Report

On
Insurance practice in Bangladesh,
“A Study on Progati Life Insurance Company Ltd.”

Supervised By:
Ms. Refatun Nahar
Lecturer
Department Of Business Administration
Dhaka City College

Prepared By:
Name Id No. Chapter No.
1. Farjana Islam Mim 299 01,08
2. Fatema Akter 300 05,
3. Sraoshi Islam 301 03,04
4. Afsin Ullah Nawsin 302 02
5. Marzia Jahan Ritu 303 07
6. Sumaiya Binte Sattar Shoma 304 06

Date of Submission: 2nd February, 2017.

1
 LETTER OF TRANSMITTAL

January 30, 2017

Ms. Refatun Nahar
Lecturer
Department Of Business Administration
Dhaka City College

Subject: Submission of Report

Dear Sir,

We are pleased to submit the report that you asked for & gave us the authorization to work on
“Insurance Practices in Bangladesh on Progati Life Insurance Company Ltd.” This report is
an essential part of our course, we tried our best to work on it carefully and sincerely to make the
report informative.

The study I conducted enhanced our knowledge to make an executive report. This report has
given us an exceptional experience that might have immense uses in the future endeavors and I
sincerely hope that it would be able to fulfill your expectations.

We have put our sincere effort to give this report a presentable shape and make it as informative
and precise as possible.  We thank you for providing us with this unique opportunity.

Sincerely yours,

Farjana Islam Mim 299

Fatema Akter 300

Sraoshi Islam 301

Afsin Ullah Nawsin 302

Marzia Jahan Ritu 303

Sumaiya Binte Sattar Shoma 304

Batch: 17th; Section: D

Department Of Business Administration
Dhaka City College

2
 ACKNOWLEDGEMENT

At first, I would like to express my gratitude to almighty Allah for enabling me the strength &
opportunity to complete the report in the schedule time successfully.
In performing our report, we had to take the help and guideline of some respected persons, who
deserve our greatest gratitude. The completion of this report gives us much Pleasure. We would
like to show our gratitude Ms. Refatun Nahar, Course Instructor, Dhaka City College for
giving us a good guideline for report throughout numerous consultations. We would also like to
expand our deepest gratitude to all those who have directly and indirectly guided us in writing
this report.

In addition, a thank you to Mr. Zakaria Taher (Director) who introduced us to the
Methodology of work, and whose passion for the “underlying structures” had lasting effect. We
also thank the K A S M Azam Ullah Tipu (Deputy General Manager) for consent to include
copyrighted pictures as a part of our paper.

Many people, especially our classmates and team members itself, have made valuable comment
suggestions on this proposal which gave us an inspiration to improve our assignment. We thank
all the people for their help directly and indirectly to complete our assignment.

The authors,

Farjana Islam Mim

Fatema Akter

Sraoshi Islam

Afsin Ullah Nawsin

Marzia Jahan Ritu

Sumaiya Binte Sattar Shoma

3
 EXECUTIVE SUMMARY

This report based on the internship report Submission program, partial requirement of BBA
program in Dhaka City College. The main objective of the report is to know the insurance
practice in Bangladesh. To make this report has been selected by Progati Life Insurance
Company Ltd.
Pragati Life Insurance Limited was established on January 30, 2000 as a public limited company
under the Companies Act, 1994 with the philosophy of maintaining competitiveness, balanced
with prudent management and fairness to all policyholders. The company obtained registration
from the Department of Insurance on April 11, 2000 under the Insurance Act, 1938 to carry out
insurance business. The Company started with a paid up capital of Tk.30 million against an
authorized capital of Tk. 250 million.
Now the present paid up capital stands to Tk. 84 million. Pragati Life has been sponsored by
some renowned business entrepreneurs of the country linked with different industrial groups.
Went for public issue in 2005 and are listed in both Dhaka Stock Exchange Limited and
Chittagong Stock Exchange Limited. Progati Life has re-insurance agreement with world's
largest reinsurer-Munich Reinsurance Company, Germany since its inception. Progati Life is
also the first insurance company in Bangladesh providing status of policies through Push-Pull
(SMS) service for its policyholders.
I have gone through the first section of the report focused on Introduction of the report,
Company Overview, Insurance Policy & Conditions, Risk Issues, Pricing Process, Company
performances analysis, Company analysis and last section of the report focused on Conclusion &
Recommendation etc.

4
 TABLE OF CONTENTS
Topic Page No
Declaration 1
Letter of Transmittal 2
Acknowledgement 3
Executive Summary 4

Chapter: 1
Introduction
1.1 Introduction 9
1.2 Objective of the study 9
1.3 Scope of the study 9
1.4 Methodology of the study 9
1.5 Limitations of the study 9

Chapter: 2
Company Overview
2:1 Company introduction 11
2:2 Historical Background 11
2:3 Vision,Mission,Goal & Objectives 11
2:4 Management team 12
2:5 Organization structure 14
2:6 Branches &Office 14
2:7 Company performance & Growth 17
2:8 Capital & Expenditure 18
2:9 Challenges 18
2:10 Future plans 18

Chapter: 3
Insurance Policies & Condition
3:1 Insurance Policies 20
3:2 Policy Conditions 21
3:3 Contents of Agreement 23
3:4 Elements of Insurance Contract 23

