 00
the year

41
k. Statistics of Business Performance.

Assets(Takain Crore)

300 296.47

250
200 197.95

150 139.04
100 96.68
66.83
50
0
2003 2004 2005 2006 2007

Investment (Taka in Crore)

250
220.39
200

150
128.37
100
78.69
50 50.19
30.28
0
2003 2004 2005 2006 2007

Premium with Life Fund

(Taka in Crore)

42
 300
256.13
250

200
165.72 171.41
150 Life Fund
135.19
112.12
110.25 Total Premium
100
70.62
70.14
51.23
50 46.44

0
2003 2004 2005 2006 2007

Premium & Claim

(Taka in Crore)

180
171.41
160
140 135.19
120 112.12
100
Claim
80 Total Premium
70.62
60
51.23
40
20 21.15
11.36 14.85 15.9 16.24
0
2003 2004 2005 2006 2007

l. Five Years at a glance of JBC

43
300 296.47

256.12
250

200 197.95

165.72 171.41 Claim

150 Life Fund
139.04135.19
Premium
112.12
110.28
100 96.68 Assets

66.8370.1
70.62
51.23
50 46.44
21.15
11.38 14.85 15.9 16.24
0
2003 2004 2005 2006 2007

44
 CHAPTER 5

ROLE OF LIFE INSURANCE COMPANY IN THE ECONOMIC

DEVELOPMENT OF BANGLADESH

5.1 Contribution in Economy

5.2 Contribution of Society

5.3 Development in Economy & Society

5.4 Tax payment system of JBC & Revenue to the

government

5.5 Customer Service & Satisfaction.

45
5.1 Contribution in Economy

Insurance performs multi various economic functions. It helps

economic progress. Class-wise specific contribution in
economy is discussed below:

Marine Insurance:

Marine Insurance primarily provides financial protection to the

ship owners, cargo owners or the freight owners in respect of
any loss or damage to their interests caused by maritime perils
insured against. Marine insurance is a positive aid to various
business enterprises, importers, exporters and persons
engaged in international trade and commerce.

Fire Insurance:

Like marine, the main contribution of fire insurance is to

provide financial protection to the insured in respect to loss or
damage sustained by him to his properly caused by fire.
Business efficiency is increased with fire insurance.

Life Insurance:

Life insurance provides an income or capital sum to the

dependants of the deceased. Life insurance encourage saving.
It provides profitable investment. When the owner of a
business is free from botheration of losses, he will certainly
devote much time to the business. The carefree owner can
work better for the maximization of the profit. Thus, the life
insurance meets all the requirements of the economic growth
of a country. National development depends largely on
borrowed capital and insurance companies by means of huge
investment provides and facilities supply of this huge capital.

46
5.2 Contribution in Society

Insurance provides security and safety. The security wish is the

prime motivating factor. So, insurance affords peace of mind
insurance protects mortgaged property. At the death of the
owner of the mortgaged property, the property is taken over
by the lender of money and the family will be deprived of the
uses of the property. The insurance will provide adequate
amount to the dependents at the early death of the property-
owner to pay off the unpaid loans. Life insurance can be
effectively utilized for providing children’s marriage and
educational expenses. So, Life insurance provides loss of
human wealth. Through prevention of economic losses,
insurance protects the society against degradation. Insurance
eliminates dependency. At the death of the husband or father,
the destruction of family needs no elaboration. Similarly, at
destruction of property and goods, the family would suffer a
lot. The economic independence of the family is reduced or,
sometimes, lost totally. What can be more pitiable condition
than this that the wife and children are looking others more
benevolent than the husband and father, in absence of
protection against such dependency. The insurance is here to
assist them and provides adequate amount at the time of
sufferings.

5.3 Development in Economic & Society

The Economy of Bangladesh is in the process of a transition

from a predominantly agrarian to a quasi-industrial and service
economy. Economy and Insurance industry go together and
are inseparable. Insurance company has been playing an

47
important role in the economic development of the company.
They have generated employments for hundreds of people in
the project and industries established under their finance. The
role and importance of insurance for development in economy
and society, here, has been discussed in three phases.

1. Wealth of the society is protected

Life insurance protects loss of human wealth. The human

material, if it is strong, educated and care-free, will
generate more income. Each and every member will have
financial security against old age, death, damage,
destruction and disappearance of his wealth including the
life wealth. Through prevention of economic losses,
insurance protects the society against degradation. The
happiness and prosperity are observed everywhere with the
help of insurance.

2. Economic Growth of the country

For the economic growth of the country, life insurance

provides strong hand and mind, protection against loss of
life and adequate capital to produce more wealth. Life
Insurance encourage saving. The saving with insurance has
certain extra advantages-

a) Systematic saving is possible because regular premiums

are required to be compulsorily paid.

b) In insurance the deposited premium cannot be withdrawn

easily before the expiry of the term of the policy, thus the
insurance meets all the requirements of the economic
growth of a county.

3. Reduction in Inflation

The insurance reduces the inflationary pressure in two

ways. First, by extracting money in supply to the amount of
premium collected and secondly, by providing sufficient
funds for production narrow down the inflationary gap. So
increased money in supply and decreased production are
properly controlled by insurance business.

48
5.4 Tax Payment system of JBC
Current Tax:

The company is engaged in life insurance business and its

taxation is based on taxable income determined under the
fourth schedule of income Tax ordinance 1984. Provision for
income tax has been made during the year as prevailing
rate of Income Tax Ordinance.

