4.

Present position of insurance business in Bangladesh In Bangladesh, the Insurance business, after and early stage of dislocation, adventureand experimentation through half a century has now being established as a nascentindustry distributed between the public and private sectors. Insurance businessevolved in the Indian subcontinent late in nineteenth century when several businesscompanies started their business and a few Christian missionaries began to operatemutual funds to serve their own community members. From Bangladesh perspectiveinsurance business was not a promising sector in its early age but it is getting its paceday by day with the growth of overall economic condition of the country.The privatization policy adopted in the 1980s paved the way for a number of insurersto emerge in the private sector. This resulted in a substantial growth of premiumincomes, competition, improvement in services, and introduction of newer types of business in wider fields hitherto untapped.Up to 2000, the government has given permission to 19 general insurance companiesand 10 life insurance companies in the private sector. Insurers of the country nowconduct almost all types of general and life insurance, except crop insurance andexport credit guarantee insurance, which are available only with the Shadharan BimaCorporation. Numerous institutions, associations and professional groups work to promote the development of insurance business in Bangladesh. Prominent amongthem is the Bangladesh Insurance Association (formed on 25 May 1988) having 30members. It aims at promoting, supporting and protecting the interests and welfare of the member companies. Another example is Bangladesh insurance academy.Surveyors and insurance agents occupy a prominent position in the insurance marketof Bangladesh. The system of professional brokers has not yet developed inBangladesh. A total of 60 insurance companies are operating in Bangladesh till date.Of these companies, 57 are private, two state-owned and one is foreign.Insurance Directorate, under the Ministry of Commerce, is the regulatory-body of thecountry's insurance sector. At present there are 44 general insurance companiesrunning in Bangladesh. Many other private companies are about to commence business. 5. Problem of Insurance Business in Bangladesh In a developing country like Bangladesh, insurance companies are playing a veryimportant role in the economy. Though insurance industry has very prospect in theeconomy but for some reasons its totally failed to achieve its goal. If we wa nt toknow the reasons behind this hen we should look forward the following according toBangladesh General Insurance Company Ltd.In this report the major problems in performing insurance business has been classifiedinto some major criteria which are social, economic, political, legal and other reasons.The actual problems are discussed in detail within these criterions 6. Prospects of insurance business in Bangladesh As well as the problems mentioned above, there are many good signs for theinsurance business in Bangladesh. The factors that can facilitate the insurance business in our country are discussed below. These facts can be measured as the prospective fields for insurance business in Bangladesh. Higher GDP The GDP of our country is increasing than the previous years which results inincrease of per capita income. So this growing GDP and income holds bright prospects for insurance companies. The major problem is the incapability of our people to pay the premium charged by the insurance companies. . With the growth inthe income more and more people are now willing to take an insurance policy for safeguarding themselves from any danger.

Increased population There is a big opportunity lies ahead for the insurance companies as the population of our country are increasing day by day. Although most of people of our country liveunder extreme poverty level and want to avoid insurance policy number of potential policy holders in Bangladesh is growing with growth of the population. There issomewhat relationship between growing populations with the number of publicvehicle. As we know all public vehicle must have an insurance policy. So growing population also increase the motor insurance too. That is growth in population opensgreater scope for every kind of insurance business that results in growing prospect for insurance companies. New businesss individual insurance There are so many new businesses starting every day and manufacturing sector is booming with global demand. Every business is insured under an insurance companyto protect its company from any kind of accident. Therefore growing industry, mill,factories are creating better scope for the insurance companies to flourish their business. Developing mass awareness about insurance People are now much more conscious about their safety. So they are encouraged totake an insurance policy for making their life free from any unexpected occurrence.Increase in literacy rate is helping predominantly to create awareness among the people regarding taking insurance policy. Besides this insurance companies are alsotrying to eradicate the negative attitude of people towards the insurance company byorganizing various programs such as seminars, programs including socialresponsibilities etc. Micro insurance Micro insurance can be a great prospective area for the insurance business in our country. Most of the people of our country are unable to have costly and long terminsurance policies. Micro insurance can be provided to individual personnel or tosmall business owners against little insurance premiums and with easy terms andconditions. When they will afford to minimize their risks at a lower price, they willtake that opportunity and they will become to get used to it. This can cover a huge portion of the society who can be a prospective target market for this business. Development of new policy SBC has long been the sole reinsures in Bangladesh and private insurance companieswere statutorily compelled to place 100% of their reinsurance business with SBC.In1990 the government amended the relevant provisions of the insurance Act allowing50% of all reinsurance of general insurance business to be placed compulsorily withSBC and the rest to private reinsurance companies .About 70% of premium incomefrom general insurance business in Bangladesh is retained locally and the rest 30% goes to reinsures abroad.Permissions to private insurance companies to act as reinsures will open up newopportunities to them. This will initiate open competition between the SBC and the private reinsures within the country and will reduce the reinsurance cost and increaseefficiency. This amendment of the existing rules can be another important policymaking that will facilitate the insurance business in Bangladesh. The private insurancecompanies can argue in favours of their capability to act as reinsures on the basis of the fact that the total capital belonging to the government owned general insurancecompanys is Tk. 550 million while the private sector insurance companies ownTk.2500 million. Scope in non-traditional sector