5
 Chapter: 4
Risk Issues of Company
4:1 Definition of risk 25
4:2 Types of Risk 25
4:3 Risk measurement tools 27
4:4 Risk management process 27

Chapter: 5
Insurance Pricing Claim Statement,
Insurance Management & Reinsurance
5:1 Pricing tools 29
5:2 Pricing process 29
5:3 Pricing elements 30
5:4 Claim settlement procedure 30
5:5 Insurance marketing techniques 30
5:6 Reinsurance management 31

Chapter:6
Performance Analysis of the
Company & comparison with Peer Groups & Industry average
6:1 Trend Analysis 33
I. Data Presentation 34
II.Graphical Representation 35
III.Result Interpretation 36
6:2 Cross sectional analysis 36
6:3 Common Size Statement analysis 37
6:4 Scenario Analysis 37
6:5 Sensitivity analysis 38
6:6 Share Price Valuation 38

Chapter: 7

6
 Company Analysis
7:1 SWOT Analysis 40
I. Strengths 40
II.Weakness 40
III.Opportunity 40
IV.Threats of the company 41
7:2 Situation analysis 41

Chapter: 8
Finding, Recomdations & Conclusion
8:1 Finding from performance analysis 43
8:2 Alternative strategies & Recommendation 43
8:3 Concluding remarks 44

Bibliography 44
Appendix\Appendices 44

Chapter 1
7
======================
Introduction

Farjana Islam Mim

ID no: 299
1.1 Introduction

8
 Pragati life insurance limited was prepared for fulfilling requirements of EM-553
strategic human resource management course. The work started as assigned by honorable course
instructor. It took about one month to finish the project

1.2 Objective of the study

The objectives of the term project were:
To understand the strategic planning and implementation process of performance appraisal at
Pragati life insurance Ltd. And matching it with the theoretical concept of the course.
1. To identify the executive level and officer level strategies of performance appraisal
Pragati Life Insurance Ltd.
2. To identify the problem in performance evaluation and recommend strategies for the
improvement, which will strengthen the company’s overall effectiveness for serving its
objectives.

1.3 Scope of the study

The scope of term project was limited to analyze the performance appraisal system Pragati
Life Insurance Ltd. and recommended restricting measures for improvement of the system.

1.4 Methodology of the study

Primary interview of employees of Pragati Life Insurance Limited was conducted to know
the system
Secondary data was analyze to gain further understanding of the performance appraisal
system of Pragati Life Insurance Ltd service rule was extensively used throughout the term
project since it provided both validity and credibility.

1.5 Limitations of the study

The limited time given for the term project was major limitation. The company set the
condition that they would not provide some confidential information. The lower level
employees of the company were not available for interviews while doing the research.

Chapter: 2
9
=====================
Company Overview

Afsin Ullah Nawsin

ID no: 302

2.1 Company Introduction

Pragati Life Insurance Limited is a public limited company incorporated with the
Registrar of Joint Stock Companies and Firms and registered under Department of Insurance,

10
 Ministry of Commerce and Government of the People’s Republic of Bangladesh to transact
life insurance business in Bangladesh. Pragati Life has started its operation in the early 2000.
Pragati Life has successfully completed its six years of business operation and stepped into
the 7th year, but already it is regarded as one of the successful life insurance company in
Bangladesh. During this short period, the company has earned a respectable position in the
market and has gained firm confidence in the mind of its clients. The success is primarily
attributed to prompt and bold decision making, efficient and cordial services, cost
containment, effective use of resources and introduction of new diversified products and
technologies.
2.2 Historical Background

Pragati Life Insurance Limited was established on January 30, 2000 as a public limited
company under the Companies Act, 1994 with the philosophy of maintaining
competitiveness, balanced with prudent management and fairness to all policyholders. The
company obtained registration from the Department of Insurance on April 11, 2000 under the
Insurance Act, 1938 to carry out insurance business. The Company started with a paid up
capital of Tk.30 million against an authorized capital of Tk. 250 million. Now the present
paid up capital stands to Tk. 84 million. Pragati Life has been sponsored by some renowned
business entrepreneurs of the country linked with different industrial groups. Went for public
issue in 2005 and are listed in both Dhaka Stock Exchange Limited and Chittagong Stock
Exchange Limited.

2.3 Vision, Mission, Goal & Objectives

Vision
 Want to e recognized as the leader among insurance company in Bangladesh.
 Their success will be built on their absolute dedication to the satisfaction of their
policyholder.
 They will always apply high standards of integrity and responsibility in their
activities.
Mission
 Their mission is to produce and provide qualitative and innovative insurance product.
 Maintain ethical standard in business operation.
 Ensuring benefit to the policyholders, shareholders and society at large.

Goal

11
  Earn profit in a way to cover the claims of the policyholder and a portion of
profit share to the shareholders.
 Provide the claims of the policyholders within time.
 Serve the policyholder true satisfaction.

Objectives:
 To develop a Brand Image as a reliable Bangladeshi Life Insurance Company
 To become Trusted Partner of all Corporate in the Country
 To ensure Prompt and Quality service
 To perform the Social Responsibility for the Rural as well as for Urban People.

