Fire Insurance, Bangladesh

user

University of Dhaka

REPORT
A

ON
IN BANGLADESH

BURNING ISSUE: FIRE INSURANCE

Course: Risk and Insurance (F 210)

SUBMITTED TO:
PALLABI SIDDIQUA LECTURER

DEPARTMENT UNIVERSITY

OF OF

FINANCE DHAKA

SUBMITTED BY:
GROUP - 1 NAME
MD. IMANUR HASAN ZUBAIRIA KHAN SHAZIA AFRIN MEHNAZ TABASSUM SABBIR AHMED BBA (14TH BATCH) DEPARTMENT UNIVERSITY
OF OF

ROLL

NO .

14-034 14-050 14-100 14-160 14-162

FINANCE DHAKA

OCTOBER 18, 2009

Letter of Transmittal
October 18, 2009 Pallabi Siddiqua
Lecturer Department of Finance University of Dhaka Dhaka-1000

Subject: Submission of the report on Fire Insurance

Dear Madam, It gives us immense pleasure to submit the report on A Burning issue: Fire Insurance in Bangladesh as a requirement of the regular BBA course called Risk and Insurance of the Department of Finance, University of Dhaka. Apart from the academic knowledge, we have got the golden opportunity to acquaint ourselves with the nature and feature of fire insurance. We believe that the experience we have acquired from this study will be an invaluable asset throughout our lives. It expresses our gratitude to you for providing us desired chance to learn about the fundamentals, detailed procedure, and mathematical terms of the Fire Insurance. Moreover we have attached our own thoughts after analyzing the practical situation. In spite of various shortcomings, we have been devoted to find out the core information from different aspects. We hope you will appreciate our Endeavour and find the report up to your expectation. It has to be mentioned further that without your expert advice and guidance and the contribution of all group members it would not have been possible to complete this term paper. We will be pleased to answer any sort of query you may have regarding this report. Thanking you Group 1, Sec- B, BBA 14th Batch

Executive Summary
In last few years, there have been a huge number of fire accidents in different industries of Bangladesh which has caused a great loss of life and property. The shocking amount of such loss is an indication that it is high time we analyzed the overall situation of Fire Insurance Industry in order to make it performing better. Here we generalize the concepts and elements of Fire Insurance in details. We have also attached the statistical data of the Fire Insurance in order to present the rear view of the reality. In case of Fire Insurance, the insurance companies of Bangladesh have invested significant resources and management time in strengthening their risk governance, management, measurement and monitoring capabilities. In an environment of volatility and demand for greater transparency and stronger financial performance, risk management has become a critical priority and a basis for competitive differentiation. Insurance organizations are making progress in developing their enterprise wide risk measurement and aggregation capabilities and practices.

Table of Contents
CHAPTER I:
1.1 1.2 1.3

BACKGROUND OF THE STUDY

Origin of the Study Methodology of Study Objectives and Limitations of Study

CHAPTER II:
2.1

CONCEPTS & FUNDAMENTALS

Principles of Insurance

CHAPTER III:
3.1

POLICY DETAILS AND DISCUSSION

Elements of insurance Contract

CHAPTER IV:
4.1 4.2 4.3

RISK ASSESSMENT & RATE FIXATION

Rate fixation according to risk assessment Fixing tariff rate Principles of tariff

CHAPTER V:
5.1 5.2

DATA & INFORMATION

Company Performance Company Operation

CHAPTER VI:
6.1 6.2 6.3 6.4 6.5 6.6

CLAIM & SETTLEMENT

Notice of Loss & Appointment of Surveyor Initial Check-up Insurers rights after a fire Fire Claim Procedure Claim Settlement of SAAD Musa Fabrics ltd. Insurance fraud

CHAPTER VII: WHY BURNING ISSUE?

7.1 7.2 7.3 Fire and Corporate Buildings Fire in Garments Industries Loss & Sufferings

CHAPTER VIII: CONFLICT, CONFESSION & CONCLUSION

8.1 8.2 8.3 8.4 8.5

Problems in various sectors Positive Measures Suggestion of Specialists Policy Implication Conclusion

Annexure Bibliography Questionnaire Company Data & Overall Data

Chapter 1

Background of the Study

Origin of the Work

The universality of insurance is concerned with the risk management which is needed in all types and sizes of organizations at all levels and in all organizational work areas and in all organizations no matter what country they are located. Thus the significance of insurance is inevitable in an organization which emphasizes on the importance of studying Risk and Insurance for every student of Business Administration. In this occasion we were assigned to work on a report relating Insurance Business in Bangladesh by our Course Instructor Pallabi Siddiqua of the course named- Risk and Insurance. We have worked hard to give our best on focusing Fire Insurance in Bangladesh in the light of Theory and Reality. To enhance our experience and to enrich our knowledge it seems to be a life-time opportunity. We contributed our heart and soul to make it a perfect piece of management features and functions. Hopefully the result of our hard work will be found in an appropriate manner.

Methodology & Sources of Data

In order to making this formal and comprehensive report we have gone through a marvelous experience while collecting and combining all information from Primary and Secondary Data source.

Primary Data Source: We have interviewed the executives of the different General Insurance Companies for the purpose of the report. Besides, we knocked Bangladesh Insurance Academy and Bangladesh Insurance association for getting a clear view of Fire Insurance. According to our questionnaire we were provided with all necessary data which fulfilled our requirements in a satisfactory level. Secondary Data Source: For the specific and defined information we have followed the sources of reference books, websites and annual reports of different Insurance Companies.

Objectives

In modern days it is quite impossible to think an organization without Fire Insurance. That is why we were assigned to prepare this report on such an important topic. Our dedicated work on this report seeks the fulfillment the following objectives:

To illustrate the overview and features of Fire Insurance. To illustrate the relevant facts and principles of Fire Insurance. To demonstrate the relevant mathematical terms and calculations. To demonstrate the structure and design of dealing risk assessment and rate fixation in Fire Insurance. To illustrate the style and concept of claim settlement. To illustrate the critical situation in dynamic environment through a reallife case study. To focus on the performance and operation of few prominent Fire Insurance Company. To discover the problems and suggest best solutions for a better industry of Fire Insurance.

Limitations
While preparing this comprehensive report we have faced a few problems which limit to make the best output. If we were not supposed to deal with these challenges we could make it a better one.

As we chose few companies of Fire Insurance to illustrate the topics we were restricted to get entry into all the required ground because of the company policy. It was necessary for us to know the strategies and tricks followed by the companies. But as the company maintains confidentiality we were unable to know these things. In few cases we were not given the specific information which was very important. So we had to be intuitive and use assumed information which is not 100% appropriate. There is lack of report and research papers relating Fire Insurance Industry which has made our way difficult to enrich our report.