Differed Tax

Since there is no difference between carrying amounts of

assets and liabilities and corresponding tax base assets and
liabilities as the profits and gains of the insurance business
from all sources are computed in accordance with the
provision in the fourth schedule of the Income Tax Ordinance
1984. Thus provision for Deferred Tax Liability or Deferred Tax
Assets has not been made in the financial statement as
required by Bangladesh Accounting Standard (BAS-12).

VAT

VAT is exempted on life insurance business according to

section 4 of second schedule of VAT Act, 1991. VAT deduct at
source for various service in accordance with relevant section
of above VAT Act deducted and deposited to Bangladesh Bank
through treasury chalan.

Source Tax

Tax deduct at source for various services in accordance with

relevant section of Income Tax Ordinance has been deducted
and deposited to Bangladesh Bank through Treasury Chalan.

Revenue to the Government

Tax provision is based on taxable income determined under

the fourth schedule of the Income Tax ordinance, 1984.

Provision for income Tax: Tk. 23,698,960

49
(Balance as on 31st December-2007)

The breakup of the above is being below:

Balance as on 1st January 2007: Tk. 15,893,423

During the year: Tk. 7,805,537

(For the year ended 31st December, 2007)

50
5.5 Customer Service & Satisfaction

For instance, now a day, the functions and activities of the

insurance are well known to far and wide of the modern
human society and its necessary is admitted by all. During
the tenure of the insurance policy, it is agreed system that
the respective insurance company is fully liable to make all
compensations for any sorts of accident of the policy
holder. Now a day’s establishment of insurance business is
one of the most profitable businesses. With this end in view
and in the hope/expected profits, so many insurance
companies have been established both in government and
in private sectors. But, for whom & by whom this
companies are running with their flourishing business, they
never think for a single moment for the betterment of
policy holders, The companies obviously true or fact that
the most of the insurance companies are harassing their
respective clients while they put up their legal claim after
completion of the tenure period or of happening any
unwanted accident. In most of the cases, it is observed that
in the case of death, the respective companies create so
many hindrances for which the window wife or the
fatherless minor Childs are to suffer most. Most of the
insurance companies continue their that type of misdeed
and unlawful activities. As such all the policy holders
cherish and pray to the noble government that the
government must look after this matter and will give
necessary instruction to the concerned govt. department to
look after this policy holders.

51
 CHAPTER 6
SWOT ANANLYSIS OF JBC

52
SWOT Analysis of JBC

The overall evaluation of a company’s strengths, weaknesses,

opportunities and threats is called SWOT analysis. It involves
monitoring the external and internal environment.

• External Environment (opportunity and threat)

analysis

A business unit has to monitor key macro environment forces

(demographic – economic, natural, technological, political-
legal, and social- cultural) and significant micro environment
actors (customers, competitors, suppliers, distribution, dealers)
that affect its ability to earn profits. In this respect, the position
of the JBC is not so sound. As because, if our government
permits and establish open world market for the industry, then
they will be in the face of downfall.

• Internal Environment (Strengths/Weakness)

analysis

It is one thing to find attractive opportunities and another to be

able to take advantage of them. Each business needs to
evaluate its internal strengths and weakness. In the light of the
above facts, the position of this company is very sound. Like
other local & national companies, they are also establishing
them in the focusing position like new attractive commodities
& products and they have captured the market. In this above
circumstances, this company at the end of the year, 2007
acquired Tk. 256.13 crore in the life fund and Tk. 296.47 crore
in Asset respectively. But in the customer services, the
advancement & the position of the other companies are better
than that of JBC.

53
 CHAPTER 7
FINDINGS & RECOMMENDATION

7.1 Findings
7.2 Recommendation
7.3 Conclusion

54
7.1 Findings

Insurance is as old as the civilization. It was present in the

form of mutual help. Insurance is a co-operative device of
distributing losses, falling on an individual or his family over a
large number of persons, each bearing a nominal expenditure
and feeling secure against heavy of loss. Insurance provides
certainty of payment at the uncertainty of loss, if provides
capital, protection & prevention of loss. It helps Economic
progress. Besides, I get more experience about Jiban Bima
Corporation.

7.2 Recommendation

There is no social recognition of insurance sector in

Bangladesh, due to lack of proper management in quality of
customer service. So they should be firmly believe their
profitability, growth and market share of business depend on
their quality of customer service.

In their customer service, they should focus on the following:

1. Achievement of core competencies in all their business

processes.

2. Improvement of service standard.

3. Addressing complaints/suggestions for improvement of

service.

4. Enrichment of products.

5. Speedy Service.

6. Service accuracy.

7. Fair treatment.

55
 7.3 Conclusion

Insurance business is only commercial but it has become

professional now. Knowledge of insurance is as much essential
as trading business for the society. Privatization of Insurance
business has added more significations for the people. The
prospects of insurance in the first years of the next millennium
decide the direction of insurance management. Safety,
security and investment have become need of the present
society people, now, demand insurance as compared to the
previous attitude of selling insurance to people. They have
become selective and practical. Insurance industry has to meet
the expectations of people.

56
 REFERENCE

1. www.google.com (Search Engine)

2. www.jbc.gov.bd

3. www.fareastislamilife.com

4. www.popularlifebd.com

5. www.nlicbd.com

6. www.primeislamilife.com

7. www.sandhanilife.com

8. Element of Insurance- Azizul Huq Chaudhury

9. Insurance- M.N. Mishra

57