2.4Management Team
Managing Director & CEO B M Yusuf Ali
Additional Managing Director B M Showkat Ali
Senior Deputy Managing Director Kazi Md. Fazlul Karim, FCA, FCS
& CFO
Deputy Managing Director (Head Nandan Bhattacharjee
of I/A)
Deputy Managing Director & Mostofa Helal Kabir
Company Secretary
Deputy Managing Directors Syed Motahar Hossai
S.M. Moniruzzaman
Md. Nawsher Ali Nayem

Senior Executive Directors Alamger Feroj

Senior Project Director
Executive Director
Feroz Iftakher
Tamar Krishna Roy
Emad Uddin Ahmed Prince
Md. Bashirul Islam
& Syed Sultan Mahmud
Md. Kamal Hossain
Syed Aminul Islam
B M Shahjahan
Md. Jahangir Hossain

12
 Project Director & Executive Syed Sultan Mahmud
Director Md. Kamal Hossain
B M Shahjahan
Syed Aminul Islam
Project Director & Senior Mohammad Anamul Haque
General Manage Jahedul Alam Shameem
Md. Mostafizar Rahoman
Md. Jahangir Alam
Project Incharge & Senior MD.Abul Hashem Mollah
General Manager Md.Sumon Akon
Soyeb Ahammad
Md.Abdul Alam

Project Incharge & General Md. Zillur Rahman

Manager Md. Dulal Miah
Syed Syful Islam Rubel
Rangit Kumar Ghosh
Mohammad Azizul Hoque
Md. Sakil Mahmud
Sayed Md. Ataur Rahman
Project Incharges Abdur Razzak
Mostafizur Rahman
Mohammad Tanvir-Al-Azad
Md. Farid Hossain
Masud Rana
Md. Nuruzzaman Kotwal
Senior General Managers Md. Jelait Hossain Mollah
Md. Faridur Rahman Jalal
General Manager Md. Sharif Hasnat
Mohammad Rahmatullah
Priyotosh Kumar Dev
Md. Elius Khan
Md. Altaf Hossain Sayail
Mohammad Shafiqur Rahman
Mahabub Rahman

2.5Organization structure

13
2.6Branches &Office:
Dhaka division:

REGISTERED OFFICE
Address:House:20-21,(6th Floor) Kazi
Nazrul Islam Ave, Dhaka 1215
Phone:+880 2-9124024
Email:info@pragatilife.com

Biman Bhaban Branch

Address: Ali Bhaban 9, Rajuk Avenue,
Motijheel Commercial Area, Dhaka –
1000
Banghabandhu Avenue Branch
Address:13 ,Banghabandhu avenue
Dhaka-1000
Phone: +88-02-9566389, 9557772 
Cell: +88-0191-134-4900 14
Email: bangabandhu@pragatiinsurance.com 
Incharge: Md. Delwar Hossain
Designation: Senior Vice President 
 Phone: +88-02-9570424, 9573465
Cell: +88-0191-135-1699, 0173-044-
1936
Email: biman@pragatiinsurance.com
Incharge: S.M.B. Shameem 
Designation: Assistant Managing
Director 

Dilkusha Branch Elephant Road Branch

Address: 76, Dilkusha Commercial Address: 299, Elephant Road, Pearsons
Area(1st Floor), Dhaka - 1000, Tower(3rd Floor), Dhaka – 1205
Bangladesh Phone: +88-02-9661349 
Phone: +88-02- 9567861 Cell: +88-0181-923-8198 
Cell: +88-0171-229-6516 Email: er@pragatiinsurance.com 
Email: dilkusha@pragatiinsurance.com  Incharge: Sharif Mustaba 
Gulshan Branch
Incharge: Md. Humayun Kabir Faridpur Branch Designation: Deputy Managing Director
Address: House #
Majumder  Address: 169,
55, Road # 17,
Designation: Mujib Sarak,
Senior Vice President 
Kamal Ataturk Faridpur
Avenue, Banani Phone: +88-0631-
Commercial Area, 62691 
Dhaka – 1213 Cell: +88-0171-
Phone: +88-02- 547-7641
9886151 Email: faridpur@p
Cell: +88-0171- ragatiinsurance.co
169-6341 m 
Email: gulshan@p Incharge:
ragatiinsurance.co Khandoker Zakir
m Hossain
Incharge: Designation:
Bahauddin Ahmed Assistant Vice
Designation: President 
Senior Vice
President 

Imamgonj Branch
Address: 31, Mitford Road, Imamgonj,
Dhaka
Phone: +88-02-7319818
Cell: +88-0155-238-2814, 0176-614-
15
6660
Email: imamgonj@pragatiinsurance.com 
Incharge: Syed Saidul Islam
Designation: Senior Vice President
 Hatkhola Branch
Address: 31, Shahid Nazrul Islam Sarak,
Mamun Plaza, Hatkhola, Dhaka-1203
Phone: +88-02-9560214
Cell: +88-0181-945-8976
Email: hatkhola@pragatiinsurance.com 
Incharge: Md. Abdul Mottaleb 
Designation: Vice President 