Chapter 2

Concepts & Fundamentals

Meaning of Fire:
There must be actual ignition There must be something on fire.

The fire must be accidental or fortuitous in its origin.

Scope of fire insurance

I. Fire but excluding damage caused by: Explosion resulting from fire. Earthquake or subterranean fire. Its own spontaneous fermentation or heating. If its own words were not included, not only the damage to the property in which the heating arose but also all damage proximately resulting there from be excluded. Its undergoing any heating process or any process involving the application of heat. II. III. Lighting Explosion of boiler or gas used for domestic purpose.

Common Causes of Fire

Before we discuss about precautionary measures to be taken to avoid such fire, here are some common causes of fire: Smoking Welding or cutting operation and use of blow lamps. Sparks from power unit. Short circuit and over loading of electrical current. Children playing with crackers. Ignition by chemical action/spontaneous combustion. Gross carelessness. Malicious Deliberate during riot or strike. Lightening Earthquake

Fire prevention and minimization

Every year valuable national properties destroyed and lives are lost due to fire. Where as if we are little careful, many such fire may never occur.

Packing material Workplace should be cleaned continuously. Pieces of papers, packing material like wood, wool, straw etc. should not dropped loose on the floor. They are to be picked up and kept in large metal bins with lead on.

Store room Store rooms, where old office equipments and furnitures are kept, is a hazardous place. Regular inspection and cleaning of such places should be carried out.

Factory waste Factory waste should be removed constantly and should be left to be swept at the end of the day. It should be removed at three stages. First at the temporary storage bins with lids and then emptying the bins into a much larger bin outside the premises and finally removal of the waste into garbage dump.

Dust Dust should be moved in a completely filled tube to ensure that there is insufficient air available to enable an explosion to take place.

Plant and machinery All machinery especially which are actually producing dust, should be kept air tight to prevent dust from leaking into the room. Cleaning should be done by means of a vacuum cleaner with a long suction hose, keeping the machine outside the premises. Dust and dirt should not be allowed to accumulate on machine and when oil leak cannot be prevented, drip trays should be placed. Even a concrete floor will absorb oil which can subsequently be ignited.

Battery powered unit Charging of heavy batteries of battery powered unit via cranes, fork-lift trucks should be carried out in separate fire resistant compartment. Each charger is separated by non-combustible partition. Electric motors Electric motors in concealed spaces can be source of danger and should be cleaned weekly by blowing a jet of air through them. They are to be serviced periodically. They should not be overrun. To avoid electrical fault all cables should run through metal conduit and for each appliance there should be a circuit breaker or voltage regulator. Earthquake To avoid fire due to lightening, proper earthling should be made. Outside the premises Outside the premises should also be kept spick and span like inside. No flammable material should be allowed to accumulate alongside the boundary walls, and grass and weeds should not be allowed to grow near the premises. Welding/cutting Such work should be carried out at a safe area where no flammable material is present and the area should be screened with portable asbestos or metal sheets.

Principles of Insurance: Fire risk or accidents are very crucial in our life. Any kind of massive loss caused by fire could not be coverable by a particular person or organization. So insurance is a better way to manage risk. For taking insurance policy for something depends on some principles; which is also pre-requisite for any other insurance policy. There are some principles of insurance which are the basic guides in regulating the business of insurance; like-

Elements of fire insurance contract:

1. Evaluation of property

Proposal by interested party company

Acceptance by insurance 2. Asses the property

3. Evidence of respectability 4. Fixation of rate.

Verbally or written Facts to be included: introduction, nature of property.

Chapter 3

Policy details & Discussion

Kinds of Policy
The Insurance companies of Bangladesh practices different kinds of Fire Insurance Policy. These are described below Valued Policy The value of the property to be insured is determined at the inception of the property. In this case, the insurer pays the total admitted value irrespective of the then market value of the properties. The measure of indemnity is, in consequence, not value at the time of ire, but a value agreed at the inception of the policy. The insurer pays the insured a fixed sum following the destruction of the insured property. The amount fixed may be greater or less than the actual market value of the property destroyed by the fire at the time of loss. Valuable Policy Valuable policy is that policy where claim amount is to be determined at the market price of the damaged property. The amount of loss is not determined at the time of commencement of the risk but is determined at the time and place of loss. This policy is truly representing the docrine of indemnity. Specific Policy Where a specific sum is insured upon a specified property in case of a specified period, the whole of the actual loss is payable provided it does not exceed the insured amount. Here the value of the property insured has no relevance in arriving at the measure of indemnity in a specified policy and the insured sum sets a limit up to which the loss can be made good. Floating Policy The floating policy is the policy taken to cover one or more kinds of goods at one time less than one sum assured for one premium and in relation to the same owner. The policy is useful to cover fluctuating stocks in different localities. Since the properties are spread over various localities and in

different forms, the physical and more hazards are also varying and therefore it makes difficult to determine and premium rates. Such policies are specially taken by manufacturers or traders whose merchandise might be lying at warehouse, godown, port or railway station. Its critical for the owner of such goods to take specified policy for each because the of the goods deposited in each will fluctuate from day to day, place or place, according to sales, consumption or consequent removal or replacement.

Average Policy The amount of indemnity is determined with reference to the value of the property insured. If the policy holder has taken policy for lesser amount than the actual value, the insured will be deemed to be his own insurer for the amount of under-insurance. The insurer will pay only such proportion of the actual loss as his insurance amount bears to the actual value of the property at the time of loss. Average clause is operative only in case of under-insurance and ineffective when the property is insured for the full value as in that case the insured is protected to the extent of the total loss. Declaration Policy The excess policy contributes to only a ratable proportion of the loss because if the amount of excess stock exceeds the sum set in the excess policy the businessman will not have a full cover owing to average condition. If the first loss policy was also subject to average condition, the assured will be at loss. The declaration policy will give a better protection in such cases where the stock fluctuates from time to time. The insured takes out insurance for the maximum amount that he considers would be at risk during the period of the policy. On the fixed date of every month, the insured furnishes a declaration of the amount. The premium is provisionally paid to the 75% of the annual premium amount. Practically, the annual premium is determined on the average of this declaration. The policy conditions may be Precedent to the contract conditions subsequent to the contract and conditions precedent to liability.

Express Condition

Fire Damage although not actually mentioned in the policy

Smoke damage caused by fire within the meaning of the policy. Water damages in extinguishing the fire. Property demolished by the fire brigade to prevent a fire from spreading. Damage done by the fireman in executing their duties. Losses incurred by the insured in attempting to check the progress of the fire or to save property. Losses by theft where property is removed from the premises to prevent its loss by fire and Subsequently stolen in the confusion of the fire.

