Assignment

On

Application of insurance Law in the insurance companies in

Bangladesh

Course Code: Fin-405

Submitted to

Udayshankar Sarkar

Lecturer in Department of Business Administration

City University

Submitted By

Khusbu Akter

Id: 163431034

Batch: 43rd

Program: BBA

Date of Submission: 23/02/2020

Acknowledgement

First of all, we wish to express our gratitude to the almighty ALLAH for giving us the strength to
perform our responsibilities as an intern and complete the report within the stipulated time.

We deeply indebted to our Faculty Advisor Uday shankar Sarkar

lecturer

Department of Business Administration City University. For his full

support and encouragement.

It was his relentless co-operation: guidance and counseling that gave structure of this report and
the report as a whole. Because report on a country’s festivals is not an easy work without our
honorable teacher Uday shankar Sarkar’s help it may would not be completed. He always gave
us advise for complete the report best way. From this report we learn a lot of things for doing
international business in Sri Lanka on festivals day. So all credit goes to our humble course
instructor Uday shankar Sarkar.
About the Insurance

The Parliament of Bangladesh on 3 March 2010 has passed two insurance laws in a bid to further
strengthen the regulatory framework for the insurance industry. The new laws, came into effect
on 18 March 2010, are Insurance Act 2010 and IDRA Act 2010.

77 insurance companies have been operating in the country. The companies are to be regulated
under comprehensive laws and guidelines, and to be supervised by IDRA. The IDRA Act 2010
has paved the way for better regulation of the sector by reducing business risks, and by
harmonizing local and international insurance laws for the Economy of Bangladesh. IDRA
attempts to protect the interest of insurance policy holders, beneficiaries and ensuring stability of
the insurance sector.[2] Two state-owned insurers -Sadharan Bima Corporation (SBC) and Jiban
Bima Corporation (JBC) are also regulated by IDRA.

 Insurance Laws in Bangladesh

Insurance business is not new in Bangladesh. Almost a century back, During the British rule in
India, some companies started insurance business, both in life and general insurance, in this
region. This business has gained momentum in Bangladesh also. So, legal provisions were
necessary to regulate insurance in Bangladesh .At present ,there is a law regarding insurance
which is the insurance Act, 2010.There were some laws in the immediate past regarding
insurance , for example Insurance Act 1938.

The Insurance Act, 1938

This Act contained provisions regarding matters like definition of insurer and insured,
commission payable to agents, licensing of agents, appointments of staff, register of policies and
register of claims powers of the controller of insurance, acquisition of surrender value by policy,
actuarial report, deposits, investments, loans, valuation of assets and liabilities, account and
balance sheets etc. The Act also contained provisions relating to co constitution, management
and winding up of insurance company. It was applicable to both in life and general insurance
business.
2.4.2 The Bangladesh Insurance (Nationalization) Order, 1972.

This order was for the nationalization of insurance business in Bangladesh by transferring all
such business to certain corporations established for the purpose and to provide for the regulation
and control of the business of the corporation.

2.4.3 The Bangladesh Insurance Corporation (Dissolution) order, 1972.This order was made
for the dissolution on of the Insurance corporations.

Insurance has scope to grow faster

Bangladesh economy is growing steadily with an average over 6% growth in the last
decade, while digitization of payment is another tool to bring more people under coverage
in the sector.

“Where there is rise in income, there is more scope for insurance. Economic development
creates opportunity for insurance against fire, car accident and naval insurance against
uncertain losses of wealth,” former World Bank Bangladesh lead economist Zahid
Hossain has told Dhaka Tribune. 

As per BBS data, Bangladesh's per capita gross national income (GNI) stood at $1,909 in
the last fiscal year, which was $1,751 a year ago. 

On top of that, life threatening diseases such as cancer are increasing, which may lead
more people to insurance coverage, says Zahid. 

But tapping the potentials will depend on people's trust in insurance companies, he adds.

Franz Josef Hahn, CEO, Peak Reinsurance Company Limited, says the fast adoption of
modern technologies in Asia creates a wealth of choices for customers and greatly
enhances their overall purchasing power and product reach.  
For life and health insurers, this trend elevates the opportunity curve, especially when
they succeed in bundling their protection propositions with primary customer priorities
such as health, family and lifestyle, he says, citing a report "Emerging Asia Life
Insurance Pulse 2019". 

Besides, Bangladesh’s higher GDP growth is an opportunity to pull out the sector from
the bottom to grow further. 