Malibagh Branch
Address: Manhattan Tower, 83,
Siddeshwari Circular Road, Malibagh,
Mirpur Branch
Dhaka -1217
Address: House No. 127, Senpara
Phone: +88-02-8321844
Parbata, Begum Rokeya Sarani, Mirpur-
Cell: +88-0171-156-6735
10, Dhaka-1216
Email: malibagh@pragatiinsurance.com
Phone: +88-02-9026587
Incharge: Md. Golam Faruque
Cell: +88-0171-184-1175 
Designation: Assistant Managing
Email: mirpur@pragatiinsurance.com
Director
Incharge: Md. Razzaqul Haider
Chowdhury 
Designation: Deputy Vice President

There are also many branches outside Dhaka. They are given below:

Chittagong Division: 9 branches

Sylhet Division: 1 branch
Rajshahi Division: 4 branches
Khulna Division: 3 branches
Barisal Division: 1 branch

16
Rangpur Division: 2 branches
Mymensingh Division: 2 branches

17
18
 2.8 Capital and Expenditure:
Capital:
The authorized share capital of the company is 20, 00, 00,000 (twenty core) ordinary share of each Tk.10
and issued share capital is 49,258,325

2.9Challenges:
In our insurance industry insurance company are facing various challenges. Challenges are
mounting for insurer. Increased pressure for profitability translate into a hard look at cost reduction & top line
revenue growth. Profitability is linked to the ability accurately access risk & manage customer relations overtime
to achieve financial success. Insurer recognized that in order to response to this pressure they need to eliminate
inefficient back-offices processing function.
Another priority is improving the quality of service to the distribution channel. As agents has more choice in
choosing carries they are looking to align with an organization that makes it easy to conduct business ,pays
commission no a timely basic & reduces the time to process business.

2.10 Future Plan

We shall be recognized as the leader among all life insurance companies in Bangladesh.
We shall always apply high standards of integrity and responsibility in our activities.
Our Success will be built on our absolute dedication to the satisfaction of our policyholders,
through constant innovation, operational efficiency, prompt services, cost effectiveness and the
talents of our people.

CHAPTER-3
======================
19
 INSURANCE POLICIES
& CONDITION

Sraoshi Islam
ID no: 301
3.1 Insurance policy
Although you may hear about many names for different types of life insurance policies, the majority of policies
contain benefits derived from one or more of three basic types. These types are briefly outlined in very
general terms below.

20
1. Term Life Insurance:
Term insurance is issued for a specific period, or term. This term usually ranges from 1 to 30 year.
Term insurance is considered an affordable´ insurance choice. Under a Term policy, in case of death
during the term of the policy, your beneficiary receives the cash payment equal to the insurance amount,
or death benefit.´ the death benefit amount is chosen when you buy the policy. Increasing term
means the death benefit gets larger throughout the term of the policy. Decreasing term means the
death benefit gets smaller.

2. Endowment Life Insurance:

Endowment life insurance generally guarantees that a sum of money will be available to you or your
beneficiaries, whether you live until the policy ends (or matures,) or in case of an untimely death.
Endowment insurance usually provides a guaranteed death benefit and has a savings component
called the cash value.
 
3. Whole Life Insurance:
Whole life insurance has many of the same features as Endowment insurance, but it is designed
to remain in force during the insured's entire lifetime. Some of the advantages of a policy's cash
value are that:
- You can cancel or surrender the policy in total or in part and receive the cash value; however,
since this is a long-term policy, in the early years the cash value may be small or even equal to zero.
- If you find that you need to skip a premium payment, you can use the cash value to continue
your current insurance protection for some time.
- In most cases, you may borrow from the insurance company, using the cash value in your life
insurance as collateral.

Other types of whole life insurance:

i. Universal Life Insurance: Universal life insurance has all the features of Whole life
insurance. In addition to those features, it offers flexibility in premium payment and face
amount, and it provides current interest rates.

ii. Variable Universal Life Insurance:

Variable universal life insurance has all the features of Universal life insurance coverage, but,
instead of earning an interest rate, its cash value is linked to non-guaranteed equity investment
funds, bond investment funds, or similar investments.

3.2 Policy condition

 Guarantee
The Sum Insured including bonuses (if any) declared under this policy are guaranteed as to
payment in cash by the Federal Government, under Article 35 of the Life Insurance
(Nationalization) Order 1972.

21
 Payment of Premium
Premiums are payable yearly in advance directly to Pragati Life Insurance. Advance payments of
half-yearly, quarterly and monthly premiums will be accepted as installments of the yearly
premiums. If the Life Insured dies, then the unpaid installments for that policy year (if any) will
be deducted from whatever amount is otherwise payable by Pragati Life Insurance.
The policyholders can pay to Pragati Life Insurance any premium within a grace period of 31
days after it falls due.

If the grace period expires before due premium is received by Pragati Life Insurance, the Policy
will lapse unless it is kept enforce under the “Automatic Non-forfeiture” clause of the Policy.

 Revival of Lapsed Policies

A lapsed policy may be considered for revival by Pragati Life Insurance upon receipt of
evidence, free of cost and satisfactory to Pragati Life Insurance that the life insured is eligible for
life insurance. Depending on the duration of lapse Pragati Life Insurance may either require a
declaration of good health by the life insured, his/ her personal statement or his/her full medical
examination report.

 Paid-up Policies
Pragoti Life Insurence will convert this policy into a paid-up policy, at the written request of the
policyholder, provided the policy has been in force for at least two consecutive policy years and
no premiums are in default. No further premiums will be payable but the sum insured will be
reduced. The reduced paid-up sum insured will be quoted by MetLife Alico on the request of the
policyholder.