Losses not protected by fire policy

Loss or theft during or after fire Loss by its own fermentation. Loss by subterranean fire. Loss caused by nuclear weapon materials Cost of removing debris. Extinguishment expenses. Loss of property due to burning by the order of the public authority. Loss caused by contamination of radio activity from ant nuclear fuel. Architects and surveyors fee for building or consultant Engineers fee for machinery.

Risks Covered With Additional Premium

The following risks and losses of risks are not covered in the Standard Fire insurance policy. But by paying additional premium these risks are covered in Standard Fire insurance policy.

Explosion Impact by vehicle Articles dropped from Aircraft Spontaneous Combustion, heating fermentation R&SD Malicious Damage Civil Commotion or

Hail & Thunderstorm Earthquake

Subterranean fire Subsidence & Landslide Horses &Cattle Bursting of pipes or apparatus

Risks not covered

There are some risks that are never covered in the Standard Fire insurance policy, even not by paying additional premium. The risks are given bellow:

War Invasion Civil war Revolution Rebellion Military power Usurped power Insurrection

Mutiny Popular rising Act of enemy Typhoon Hurricane Tornado Volcanic Eruption

Risks other than fire covered by S. F. P

In Standard Fire insurance policy without fire risks some other risks are also covered, these are given bellow: a. Lightning(with or without fire) b. Explosion(boiler or gas work used for domestic purposes)

Incidental Loss
Some other risks are also covered, they are called Incidental loss. There are two kinds of Incidental lossa. Natural Consequences of fire and b. Agencies involved in the outbreak of fire.

Cost of incidental loss

a. Cost of boarding up a severely damaged building b. Cost of demolition of any dangerous part of a structure of fire c. Salvage expenses such as removal sorting, drying, cleaning and reconditioning d. Salvage corps charges e. Cost of tarpaulins essential to temporary roof or partition for protection of the property.

Chapter 4

Risk Assessment & Rate Fixation

Rate Fixation According to the Risk Assessment

The actual process of rating consists of three steps:
1.

Classification Properties to be insured are of various nature and risk. Since the premium is fixed in relation to the class of risk, the properties are classified accordingly. Properties are generally divided into three main classes, Common or ordinary, Hazardous Double hazardous. Different premium rates are fixed for each class.

a. b. c.

Factors Affecting Fire Risk Now the risks are classified into various classes according to factors affecting fire risk. 1. Construction of Structure: The construction of building has always been a great importance in rating. The height of the building, the area the number of unprotected floor openings, constructions if walls, floors, roof, etc are considered in calculating fire hazard. 2. Occupancy: The risk considerably varies according to the nature of occupancy, the use to which the building is devoted. There is inherent connection between the building and its contents. It is essential for companies to change their rate to meet changing business conditions. 3. Nature of flooring: The nature of flooring influences the risk to a greater extent. Existence of wooden floors in the building introduces are additional physical hazard. It may collapse easily causing damage to property. 4. Height: The height adds difficulty in fighting a fire on the upper floors. The floors involve heavy risk collapse of the upper floors. 5. Floor and wall openings: Opening in the floor for lifts and belts constitute higher physical hazards which may cause greater chances of ignition of fire.

6. Exposure: The chances of risk may differ from property to property according to the degree of exposure. Exposure stands second as a cause of a fire and is more than the occupancy hazard. 7. Lighting, Heating and Power: Fire may occur due to short-circuit. Combustion can arise from faulty installation and dampness. Lighting system by gas or oil, leakage system and naked flames cause more hazard. 8. Place or situation:

The location of the property, nature of adjoining premises, the distance from a fire brigade station or source of water supply are the important factors to influence the degree of risk. 9. Protection: The protection facilities may be public or private. When the facilities are available, the fire may be extinguished in its incipiency. Smaller premium is charged where modern devices for preventing and extinguishing are present. 10. Time: The annual loss ratio is by no means uniform every year. So, the rate fixation must account for good or bad years to determine approximately the real loss. A long period of time is taken into consideration while calculating the premium.
2.

Discrimination
The differentiation of the rates for individual risks in a particular class is known as discrimination. Each additional feature of risk is charged extra premium. The better types of risks are encouraged and attracted by the insurer. Lesser premium is charged where fire extinguishing appliances are present. The tariff system is based on the law of average and graded schedule is formulated where different rates ascertained for the different types of risks. Thus the different risks are put in a specified class and are differentiated from each other according to the merits and demerits of the individual risks.
3. Schedule Rating

Schedule rating takes into consideration the various items influencing the peril of fire. It is a plan by which hazards with respect to any particular risk are measured. It is based on the theory that the aggregate fire of any risk is capable of ultimate analysis into its component factors to each of which could be assigned an appropriate charge.

Fixing Tariff Rates

Each region has its own Tariff providing for rates, warranties and other regulations applicable to risks situated in its territorial jurisdiction. The tariffs applicable to each of the regions are similar in broad outline but differ in

matters of detail i. e. actual rates which reflect local hazards and past experience of the area. Risks are classified into principal groups and rates are provided for each group on the basis of loss experience of each such group. In the same group of risks, there will be differences in the circumstances on individual risks which are dealt with by charging extra premium for unfavorable feature and granting discount for favorable feature.

Principles of Tariff
Three broad principles are adopted by the tariff
1. Occupancy

Risks are classified according to the occupation of premises. Goods stored are classified into hazardous or non-hazardous. Under this factor manufacturing process heating, lighting and power, the nature of goods, combustion and damage by smoke and water etc. are included.
2. Construction

Buildings are classified into few categories according to materials used in the construction of external walls and roof. Fire resisting materials, fire extinguishers, etc. are considered.
3. Situation

Risks are estimated according to the situation of the property, big cities, smaller towns, narrow streets, fire brigade facilities, water supplies, survey facilities etc. The tariff provides

Definition of the class of risks. A minimum basic rate for a normal risk in a class. Extra rates for specified, common and special hazards of a particular risk e.g. situation in the conflagration area, height, night work etc. Discount in the premium for improvements in the risk e. g. sprinkler installation, fire extinguishing appliance.