According to the forecast of the Swiss Re, the markets in emerging Asia will also grow as
GDP per capita continues to increase rapidly, fuelling insurance demand. The insurance
markets in the Asia-Pacific regions will count for 42% of the global premiums by 2029.  

Bangladesh’s GDP growth was 8.13% in the last fiscal year, while the government has set
a target to attain 8.2% in the current fiscal year. 

Meanwhile, Finance Minister AHM Mustafa Kamal on Sunday stated that all kinds of
structures, including buildings and flats, would be brought under insurance coverage in a
bid develop the insurance sector in Bangladesh. 

Insurance penetration
Bangladesh’s insurance sector is a vital area that requires more attention

The role of insurance in managing risks in an economy cannot be overstated. On a micro

scale, it safeguards households and companies from a myriad of risks. On a larger scale,
it reduces the financial burden on a government and creates a stable environment in
which businesses can thrive and succeed. 

While Bangladesh has made gigantic strides on the path to economic prosperity, its
insurance sector is a vital area that requires more attention and would benefit from
regulatory reform. Currently, Bangladesh’s insurance sector comprises 45 general
insurance companies and 31 life insurance companies. In addition, the country has two
state-owned insurance corporations -- one in the general segment and the other in the life
segment.

Within Bangladesh’s insurance sector, life insurance constitutes a 73.5% share of its
insurance market and non-life insurance a 26.5% share . Micro-insurance and Islamic
Insurance (Takaful) are also a part of Bangladesh’s insurance sector.In 2017, non-life
insurers earned a gross premium income of Tk2,908.1 crores and life insurers Tk8,203.1
crores.

The assets of all the insurance companies stood at Tk44,328 crores by the end of 2016.
Investments in both life and non-life insurance companies have grown significantly
during the period between 2006 and 2014.

Yet, despite some growth, a comparison with other countries paints a dreary picture.
Overall, insurance penetration (insurance premiums as a fraction of GDP) in Bangladesh
was a meager 0.7% in 2016 and has mostly been on a downward trend since 2009 (see
Figure 1).  Figure 2 clearly indicates that Bangladesh’s life insurance penetration rate
falls behind those of several other developing countries.
Compared to its South Asian counterparts, including India, Bangladesh has the lowest
premium per capita. According to the World Bank, from 1999 to 2004, the average gross
premium income as a percentage of its GDP was 2.7% in India, 1.27% in Sri-Lanka, but
only 0.51% in Bangladesh. Egypt, which like Bangladesh is one of the countries featuring
in Goldman Sachs’ Next Eleven (N-11), has been implementing regulatory reforms.

These reforms have helped Egypt strengthen its insurance sector significantly, as is
evidenced by the growth of its insurance density premium per capita from $8 in 1999 to
$23 in 2016 (PwC Analysis). Globally, Bangladesh ranks 86th out 88 countries in terms
of its premium per capita (US dollars) and 85th out of 88 countries in terms of its
premium as a percentage of its GDP.

Bangladesh Insurance Corporation Act, 1973

This law contained 34 sections. It was promulgated on 23 june in 1973. However, it was enacted
to establish Jiban (Life) Bima Corporation and Sadharon (general) Bima Corporation by
abolishing the former four insurance corporations, namely, Rupsa, Surma, Karnaphuli and Teesta

The Insurance Act, 2010.

All the previous laws relating to insurance were repealed by this Act. It contains 160 sections
under seven chapters. It is an updated law. It provides the provisions applicable to insurer,
insured, punishment for violation of the law .On the other, it provides provision for Islamic
Insurance also.

The Insurance Development and Regulatory Act, 2010

The control over insurance companies including their functions relating to investments, taxation
and reporting are regulated by this Act

 Insurance Regulatory Authority

The insurance companies operating in the country need to be regulated under comprehensive law
and guidelines and supervised by a strong authority named ‘’Insurance Development and
Regulatory Authority’’ (IDRA) established under the Insurance Development and Regulatory
Authority Act, 2010. It is run by an executive committee of 15 members including a chairman
and a vice-chairman.

Bangladesh Insurance Association

Insurance companies are the companies are the companies under the companies Act, 1994. The
private insurance companies of Bangladesh has an association to promote ,support and protect
the interests and welfare of the member companies, to help develop the healthy growth of
insurance business in Bangladesh. It is run by an executive committee of 15 members including a
chairman and a vice chairman.

On the other, there is an institution for providing training and education to the people of this
sector name “Bangladesh Insurance Academy”

Conclusion

The role of insurance in developing our economy is increasing so it is necessary to give

importance in this sector for giving protection of the people in general and the society in
particular.