 Automatic Non-Forfeiture Options

If the policy has acquired a surrender value and a premium has remained unpaid beyond the
grace period, the policyholder will entitled to benefits under one of the following two options
given hereinafter, depending on the option exercised (if any) in his Proposal for this policy;

Option A : Automatic Paid-up

Option B : Automatic Premium Loan

Provided the surrender value of the policy exceeds the total of due premium(s) remaining unpaid
and any other amount owed to Pragoti Life Insurence. The option can be exercised at the time of
taking the policy or at any time thereafter while the policy is in force.

 Evidence of age
No benefits will be paid by Pragoti Life Insurence under this policy, unless the age of the life
insured has been proved to its satisfaction.

22
If the age of the life insured is proved to be different from that stated in the proposal of this
policy, Pragoti Life Insurence will adjust the premiums or benefits under the policy as it deems
fit.
This policy will, however, become void from its commencement, if the age of the Life Insured at
the commencement date is proved to be higher than the maximum entry age that was permissible
by State Life under the table and term of insurance mentioned in the proposal of this policy.

 Suicide
If the life insured commits suicide within thirteen months from the date this policy was signed or
within thirteen months from the date this policy was last revived then will only return premiums
actually received under this policy.

 Currency and Place of Payment

All amounts payable by State Life shall be paid in Pakistan Currency at the Principal
Office/Office of issue mentioned in this policy.

 Notice of Assignment and Nomination

Notice of assignment or nomination, duly attested, must be submitted for registration at the
office of issue mentioned in this policy.

 Supplementary Benefits
Supplementary benefits (if any) and the corresponding premium payments will be governed by
the terms of the supplementary covers attached to this policy. Premiums for these benefits will,
however, be payable on the same dates as premiums under this policy.

 Premium Notices
Pragoti Life Insurence may issue premium notices although there is no obligation on its part to
do so. It is the duty of the policyholder to pay the premium on its due date or within the grace
period, whether premium notice is received or not.

 Incontestability
Policies are incontestable with regard to statements made in the proposal after two years from the
date of issue/revival/reinstatement of policy except for fraudulent and willful misstatement of
material facts or on account of breach of any of the conditions of the policy.

 Travel, Residence and Occupation

The policy is free from all restrictions as to travel, residence and occupation.

 Free Look Period

This Policy shall be liable to be cancelled at the option of the policyholder within fourteen day of
its commencement date and if the policyholder cancels the policy within that time all amounts
paid by way of premium shall be refunded without any deduction for management expenses.

23
 Liquidated Damages
Where payment under this policy becomes due and the person entitled thereto has complied with
all the requirements, including the filing of complete papers, for claiming the payment, the
Pragoti Life Insurence shall, if it fails to make the payment within a period of ninety days.

3.3 CONTENTS OF AGREEMENT:

OFFER &ACCEPTANCE: In insurance publication of prospectus, the canvassing
of the agents are the invitation to offer. If the offer or proposal agreed by other party then it is the
acceptance.

LEGAL CONSIDERATION: Premium is a consideration of insurance contract.

Which must have legality.

COMPETENT TO MAKE CINTRACT: Every person is competent to contract-

a. Age of majority
b. Sound mind

FREE CONSENT: Parties entering into the contract should enter into it by their free
consent.

LEGAL OBJECT: The object of the any insurance contract should be lawful.

3.4 ELEMENT’SOF INSURANCE CONTRACT:

INSURABLE INTEREST: The insured must possess an insurable interest in the

subject matter of insurance for the validity of insurance contract.

UTMOST GOODFAITH: All material facts should be disclosed in true and full from
which is the duty of both parties.

RPOXIMATE CAUSE: Immediate and not the remote cause is to be regarded. The real
cause must be seen while payment of the loss.

DOCTRINE OF SUBROGATION:
The right of the insurer to stand in the place of the insured, after settlement of a claim

Chapter 4
24
======================
Risk Issues of Company

Sraoshi Islam
ID no: 301
4.1 Definition of Risk
Risk is a concept which relates to human expectation. It denotes a potential negative impact
to an asset or some characteristic of value that may arise from some present process or from
some future event.

25
 People express risk in different ways. To some, it is the chance or probability of loss, to
others, it’s may be uncertain situation or deviations or what statistician call dispersions from the
expectation. In most of the terminology the term risk includes exposure to adverse situations.

Risk is, therefore, incidental to life. Some people live dangerously, whilst others exercise
extreme caution. Nevertheless, the happing of a fortuitous event or elements cannot be avoided,
although its effects may be either good or bad.

4.2 TYPES OF RISK:

Financial and Non- Financial Risk: Financial risk means which can cause the loss to asset
or income of a person. These risks are more particular in nature.

When the possibility of a financial loss doesn’t exist the situation refers to non-financial risk.

Fundamental Risk: When a perils affects the economy or its participation a macro basis.
These are impersonal in origin and consequences. They affect most of the social segments or the
entire population.

Pure Risk: Where there is a possibility of loss or no loss. There is no gain to the individual or
the organization.

Speculative Risk: Where there is possibility of gain as well as loss. The element of gain is
inherent or structured in such a situation.