In Bangladesh, the Tariff Rate is fixed by the Central Rating committee. For fire risk the general rate of premium is given below:

Rating of Premium
Description of Commodities
1st cls

Dhaka
2nd cls 3rd cls

Other areas
1st cls 2nd cls 3rd cls

Residential area ,office, school, hospital, museum Storage (normal) Storage (burnable) Shop (normal) Shop (burnable) Fertilizer ( if stored) Fertilizer ( if in shop) Biscuit Factory Jute ( go down jute) Shoe Factory Jute mill ( according to tariff rate) Cotton mill(according to tariff rate)

0.75 1.25 3.00 1.75 3.50 1.25 3.50 2.40

1.00 1.50 4.00 2.00 4.50 2.00 4.50 3.40

2.00 2.50 6.00 3.00 6.50 3.00 6.50 5.40

0.90 1.50 3.60 2.10 4.20 2.10 4.20 2.40

1.90 2.50 4.60 3.10 5.20 3.10 5.20 3.40

2.90 3.50 6.60 5.10 7.20 5.10 7.20 5.40

12.00 25.00 37.50 12.00 25.00 37.50 2.40 3.40 5.40 2.40 3.40 5.40

Premium rate in case of Flood and wind storm

Description Rate of premium Southern area Brick constructed Building/machi ne Inventories Brick wall & tin made roof, steel frame Building/machi ne Inventories Tin wall & roof, steel frame Building/machi ne Inventories Brick wall, tin roof & wooden frame Building/machi ne Inventories Wall & roof tin made, wooden frame Building/machi ne inventories 2.00 3.50 3.00 5.00 Northern area 1.75 2.75 2.25 3.75

4.00 6.00 6.00 9.00

3.00 4.75 4.00 7.00

8.50 11.50

6.00 9.25

Some important factors to be noted:

If there are many buildings exist in any factory, the premium is determined depending on the risk &distance. Like-

1st class constructi on Distance 10 feet

2nd class constructi on

Here the premium is similar to 2nd class construction

2nd class constructi on

3rd class constructi on

Distance 20 feet

Here the premium is similar to 3rd class construction

Departmental rating of a 1st class cotton factory

Name of dept Blow room Carding section Spinning section Finishing section

Building 7.25 2.35 1.60 1.60

Machineries 11.85 3.10 2.15 2.00

Stock 23.35 3.10 2.15 2.00

Chapter 5

Data & Information

W
Name

hile fire insurance organizations have been effective in managing risks within business units, few insurance organizations are characterized as having excellent enterprise-wide risk management practices. Today, a majority of companies are moving to the next level to establish more robust risk management frameworks that include a broader range of risks, utilize more sophisticated methodologies and provide more transparency internally and externally.

Company At a Glance
Establi shmen t March 14, 2000 Authori zed /Paid Up Capital 200/150 Gross premiu m 174.22 Net premiu m 107.22 Net profi t after Tax 17.8 6 Grow th EPS Credit rating

Agrani Insurance Company Ltd. Karnaphuli Insurance Company Ltd Pionnr Insurance

11.9 0 34.8 5 37% 41.9 9

A-

1986

300/134

1788 2 2 665.50

1141.00 38.8 4 323.08 61.9 9

AA

1996

200/150

AA2

Company Ltd Prime Insurance Company Ltd Reliance Insurance Company Ltd

March 21, 1996 March 20, 1988

250

168.03

99.28

25.6 6 107. 94

16%

13.5 8 59.9 7

BBB+

500/234

1101.53 413.44

33%

A+

Sector wise performance Fire insurance: premium earned in 2008

Premium Income: 2008 (PRIME)

Premium Income:2008 (RELIANCE)

Premium Income:2008 (Agroni)

Premium Income Pioneer 2008

Five Years Performance at A Glance:

Prime Insurance Company Ltd.
Particulars Gross premium income Net premium income Net claims Investment & other income Underwriting profit Net profit before tax Profit after tax Dividend 2008 168.03 99.28 45.02 31.98 1.97 2007 144.24 89.44 33.90 36.21 3.17 2006 127.66 73.37 46.30 16.81 (2.63) 2005 131.47 72.66 52.03 12.38 5.97 2004 154.55 93.69 29.51 15.11 (30.58)

25.66 10%

27.99 10%

14.16

18.35

(15.47)

Dividend (%) Deposit premium Total asset Paid up capital Cash & bank balance

165

165

165

165

165

Reliance Insurance Company Ltd.

Particulars Gross premium income Net premium income Net claims Investment & other income Underwriting profit Net profit before tax Profit after tax Dividend Dividend (%) Deposit premium Total asset Paid up capital Cash & bank balance Investment 2008 1101.53 453.20 103.68 61.14 96.32 137.93 107.94 30% 1467.92 180.00 598.82 198.53 2007 827.53 353.66 85.60 42.42 76.56 100.68 66.39 20% 1196.97 150.00 463.12 169.52 1065.80 150 350.68 171.86 2006 743.84 293.18 70.92 43.01 45.10 70.17 52.18 15% 2005 626.49 248.42 69.84 36.00 35.04 55.79 39.14 10% 25% 794.78 120 270.51 181.01 2004 492.27 206.89 70.41 31.74 27.38 42.64 35.90 10% 33.33% 716.89 90 274.85 165.38

Pioneer Insurance Company Ltd.

Particulars Gross premium income Net premium income 2008 665.50 323.08 2007 385.20 195.37 2006 301.16 144.95 2005 245.41 106.16 2004 178.34 83.64

Net claims Investment & other income Underwriting profit Net profit before tax Profit after tax Dividend Dividend (%) Deposit premium Total asset Paid up capital Cash & bank balance Investment

162.80 56.49 45.88 88.98 61.99 20% 270.65 690.67 150

55.74 24.66 70.50 49.50 20% 259.47 677.03 150

46.87 17.66 56.40 35.60 20% 231.37 575.77 150

38.78 18.74 50.26 34.05 15% 233.47 505.96 150

29.76 14.58 37.29 27.65 13% 215.52 438.15 150

Agrani Insurance Company Ltd. Particulars

Gross premium income Net premium income Net claims Investment & other income Underwriting profit Net profit before tax Profit after tax Dividend Dividend (%) Deposit premium Total asset Paid up capital Cash & bank balance Investment

2008
174.22 107.22 30.63 21.54 20.52 30.81 17.85 15 10% 373.19 150 200.57 20.03

2007
150.98 98.41 21.49 19.87 19.72 28.98 17.16 10.50 7% 354.45 150 201.60 9.00

2006
118.22 72.24 12.31 19.10 20.49 27.99 18.09 10.50 7% 313.24 150 194.31 9.00

2005
117.59 92.22 5.89 16.96 3.32 16.21 7.70 7.50 5% 258.90 150 175.74 9.00

2004
78.62 63.38 8.26 6.56 4.54 6.20 3.41 3.00 5% 133.63 60 78.39 9.00

Karnaphuli Insurance Company Ltd

Particulars Gross premium income Net premium income Net claims Investment & other income Underwriting profit Net profit before tax Profit after tax Dividend Dividend (%) Deposit premium Total asset Paid up capital Cash & bank balance Investment 2008 17,88 11,41 52941787 35394324 8400911 50940 38.84 22294500 20% 60956839 3 11147250 0 15790727 2 45629654 1528172 12230048 215018 16.93 13689619 14% 57859212 3 97782989 12774797 3 13.16 12% 11.22 12% 13.83 12% 2007 2006 2005 2004

The journey to a new era of fire insurance enterprise risk management is well on its way. But it will be important to sustain the same sense of purpose and urgency that the industry demonstrated a few years ago. Although rating agencies have completed their initial scoring process, and most companies have reached a level of adequacy, companies will still need to be vigilant and committed to moving their risk management processes forward.