Nowadays, along with traditional insurance services, they can offer various non-traditional insurance services to their customer. Target market of insurance companymay expand and they can offer different types of non-traditional insurance servicessuch as health insurance, personal accident insurance, travel insurance, burglaryinsurance and pension scheme. Scope of investment Insurance companies can usually make more profit from investment activities thanfrom their regular insurance business. The private insurance companies are realizingthis fact and playing role in the financial market. Insurance companies are makinglarge investment in government bonds, ICB projects and in private sector business.T h e r e a r e o p p o r t u n i t i e s t o e n h a n c e p r o f i t t h r o u g h e f f e c t i v e a n d e f ficient money management by employing capable and experienced personnel. Scope of investmentexpansion persists in the areas leasing, housing, health and money market. Service diversification Insurance is not just a tool of risk coverage. It is also an attractive instrument of savings. The mixture of risk coverage with savings gives the opportunity for innovative product designing which means service diversification. In a dynamicinsurance market one can expect to see new products being promoted at regular intervals. So far very little efforts have been taken to innovative and introduce needoriented insurance services in response to existing threats.The prospect of the insurance business in various sectors that affect our economy can be differentiated in the following way. Agriculture sector The economy of Bangladesh is predominantly an agrarian one, with most peoplee n g a g e i n f a r m i n g a n d f i s h i n g . T h e u n c e r t a i n t y o f a g r i c u l t u r e d u e t o c r o p f a i l u r e caused by climate variation, drought, cyclone, flood and pests affects farmer incomeas well as government revenue.Furhermore, in the last few years commercializationhas occurred in some sections of the agricultural sector. Increase in investment in thea g r i c u l t u r a l s e c t o r i s c r e a t i n g a n e w o p p o r t u n i t y f o r i n s u r a n c e i n d u s t r y. V a r i o u s a g r i c u l t u r a l i n s u r a n c e s e r v i c e s a r e b e c o m i n g c o m m o n t h e s e d a ys . D e m a n d f o r insurance protection against crop loans, livestock loans, fisheries loans and equipmentloans are also increasing day by day. Business sector Nowadays in Bangladesh the SME plays a important role in t h e e c o n o m i c development. But they are deprived from taking loans from bank for large amount. If insurance business focuses this section in Bangladesh they are able to contribute morein the economy .Thus insurance business has a bright prospect in business sector in adeveloping country like Bangladesh Education sector: Insurance companies can provide different types of scheme to expand education planinsurance. 7. Comments and suggestion From the presiding discussions of the report, we can realize that the policy makerswithin the government and the insurance company should adopt effective measures inorder to make good use of the opportunities and to tackle the threats for ensuring ahealthy development of the insurance industry. The following actions are suggested

. The insurance companies of Bangladesh should practice marketing throught h e u s e o f p r o m o t i o n a l t o o l s s u c h a s a d v e r t i s i n g , s a l e s p r o m o t i o n , p u b l i c relation and publicity, personal selling and direct marketing. 8. Conclusion In present insurance is too much important to the business and individual sector. Mostof the companies provide more or less same services. For this reason the competitionis increasing day by day between the insurance companies. O n the other hand somenew insurance companies are going to start businesses in the competent market. BGICneed to develop their some productive sectors. In present, a company cannot establish properly without developing information technology. People search their desiresrequirement through Internet so, insurance companies need to develop Web address toi n c r e a s e b o t h f o r e i g n a n d local investors. So we have discussed about both the p r o b l e m a n d p r o s p e c t s o f i n s u r a n c e b u s i n e s s i n B a n g l a d e s h . T h e p r o g r e s s o f insuranc e b u s i n e s s d e p e n d s o n t h e p r o g r e s s o f e c o n o m i c c o n d i t i o n . I n s u r a n c e busin ess also faces many problem. So if we develop economic condition as well asovercome the problems, it will help a lot to flourish this business in our country.

Introduction: In law and economics, insurance is a form of risk management primarily used to hedge againstthe risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling theinsurance; an insured or policyholder is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium . R i s k m a n a g e m e n t , t h e p r a c t i c e o f a p p r a i s i n g a n d controlling risk, has evolved as a discrete field of study and practice.The transaction involves the insured assuming a guaranteed and known relatively small loss int h e f o r m o f p a y m e n t t o t h e i n s u r e r i n e x c h a n g e f o r t h e i n s u r e r ' s p r o m i s e t o c o m p e n s a t e (indemnify) the insured in the case of a large, possibly

devastating loss. The insured receives acontract called the insurance policy which details the conditions and circumstances under whichthe insured will be compensated. Backdrop 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 regime in the then India, some insurance compa nies started insurance business, particularly life, in this part of the world. Since 1947 until 1971 insurance businessgained momentum in this part of what was then known as East Pakistan. There were about 49companies transacting both life and general insurance business. These companies were operatingunder a free competitive economy.After the emergence of the Peoples Republic of Bangladesh in 1971, the government, in order tomake available the fruit of liberation to the general mass, nationalized the insur ance industryalong with the banks in 1972 by Presidential Order No. 95. By virtue of this order, save anda c c e p t p o s t a l l i f e i n s u r a n c e a n d f o r e i g n l i f e i n s u r a n c e c o m p a n i e s ( o t h e r than the Pakistanicompanies), all companies and organization transactin g a l l t yp e s o f i n s u r a n c e b u s i n e s s i n Bangladesh came under this nationalization order. At the same time, five insurance corporationswere initially established by the Government, viz1)Jatiya Bima Corporation (National Insurance Corporation),2)Teesta Bima Corporation (Teesta Insurance Corporation),3)Karnaphuli Bima Corporation (Karnaphuli Insurance Corporation),4)Rupsa Jiban Bima Corporation (Rupsa Life Insurance Corporation),5)Surma Jiban Bima Corporation (Surma Life Insurance Corporation).O n 1 4 t h M a y, 1 9 7 3 t h e I n s u r a n c e C o r p o r a t i o n A c t V I , 1 9 7 3 w a s e n a c t e d u n d e r w h i c h t h e previous five corporations were abolished and the following two corporations emerged:1)Sadharan Bima Corporation for General Insurance and,