Dynamic Risk: Dynamic risk are those resulting from the changes in the economy or the
environment. These risk factors mainly refer to the macro to the macro economic variables like
inflation, income, output levels, and technology changes.

Static Risk:The possibility of loss in a business or unemployment after undergoing a

professional qualification, loss due to act of others etc. are static and accordingly suitable for
insurance.

Particular Risk:It refers to event like thefts, robbery, fire etc. which are particular in nature.

26
 Financial &
Non-financial

Fundamental Personal

pure Property

fundamental Liability

particular
Risk

speculative

Dynamic

static

quantifiable
nonquantifiable

27
4.3 RISK MANAGEMENT:
ESTABLISHING THE CONTEXT:
It means planning the whole risk management process and mapping out the scope of the exercise,
collecting data about stakeholders the basis on which risks will be evaluated and defining
framework for the process.

IDENTIFY THE LOSS EXPOSURE:

The process of managing risk is to identify potential risk.

a. Source analysis
b. Problem analysis
c. Event analysis

ASSESSING THE LOSS EXPOSURE:

Identified risk must be assessed as to their severity of loss and to the probability of occurrence.

POTENTIAL RISK TREATMEANT:

a. Risk Transfer
b. Risk Avoidance
c. Risk Retention
d. Risk control

IMPLEMENTATION:
Making decision and take action over decision.

MONITOR & REVIEW THE RISK MANAGEMENT PROCESS:

a. Monitoring and measuring extends to the evaluation of culture, performance and
preparedness of the organization.
b. Evaluating the effectiveness of existing controls is to ensure that there is adequate
evaluation of the business continuity planning and disaster recovery planning arrangement
in place.

28
 Chapter 5
======================
Insurance Pricing Claim
Statement, Insurance Management
& Reinsurance

Fatema Akter
ID no: 300
29
5.1 Pricing Process:
Pragati Life Insurance Limited is continuously developing its products depending on the
trend of the market, changes in financial market and social market. In order to meet the present
stiff competition and challenges the company is constantly trying to upgrade its existing product
range and to develop new innovative products as well.
The company designs their product prices according to the need of their customers in order
to meet the competition. The pricing is done primarily on the basis of age primarily and then on
other criterion.

5.2 Pricing Tools of Pragati:

The company follow some pricing tools to promote their product those are describe follow:
Information management:
Key to the success of using price optimization is the quantity and quality of the
available data, especially claims and customer data.
Data exploration:
The emergence of business analytics software, like data exploration and visualization
tools, helps insurers refine their analysis and evaluation of certain risk elements.For example, 20
years ago, credit score was probably deemed unimportant. Now it is probably the most used
variable in determining premium rates.
Predictive modelling:
Insurers must use analytical tools to perform what-if simulation and scenario testing
to forecast future behavior and improve the underwriting performance of the insurance
company.
High-performance analytics:
To process the large data quantity and perform complex analytical calculations, insurers
need an in-memory or distributed computing environment.
Competitive intelligence:
Price optimization requires an in-depth understanding of the competitive landscape,
industry wide pricing strategies, and customer demographics and buying preferences.

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5.3 Pricing Elements
Agents commission Administration cost Return from investment of Premium. Pragati life
Insurance Limited considers three things as their pricing elements.
Agents Commission
Administration Cost
Return from investment of Premium

5.4 Claim Settlement Procedure

The policy holder calls up the insurer claiming the insurance asking about all the minute
details of the process of claiming the same along with the documents required.

The insurance company asks for the details of the loss and the relevant documents in support of
the claim .A notice has to be issued be the policy holder for claiming the same with utmost
urgency mentioning all the possible details (name of the policy holder, names of the persons
associated with the accident, witness particulars, their addresses etc)
 
The company would make all the possible queries and inspections by the company
representatives or consultants  They have the right to inspect all the relevant properties related
with the loss along with police verifications and determination of the policy holder’s liability
structure  The processing period is mentioned in the contract document , which is the
approximate time required for verification of the genuineness of the insurance claim .

5.5 Insurance marketing Techniques:

Pragati life insurance company to operate their business, they follow different marketing
techniques. Some of them are disturbing below:
Know the Market:
First and foremost, insurance companies must know their market. This means having a
strong understanding of their target audience, their competition and the most effective ways to
connect with that audience.
Establish a Plan:
Successful marketers just go out and "do things." Based on their knowledge of the
market, and their overall goals and objectives, successful marketers identify and prioritize the
communication strategies most likely to generate the results they need. This generally involves a
combination of activities that include both traditional and new media, direct and indirect sales.
Measure Effectiveness:
It is important for insurance companies to measure the effectiveness of their marketing efforts
based on the goals they have established. This may be as simple as comparing the number of
clients before and after a campaign. It may also involve using online analytics to monitor website
visits after launching a promotion.

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Gather Feedback:
For insurance marketers, word of mouth is key. In addition to measuring the effectiveness of
marketing efforts based on quantitative data, insurance marketers can seek input from their
existing and new clients about their communication efforts. Successful insurance marketers will
take advantage of the opportunity to leverage their clients as word-of-mouth marketing
advocates.