Chapter 6

Claim & Settlement

Notice of Loss & Appointment of Surveyor

The insured should inform about the loss as soon as the loss occurs between 14 days. Then the insurer appoints a surveyor to examine the facts of the case and to determine the amount of liability. The surveyor is the person having the ability and experience of handling claims. The surveyor is empowered to act and make necessary arrangement on behalf of the insurer. He visits the site for examining the damaged property to get the idea of the nature and extent of the damage, the origin and cause of fire. The insured is suggested to separate the salvage from the damaged part to reduce the probability of further damage and tell about the loss to evaluate the loss.

Initial check-Up
Steps are taken to check that The policy is in force on the date of occurrence of the loss or damage The loss or damage is by the peril insured by the policy The property affected by the loss is the same as insured under policy Notice of loss is received without undue delay the

After the initial check-up a number is allotted to the claim and entered in the claim register. A separate docket is opened for filling the claim papers and copy of the policy. The face of the docket provides for printed columns for incorporating claim and policy number, date of loss, estimated amount, and name of surveyor etc.

Insurers Rights after a Fire

On the happening of any loss or damage to any of the property insured by this policy, the company may Enter and take and keep possession of the building or premises where the loss or damage has happened. The possession of or require to be delivered to it any property of the insured in the building or on the premises at the time of the loss. Keep possession of the property and examine, sort, arrange, remove or otherwise deal with the same.

Sell any such property or dispose of the same for account for whom it may concern.

FIRE CLAIM SETTLEMENT PROCEDURE

APPOINTMENT OF SURVEYOR

Upon receipt of loss intimation from the client or Branch In charge the insurance co. immediately appoint licensed Surveyor ( if it seems to them that loss is exceeding tk. 5000) to enquire into the cause of fire incident and assess the extent of loss thereof. The surveyors are advised to issue preliminary survey report within 3 days and final report within 30 days. If loss is reported to be major co. visits the affected area or premises along with the surveyors. If as per preliminary survey report the loss is exceeding tk. 500000 co. intimate re-insurers (SBC) as per re-insurance treaty.

REQUIRED DOCUMENTS

While the insures co. appointing surveyor, they ask the Insured for submission of following documents: 1. Claim form duly completed and signed jointly by the insured and their Banker. 2. Statement of the person who firstly saw the fire. 3. Statement of stock for last 6 months prior to the incident duly signed by the concerned Bank Manager 4. Fire Brigade report 5. Insureds claim bill showing loss in details 6. Copies of cash memo/invoices in support of purchase of goods affected 7. Copy of G.D 8. Weather report 9. Final Policy investigation report

Upon receipt of above documents from the Insured and final survey report from the appointed surveyors, co. scrutinizes the documents for decision on approval/ repudiation of the claim. SCRUTINIZING SURVEY REPORT & DOCUMENTS

While scrutinizing the survey report & the documents by the Insured the Insurer check the following:
I.

Premium payment Position incident Proximate cause of fire Insured against Date of fire mentioned Affected Properties insured :

: :

Whether paid before or after the Whether covered by the perils fall between the period

II.

III.

Whether :

IV.

Whether covered by the interest mentioned in the Policy.

V.

Situation of affected premises : in the policy Construction of affected premises: mentioned in the policy Form

whether confirm to that mentioned Whether conform to that and declared in Proposal

VI.

VII.

Value of affected goods sum insured in policy

Pre-incident market value or which ever is less.

VIII.

Storing of hazardous goods if any in the premises affected : : to be checked to be checked to be checked

IX. X.

Involvement of moral hazard

Non-disclosure of material facts:

XI.

Whether the insured ( in case of RMG, TEXTILE & Spinning mills) has complied with the suggestion for risk improvement as recommended on pre-underwriting survey report. While arriving at net loss, the Ins. Co. scrutinize survey report and check on the following points: a. Pre-incident market value of stock/ machinery b. Application of depreciation c. Assessment of salvage value

XII.

d. Application of average e. Application of compulsory excess & voluntary excess if any If net loss exceeds tk. 500000, the co. is to seek Re-insurances concurrence before settlement of the claim.

CLAIM AND LOSS SETTLEMENT

(This is a real life event on Fire claim and loss settlement)
Insurer: KARNFULI INSURANCE Co. Ltd. Re-insurance with: INSURANCE Co. SHADHRAN BIMA Co. ltd. and RELIANCE

Insured: Saad Musa Fabrics Ltd. (garments factory) Sum insured: 33, 60, and 00,000 tk Date of loss occurred: 7.11.05 Intimated date: 8.11.05 Appointment of surveyor report submission: 8.11.05 Informing Re-insurers: 9.11.05 Submitting fire loss documents: 14.11.05 Submitted documents: 14.12.05 Primary report submission: 14.12.05 Final Survey report submission: 24.05.07 Date of Payment: 2.06.09 Assessment of net loss (payment): 10, 38, 72,500 tk Important claim documents: 1. Claim form duly completed in all respects and signed by the insured as well as their bankers or other co-insured. If any 2. Copy of relevant policy/ endorsement 3. Survey report
4. Fire Brigade report, copy of FIR

5. Policy investigation report 6. Weather report or Certificate from Gazette Officer

Insurance Fraud
(This is a real life event on Fire claim and loss settlement)
INSURED COMPANY: SIGMA SEA FORT

INSURER COMPANY: SHADHARAN BIMA, PEOPLES INSURANCE & GREENDELTA INSURANCE SURVEYOR: BUET & PRIME INSURANCE CO. COMPANY CONDITION & NATURE: Under litigation & Fish company( Cold Storage) SUM INSURED: 7, 00, 00, 000 TK POLICY NATURE: Fire policy PERIL COVERD: General fire risks, special coverage & accident caused by fire CAUSE OF ACCIDENT (FALSE CAUSE): Defective fridge & blast of that CAUSE OF BLUST (FALSE CAUSE): Leakage in the high pressure pump and spreading out of AMONIAM GAS POLICY BREACH: Blast of Low pressure pump, where the blast should not be caused by the low pressure pump. It should be the high pressure pump AFFCET OF ACCIDENT: Damaged all fishes in the cold storage WHY ITS FRAUDE: Policy condition was breached by sabotaging the transmeter of cold storage. While the trans-meter supposed to be outside the storage and there were other automated measures for preventing this kind of accidents. So that was not an accident. TOTAL CLAIM PLACED BY SIGMA SEA FORT: 4, 00, 00, 000 TK COMPENSATION AMOUNT PAID BY SIGNA SEA FORT: 2, 00, 00, 000 TK

Chapter 7

Why Burning Issue???