5.6 Reinsurance Management

The Company maintains reinsurance arrangement with Munich Reinsurance Company of
Germany since its inception.
The net retention of the company for individual life is Tk. 2 lac per policy and for Group life Tk.
10 lac per person of risk.
Reinsurance premium is recorded as an expense evenly over the period of the reinsurance
contact and off-set against the premium income of respective year. The claim recoveries arising
out of reinsurance contracts are off-set against the claims expenses of respective year.

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 Chapter 6
======================
Performance Analysis of the
Company & comparison with
Peer Groups & Industry
average

Sumaiya Binte Sattar Shoma

ID no: 304
33
To measure the performance of the company we go through some analysis.
These analysis may include _

 Trend Analysis
 Data Presentation
 Graphical Representation
 Result Interpretation
 Cross sectional analysis
 Common Size Statement analysis
 Scenario Analysis
 Sensitivity analysis
 Share Price Valuation

34
6.1 Trend Analysis (Ratio for 5 year)
I. Data Presentation

35
II.Graphical Representation

III.Result Interpretation
36
 Company performance ratio of the Pragati Life Insurance in 2011 to 2015 is fluctuated over
the time period. The calculated ratio shows that the company holds more current assets than
current liabilities and the ratios are overall stable from 2011 to 2015.

In 2011 the total claim is favorable and after the next two years it is increasing but again the
last two years it is decreasing. Overall in 2015 the claim is not favorable in terms of premium.

So the result interpretation of the Progati Life Insurance Company represents the company’s
measurement of profitability and efficiency is good. Moreover, it easily earns sufficient premium
to cover expected claims.

6.2 Cross-Sectional Analysis

Cross-sectional analysis is a type of analysis that an investor, analyst or portfolio
manager may conduct on a company in relation to that company's industry or industry peers. The
analysis compares one company against the industry in which it operates, or directly against
certain competitors within the same industry, in an attempt to assess performance and investment
opportunities.
COMPANY NAME PROFITABILITY EXPENSE CLAIM TO RAO
ON PREMIUM
PREMIUM
Pragati Life 12.01% 46.36% 32% 7.06%
Insurance
Sandhani Life 6.54% 39.32% 41.06% 4.29%
Insurance
National Life 8.56% 41.98% 44.41% 3.31%
Insurance
Cross – Selection Analysis of Progati Life Insurance Company with others Company:

In this part of the chapter we will compare the trend analysis results of Pragati Life
Insurance with other life insurance companies We will here compare Pragati Life Insurance with
Sandhani Life Insurance and National Life Insurance Cross sectional analysis.

6.3 Common Size Statement Analysis

37
 In this segment we compare the prime elements of income statement and balance sheet
and their ups and downs comparing with the amount of premium of a particular year. Major
elements here are weighted here with total premium collected.

Premium 100%
Interest 7.51%
Income Tax 0.69%
Dividend 0.48%

On this basis income statement of 2015 of Pragati Life Insurance Looks like this Common
Size Statement analysis.

6.4 Scenario Analysis

Scenario analysis is the process of evaluating the impact of specified scenarios on
the company’s financial position.
The emphasis is on specifying the scenarios and following through their implications.
Scenario analysis typically refers to a study where a wide range of parameters are varied
simultaneously. The scenarios could be chosen as events intended to have a defined probability
of occurrence, for example, a ‘one in a hundred years’ event.
Here, the 5 years performance of the Progati Life Insurance Company is given below:

particulars Gross premium Claim to Solvency

policies Surplus
Year
2011 1137.29 60.33 2696.64

2012 1151.25 102.2 2530.61

2013 1269.14 143.02 2678.45

2014 1387.83 136.72 2484.41

2015 1512.62 92.59 2008

6.5 Sensitivity Analysis

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 A sensitivity analysis is a technique used to determine how different values of an
independent variable impact a particular dependent variable under a given set of assumptions.
This technique is used within specific boundaries that depend on one or more input variables,
such as the effect that changes in interest rates have on bond prices.

This table shows the effect that in interest rates have on Bond
prices:
Particulars Portfolio Risk Change 31
Parameter Dce,2015
Bonds & Bond funds 25086755 Interest Rate 10% 2508676
Shares & 2882.69 Market value 10 % 288
Alternatives
Properties 2191.79 Market value 10% 219
6.6 Share Price Valuation:
In share Price valuation we need to find out dividend of the share. So here in this table we
show the dividend amount (in %) for the year 2011-2015 :

Dividend (in %) D0 D1 D2 D3 D4
Year 2011 2012 2013 2014 2015
Taka 1.90 1.20 2.32 2.42 3.69

Year 2011 2012 2013 2014 2015

Profit per Year 105.89 106.22 145.67 92.51 97.01
(mn)
And also need to find out profit for the year (according to the DSE) 2011-2015 to determine
the market value of the share:
Market value of the share in 2015 is = 97.01 according to DSE .So, the value of the share is
undervalued in the capital market.
So, these are the analysis to measure the performance of the Progati Life Insurance
Company. From this trend analysis, graphical representation, cross selection statement &share
price valuation we can measure the company performance for the year (2011-2015) &
comparison with Peer Groups & Industry average.