Fire on Corporate Office

With the passage of time mankind's race for more comfort and better living resulted in faster development in building construction along with its various service systems like electricity, water supply, sanitary drainage, mechanical

escalators etc. Increasing trend in population growth coupled with poverty laden economy provokes people to live in urban centres. Shortage of urban land coupled with high demand of building infrastructures compels construction of high rise buildings. Exorbitant cost of land and callousness of concerned regulating and planning authorities encouraged owners to construct buildings of bigger floors and levels than the rules normally permits. In this way the urban areas predominantly the Dhaka city has turned to a chaotic city entangling its dwellers into the almost all sorts of manmade hazards of life threatening. Fire is one of those hazards whose occurrence increasing day by day mostly in buildings. In Dhaka fire is becoming an unmanageable threat particularly in high rise buildings mostly constructed violating the national building code.

Some major incidences of fire in buildings

BSEC Bhaban: A devastating fire broke out at the Bangladesh Steel and Engineering Corporation (BSEC) Bhaban at Karwan Bazaar in the capital at about 10.15am on 26 February 2007. Within minutes the fire engulfed the entire floor and gradually started to spread to the upper floors, trapping hundreds of people inside. Within minutes the fire engulfed the entire floor and gradually started to spread to the upper floors, trapping hundreds of people inside. There were fire extinguishers on almost all the floors but none dared to use them. Finding no fire lift but a switched off lift, people from the first to the eleventh floors mad rushed to the central staircase to go out off the building. The first batch of fire-fighters came in from the Tejgaon fire station after half an hour of ignition. Twenty-five fire-fighting units from different fire stations and worked frantically for more than six hours to bring the fire under control. Acute shortage of water and inadequate equipment hampered the rescue operation, by the firemen who had to bring in water from the nearby WASA Bhaban and the Sonargaon Hotel. The army and the air force commissioned three helicopters to rescue dozens of people stranded on the rooftop of the building. The idea of airlifting them was eventually abandoned as the rotors of the helicopters fanned the fire. Three persons were killed and more than 100 injured in this incidence. NTV, RTV offices totally burnt and went off air. Several witnesses said the fire originated from electric oven; while some others said it was sourced from electric short-circuit.

Bashundhara fire: On 13 march 2009, Friday at about 1-45pm, a hell fire engulfed the upper levels of 20 storey office cum shopping centre known as Bashundhara City Complex at Panthopath, Dhaka killing 7 and injured 20 people. The top six floors were totally gutted. All fire fighting units of the capital and from its surroundings took about six hours to tame the massive blaze that raged through the Tower. Black plumes of smoke from the high rise spiraled upward, while blazing windowpanes, furniture, and other objects rained down on the pavement causing another fire in adjacent one storey furniture shop. Building's own fire fighters had very little training and they could not control the fire. Though the building was equipped with sufficient fire detecting, suppressing, and evacuating systems but they were useless during the fire. From the fire Brigade sources it was known that complex's water reservoir remained empty, the hydrants were useless as there was no water in the tank. Initially water was pumped from nearby Unique Trade Centre. The fire brigade received the first call at 1:35pm and sent a fire engine within 15 minutes, but did not have enough hoses or water sources to tame the fire. Fire fighters claimed that the blaze brought under control at about 7:00pm. i.e after five and half hours after the fire outbreak. Due to faulty fire fighting system, fire alarms set up at the building gave false warnings at least 886 times in the last two years. The fire alarm on the 18th floor, where the fire broke out first, gave false alarm 18 times during the same period. As there was false fire alarms on many occasions the fighters of the building didn't care about those warnings. The probe committee that was formed to find out the cause of fire could not identify the source and cause of fire but mentioned gross negligence of the Bashundhara authority in managing the fire fighting system for the building. Various Perspectives The incidences of fires and situation prevailing in fire related issues so far delineated reveal that in all aspects of fire avoidance, protection and rescue operations there exists more or less various problems, some of which have been listed hereunder: 01. Building aspect:
Planning related problems * High rise buildings lack of proper refuge areas.

* Adequate and proper escape routs are not provided. * Inadequate width of approach road for fire engines to reach the building * Underground reservoirs are mostly undersized for holding adequate water for fire fighting. Design related problems * Fire hydrants may not work properly for faulty design. * Building components are seldom designed considering fire resisting ratings. Construction related problems * Lack of exit signals for escape route. * Doors of escape routes are not made as fire doors. * Use of substandard and unspecified materials causing fire and aggravating fire. * Bad workmanship due to engagement of unauthorized working personnel. Maintenance related problems * Escape routes remain blocked. *Parked vehicles, unauthorized establishments etc. obstruct exits to the open air. * Fire fighting detectors and equipments are seldom tested and checked as routine work. Regulatory issues * Absence of regulatory authority to care for all safety aspects of building. * Unauthorized construction of buildings of mixed occupancies. 02. Institutional aspect: The authorities and the institutions responsible for urban infrastructural development and various service providing activities suffers from manifold problems. Incapacitation of and lack of cooperation and coordination among the institutions or the authorities intensifies the fire related hazards.

03. National aspects: Poor initiatives for capacity building and performance improvement of the concerned authorities. * Lack of initiatives for sustainable development in a planned, integrated and coordinated manner.

Loss and sufferings due to fire

Loss of Life and property: Since 1990, over 350 workers have died and some
1500 injured in fire-related incidents in garments factories in Bangladesh. Till 2000, there were more than hundred fires in factories in Bangladesh. More than 5000 workers were injured in these fires and 246 workers were killed. Properties worth around Tk 39.34 crore were damaged in 836 fire incidents in Chittagong district last year. Besides these direct losses due to fire there results huge intangible loss which remains always in the dark.

Psychological problem: It is learnt that a number of survivors from a fire at KTS

Textile and Garments in Chittagong, killing 62 workers in February, are reportedly suffering from psychological trauma. From Chittagong Medical College and Hospital sources it was learnt some of burnt patients were suffering from post traumatic stress disorder who needed long term observation along with psychotherapy for being fully cured. Experience says that those patients could become mentally deranged if proper treatment would not be provided at the initial stage.

Losing job: After any devastating fire in any commercial or industrial units if the
owners cannot restart their business after the incidence then there remains fear of losing job of the workers of the concern organization which brings huge sufferings to the victims and their family members as well.