Chapter 7
39
======================
Company Analysis

Marzia Jahan Ritu

ID no: 303
7.1 SWOT Analysis
SWOT analysis is the detailed study of an organization’s exposure and potential in perspective
of its strength, weakness, opportunity, and threat. This facilitates the organization to make their

40
existing line of performance and also foresee the future to improve their performance in
comparison to their competitors. As though this tool an organization can also study its current
position, it can also be considered as an important tool for making changes in the strategic
management of the organization.
S= Strengths, W=Weakness,
O=Opportunity, T=Threats.
Here is the SWOT analysis of ALICO.

Strengths
List all the firm’s strengths in the top left box. The strength must be unique. If most competitors
offer quality service, then that is a necessity not strength. One of the strengths that a business
owner may take for granted might be something that customers would value and that the
competition doesn’t have or do. Brainstorm first
and edit later. Write down words that
characterize the business.

Weakness
Higher overall unit costs relative to other
countries, Existing customers already lost,
Power failures, higher operational costs,
Bangladesh branches of ALICO have only two
products. The products are Life Insurance, and
Health Insurance.

Opportunities

American Life Insurance Company (“ALICO”)

is a stand-alone insurance company operating in
over 55 countries worldwide. Through its
branches and subsidiaries, ALICO markets a
variety of life and health insurance products
with a current S& P financial strength rating of A+. ALICO’s financial position remains stable
and strong.

Threats
1. Threat of trade bans.
2. Slow recovery from political instability.

41
3. No development of technical and managerial training.
4. Competitors have growing bargaining power.
5. Foreign exchange rates & trade policies of overseas countries are more favorable.

Industry Example
With the above synapses in mind we would like to apply a SWOT Analysis to the insurance industry
for an example. Keep in mind that this will be written from the agency’s perspective.

Major Strengths:
• Premium rates are increasing and so are commissions.
• The variety of products is increasing.
• Prospects expect more services from their brokers.

Major Weaknesses
• Insurance companies are often slow to respond to changing needs.
• There is an increasing trend of financial weakness among the companies.
• There are more competitors for agencies to compete with banks and Internet players.

Opportunities
• the ability to cross sell financial services is barely being tapped.
• Technology is improving to the point that paperless transactions are available.
• The client’s increasing need for an “insurance consultant” can open new ways to service the
client and generate income.

Threats
• the increasing cost and need for insurance might hit a point where a backlash will occur.
• Government regulations on issues like health care, mold and terrorism can quickly change the
direction of insurance. Increasing expenses and lower profit margins will hit hard on the smaller
agencies and insurance companies.
• Increasing expenses and lower profit margins will hit hard on the smaller agencies and
insurance companies.

Summary
Just remember since a SWOT Analysis is a snapshot, stick to the big picture. There will be some
items that will warrant deeper study after the initial analysis. Beware of paralysis by analysis—
just jump in and start. Also, keep it simple and stick to what is easily known or understood.
Finally, apply a SWOT Analysis to your main competitors—this may produce some interesting
insights!

Chapter: 8
42
======================
Finding, Recomdations
& Conclusion

Farjana Islam Mim

ID no: 299
8.1FINSING FROM PERFORMANCE ANALYSIS:

43
 About four – fifth of the executives reported that the performance appraisal system in PLIL
serves as a control device, it is good mechanism to control employee. They opined that it should
be continue.
The review helps the company supervising officer to have better idea about strengths and
weaknesses of his/her department and enables his/her to make more effective work assignments
and improve communication between his/her subordinates.
The appraisal review guides the decision regarding increment to a great extent. This
encourages employees to show better performance.
The supervising officer in-charge of apprising his/her subordinates has enough about his/her
subordinates.
The present ARP system has improved the performance since it was introduced in 2010.some
of the improvement are as follows:
 Steady growth of business
 Man power is more efficiently utilized
 Officer are more serious about their assigned job. They are also serious regarding their
procurement of business. This particular system helps to employees for additional
increment or promotion.
 Control device in the form of performance appraisal has helped in accomplishing its
objectives of providing better insurance companying service to the people.

8.2Recommendation:
 The ARP forms which are in use, needs to revise to make it simple and short.
 At the end of the year during the appraisal period the appraisal process should begin with
self-appraisal by every employee. To appraise one’s own self targets and qualities, the
Appraise would go through a process of reflection. In addition, one reviews one’s own
performance, she/he gets the opportunity to become more aware of his or her own
strengths and weaknesses.
 Performance Appraisal should be continuing process and not a once a year ritual.
 Training programs for Appraiser should be undertaken by the HRD & R department, so
that the supervising officers develop their Appraisal skills and fill up the forms more
accurately.
 An atmosphere of confidence and trust should be developed so that the supervisor and the
employee may discuss matters frankly and offer suggestion which may be beneficial for
the organization and the employee.
 The insurance company should introduce the standard to assess the performance of
employees.

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8.3 CONCLUDING REMARKS:
In our efforts to prepare this report has not only been a guideline for our future , but also it will
taught us to deal with in our real life issues like never before. In this little but significant journey
of ours through this path, we have come across people who immense contribution in the
researching of our destination.

Our last thanks goes to the employees of Pragati life insurance limited for endless help in
providing the information and sharing their thoughts..

BIBLIOGRAPHY:
1. Assistant General Manager of Pragati Life Insurance company LTD
2. Annual report of Pragati L:ife Insurance Company LTD (2010-2015)
3. WWW.Pragatilifeinsurance.com.BD
4. WWW.google.com
5. WWW.wikipedia.com

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