Traffic congestion: Traffic movement in the vicinity of the fire occurrence become
more or less to a standstill because of any fire. Where in normal situation the traffic movement in many parts of the city roads remains nearly standing condition, in case of any fire at city centres it creates heavy grid lock at almost all the roads nearby. The extent of such effect widens depending upon the main reason is the gathering of the onlookers at the site. The onlookers create all sorts of trouble in fire fighting and rescue operations. In this circumstances law enforcing agencies become literally helpless, which badly hampers in rescue and fighting operation resulting avoidable losses.

Chapter 8

Conflict-ConfessionConclusion

Failure of the authorities Buildings cannot be made cent percent fire occurrence proof but loss due to building fire can be minimized to satisfactory level by taking various measures amongst which planned development of cities and strictly regulated building construction are the major factors to be satisfied, Unfortunately in these regards the cities are lagging far behind due to the failure of the respective concerned authorities. Not finalizing the detailed area plan (DAP) for Dhaka: The detailed area plan (DAP), the major component of the DMDP, could not be prepared in about12 years, leading to unplanned urbanization. Being drafted in 1995, the 20-year DMDP plan was approved by the government in 1997 with retrospective effect, but it is yet to be materialized for want of the DAP. Lack of enforcement of BNBC: Around 90 per cent buildings are being constructed in the capital city in violation of building construction regulations prepared on the basis of Bangladesh National Building Code 1993 (BNBC). Majority of the building owners have committed gross violation of setback rules followed by the urban development authorities due to lack of proper monitoring by the respective concern authorities. Absence of building office: Some 72 percent of high-rise buildings in the city do not have necessary arrangements to handle disasters like fire and earthquake, according to a survey prepared by a NGO. Rest 28 percent of

high-rise buildings keep some arrangements and equipment to deal with fire and earthquake, but there was doubt whether those could be hardly used when needed. This situation emerged due to absence of any office that can monitor the safety aspects related to building construction, maintenance, operation, and above all occupational safety. According to BNBC there shall be an authority to be named as Building Office who would be shouldering these responsibilities. This office is yet to be established though following BNBC in building management has been obligated through amendment of Building Construction Act in 2006. Fire safety and some limitations of BNBC * Bangladesh National Building Code (BNBC) has been published in 1993 with a view to streamlining the building construction practices which was done before following various guidelines at one's will. BNBC provided sufficient guidelines to make a building safe in all respect including safety against fire hazards. Almost 16 years have passed after the emergence of BNBC. By this time technology has advanced a lot. Moreover this was the first effort of its kind. So in few cases some shortcoming in the BNBC may have surfaced. Some of those in respect of fire safety of buildings have been discussed below. * BNBC did not mention categorically what type and extent of fire safety measures shall be incorporated in respect of type of occupancy, size of building, location of building and importance of building. * Incorporation of fire hydrant from roof top water tank working under gravity does not ensure perfect solution for fire suppression requirement by water. * Use of 50mm landing valve and hose is not common, which is incorporated in BNBC. * Guideline for hydrant sizing gives result for using relatively higher sized hydrant. Traffic congestion: Traffic movement in the vicinity of the fire occurrence become more or less to a standstill because of any fire. Where in normal situation the traffic movement in many parts of the city roads remains nearly standing condition, in case of any fire at city centres it creates heavy grid lock at almost all the roads nearby. The extent of such effect widens depending upon the main reason is the gathering of the onlookers at the site. The onlookers create all sorts of trouble in fire fighting and rescue operations. In this circumstances law enforcing agencies become literally helpless, which badly hampers in rescue and fighting operation resulting avoidable losses.

Fire Brigade's capacity and limitation The Fire Service and Civil Defence (FSCD) authority is held responsible for suppressing fires that occurs within its jurisdiction and run rescue operation for the victims. In addition as per Fire Prevention and Dousing Act 2003 (original in Bangla) the Fire Service and Civil Defence authority is empowered to inspect any building and check its compliance with the fire safety provisions. With a view to performing such difficult and risky jobs, this authority shall be well capacitated to manage fires that may occur at any corner and level within its boundary. Narrow width of road for fire engine vehicles to ply, height of buildings beyond the reach of turntable ladder, and lack of sufficient water in any operation are the major obstacles in performing their duty. Nevertheless, despite the following limitations the FSCD is doing a commendable job. Dhaka city: Dhaka city now has 13 fire stations equipped with about 20 vehicles including water carrying tenders, and pickup vans for carrying pumps. The agency has only two hydraulic ladders which can hose water up to the 14th floor of a building at best and the country does not have helicopters equipped to put off flames in high rises. Chittagong city: There are 11 fire stations in the city. Chittagong fire fighters are unable to douse flames beyond sixth floor of a high rise building. There is no turntable ladder. Positive initiatives Amidst limited resources and capacity the FSCD has taken various steps to keep people safe from fire as far as possible. On the other hand some committed owners have shown respect to the prevailing building code by constructing safe buildings for its occupants. Here some of those initiatives are cited. Demonstration on fire fighting: A demonstration on fire fighting was held in Dhaka Export Promotion Zone on 08 February 2006 in view to improving capabilities of the enterprises to protect fire accident and to create expertise of the workers of EPZ. Fire drill conducted in secretariat: The Fire Service and Civil Defence authority conducted a fire drill in the 21-storey building of the secretariat on 19 March, 2009 to educate the officials and employees about what to do in case fire breaks out. Construction of intelligent building: There are 15 fully intelligent buildings in Bangladesh. All are built in Dhaka. These intelligent buildings have automated fire fighting and suppression systems, air conditioning systems,

and access control with CCTV and intruder alarms.

Suggestions Recommended By Insurance Specialists

-First of all, there should be an exit sign on every floor. Then there should be fire extinguishers. Fire drill should be given maximum priority and we have to have fire hydrants. -During fire the main electric and gas connection needs to be closed and kitchen doors need to be fire proof. -Trying to keep at least one veranda grill free. There has to be at least one exit.

-It is better to avoid carpets, and use steel doors instead of wooden doors. -Every building has an electric sub-station on the ground floor of the building. It has to be assessed what amount of risk that sub-station is posing. -The existing building laws and codes need to be updated and upgraded. -Every year, clearance certificates should be collected from building inspectors and fire department. -People keep their gas stoves open 24 hours to save one stick of matchbox. It is to stop gas supply and introduce gas cylinders. -The media has to take the responsibility of making the people aware of the fire hazards. -A pragmatic fire safety plan has to be made for all the buildings with the help of the fire department. -The number of people who will be using a building is far greater than the number of owners so occupants will have to be more proactive. -If Rajuk and the fire department inspect a building and they find faults then they should give notice to the owner that the building will be closed down. Disseminate the information that if one does not follow the law then legal action will be taken against him. -Those who live in high-rise apartments can make a plan as to who will call the fire brigade, who will shut down the gas line etc. -Along with an occupancy certificate there should be a fire safety evaluation report. That has to be submitted to the fire department. -The definition of high rise and low rise should be determined on the basis of fire and other services. This should be done with the help of the architects. To create public awareness, there should be more meetings like this. -When it comes to fire safety, high-rise and low rise is not the main issue. The main issue is the risk assessment. What are the chances of the building falling into a fire hazard? Based on that we shall have to install fire fighting equipment in the building. -Fire service needs to be have digital system so that either with the help of the Internet or quick detectors they can know where the fire is and reach there as soon as possible.

-Fire extinguishers will have to be made easily available in the small shops. And these should be made tax free for import. -The related building codes of different countries need to be studied thoroughly and adopted according to our context. -We can arrange a workshops to increase people's awareness. -Information of the buildings that were built before the building code 2008 need to be collected. This can be done by the fire department. After sorting out all the information, the buildings have to be inspected. -We need to make sure that people do not live in the commercial buildings. -High rise buildings will need more stairs. -If we can make WASA to install water hydrants beside the roads that would be a great help. Either WASA or city corporations can do that. -If there is a system of insurance then people would be forced to install fire fighting measures. It should be on the basis of "the more facility you have the less premium you have to pay. And in this case they will need certificate from the fire department. -Measures against electrical short circuit have to be taken through ensuring quality, fire resistant electrical materials. -If fire occurs for using faulty and low quality materials by the owner then he or she should be forced to pay compensation to the aggrieved occupants. -Every building has to have a fire command room on the ground floor. That room must have the monitoring facility with all the floors. -All the buildings should have proper announcement system as to how to get out of the building. One should leave the building within a certain time. Building should be designed with 2- hour fire rating doors, windows and walls.

Policy Implication
1. Modifying Premium Rate:

Implication of modern methods for calculation in case of fixing Premium and Indemnity. Fixation of premium or indemnity is not up to the mark in Bangladesh comparing to other countries. 2. Advanced rating System: Changing the rating system. Rating system is done by the Central Rating Committee in Bangladesh; which has not been re-printed or changed after 1974. 3. Specialization in Risk assessment: Introduction of risk assessment system or specialized risk assessment system
4. Emphasizing on Liability Act:

In case of accidents happened by FIRE or CAR/MOTOR VEHICALS, other countries look after on 3rd party-work on 3rd party liabilities
5. Modification of Indemnity process:

Apart from the fixed amount of loss sharing or compensation (caused by fire) the compensation or amount of indemnity is absurd while accident happens. Accident happened to a 3rd party, by fire or car, allows to indemnify Killed 20000 tk

Severely injured 10000 tk Medium injured 5000 tk

But this couldnt be a well judged amount of indemnity

6. Appointment of Intermediaries:

Who are to maintain the link between the insurer and insured.
7. Updating of Tariff Rate Determination:

Tariff rate changes after 5-7 years. But as the market rate, monetary value, interest rate and other relative factors are changing in a regular basis, the rate doesnt show the actual situation
8. Enterprise risk management (ERM):

ERM policy frameworks are designed to be comprehensive in identifying the key elements of an organizations ERM activities. ERM policies are works in progress, rather than fully integrated elements of company operations. As expected, most companies have adopted formal ERM mission statements, principles, risk categories, risk management processes and ownership structures. On the other hand, the more dynamic aspects of ERM are still to be addressed.

9. Risk Appetite: Formal risk appetite statements and the integration of risk tolerances and limits have been adopted more broadly as part of risk management governance frameworks. While much progress is to be made in developing these initial risk appetite statements, there is still more work to do in adopting more sophisticated and useful statements that can be used to guide risk-taking. A majority of companies also have in place formal risk tolerances and limits. However, we suggest companies need to work on establishing meaningful linkages between risk appetite and tolerances. In practice, existing linkages are notional and high level.

Conclusion
In case of Fire Insurance, risk management organizational roles are evolving and maturing. At many companies, risk ownership, management and monitoring roles are not always distinct and separate across corporate functions and business units. Individuals with responsibility for ownership of key risks are often responsible for overseeing or monitoring the same risk. In many organizations, risk management and measurement of Fire Insurance are evolving, becoming stronger and gaining strategic importance. A critical objective of our survey was to determine to what extent risk is and will be embedded into companies decision-making processes in order to improve those decisions and, therefore, improve financial and operating results. There are gaps, areas of immaturity and a necessity to evolve to higher levels of rigor and discipline. Progress is needed in effectively and permanently integrating companies risk practices into their strategic and business decision-making. Companies will need to continue investing and, for a time, perhaps increase the level of investment in risk measurement. Limitations and lack of sophistication in modeling and the lack of critical data for riskreporting and decision-making must be overcome. Finally, better communication and the building of stronger functional and personal linkages among all the risk stakeholders within a company will be critical in moving risk leadership to the next level and helping the industry achieve its potential.

Annexure

Questionnaire

1. What is the procedure of taking a fire insurance policy? 2. What are the prime concerns of interested people who go for a fire insurance policy? 3. Which types of industry usually go for a fir insurance policy? What is their share in the insurance industry? 4. What are the type & value of properties while accepting a proposal of fire insurance? 5. What is the procedure of assessing risk & fixing the premium? 6. What are the terms & conditions of a contract of fire insurance? 7. What are the different kinds of fire insurance policy? 8. What is the total number of different fire insurance policy in last 10 years?
9. What is the total number of fire insurance policy that has been void

because of the violation of the express conditions of the contract in last few years? 10. What are the perils preferred to the insurer to be insured?

11. What are the cases of misdescription, alteration (removal, increase of risk, change of interest), and fraud? 12. What are the insurers rights after an accident, subrogation, warranties & arbitration? 13. 14. 15. 16. What is the loss procedure & ex-gratia payment? What are the classification of properties while rate fixation? What are the methods of rate fixation? What is all about the tariff rate in this case?

17. What is all about the claim requirement, assessors initial checkup & survey report? 18. What is all about the reinsurance & financial support?

19. What are the total gross and net premiums, net commission, expenses

to management, miscellaneous outgo, unexpired risk and underwriting profit in last few years?

Bibliography

I.

Reference books

Risk & Insurance Azizul Haq Chawdhuri

Risk & insurance M. N. Mishra

II.

Websites

 III. Interviews

www.prime-insurance.net www.scribd.com www.bangladeshinfo.com www.karnafuliho.com

Bangladesh Insurance Academy Bangladesh Insurance Association Prime Insurance Ltd. Pioneer Insurance Ltd. Karnafuliho Insurance Ltd.