IMPACT OF INSURANCE INDUSTRY ON ECONOMIC

GROWTH : BANGLADESH PERSPECTIVE.

CURRENTLY, B ANGLADESH ’S INSURANCE SECTOR COMPRISES 46 GENERAL INSURANCE COMPANIES AND 32 LIFE
INSURANCE COMPANIES . I N ADDITION , THERE ARE TWO STATE -OWNED INSURANCE CORPORATIONS :- ONE IN THE
GENERAL SEGMENT AND THE OTHER IN THE LIFE SEGMENT .

According to a sigma report of the Swiss Re Institute as of 2017, the gross premium volume of life
insurance in Bangladesh stands at USD 974 million and that of non-life stands at USD 371 million.
Figure 1 - depicts the year-on-year growth.

Life insurance constitutes 73.5% of Bangladesh’s insurance market and non-life insurance 26.5%.
Micro-insurance and Islamic insurance (takaful) are also a part of Bangladesh’s insurance sector.
In 2017, 2.20 million new life and 2.36 million and new non-life insurance policies were issued.

Further, the number of active life insurance policies was 10.78 million in 2017. The assets of all
insurance companies in Bangladesh stood at USD 5,810.61 million by the end of 2017 with an average
growth rate of 13.83% from 2009.

Investments in both life and non-life insurance companies have grown at an average rate of 14.95%
during 2009-2017 with returns increasing from 8% to 11.5% during the same period. The life insurance
sector has a competitive landscape with market share being closely distributed among multiple players.
Although Bangladesh’s insurance sector has witnessed some growth in comparison with other emerging
nations, there is a lot of room for improvement. According to the Seventh Five Year Plan (2016–2020) of
the Government of Bangladesh, a majority of the population across product segments (life and non-life)
remains untapped by the insurance market.
Overall, insurance penetration (insurance premiums as a share of GDP) in Bangladesh was 0.55% in 2017
and has mostly been on a downward trend since 2009 (Figure 3).

Figure 4 indicates that Bangladesh’s life insurance penetration rate falls behind that of several other
developing countries. Compared to its South Asian counter parts, Bangladesh has the lowest premium
per capita .In emerging markets, the average per capita spending on insurance increased by 13% to USD
166 in 2017.

The average insurance penetration in emerging markets increased to 3.3% in 2017 (2016:3.2%) as
premium growth continued to outpace GDP growth within these economies.

Egypt like Bangladesh is one of the countries featured on Goldman Sachs Next Eleven (N-11) and has
been implementing regulatory reforms.

These reforms have helped Egypt strengthen its insurance sector significantly as evidenced by the
growth of its insurance density premium per capita from USD 8 in 1999 to USD 16 in 2017.
Across the financial sector, there is low penetration of financial products and services beyond current
accounts (Figure 5). Among all financial products savings products account for only 18%.
 PROBLEMS AND PROSPECTS OF
INSURANCE BUSINESS IN BANGLADESH

 PROBLEMS :-
FOR THE DEVELOPMENT OF ECONOMIC INFRASTRUCTURE OF A DEVELOPING COUNTRY LIKE BANGLADESH,
THERE IS A GREAT ROLE OF INSURANCE . B UT THE INSURANCE BUSINESS IN OUR COUNTRY IS NOT
SATISFACTORY . THOUGH INSURANCE INDUSTRY HAS VERY PROSPECT IN THE ECONOMY BUT FOR SOME
REASONS IT ’S TOTALLY FAILED TO ACHIEVE ITS GOAL . I F WE WANT TO KNOW THE REASONS BEHIND THIS
THEN WE SHOULD LOOK FORWARD THE FOLLOWING ACCORDING TO BANGLADESH GENERAL I NSURANCE
COMPANY LTD. THE MAJOR PROBLEMS IN PERFORMING INSURANCE BUSINESS HAS BEEN CLASSIFIED INTO
SOME MAJOR CRITERIA WHICH ARE SOCIAL , ECONOMIC , POLITICAL , LEGAL AND OTHER REASONS. THE
ACTUAL PROBLEMS ARE DISCUSSED IN DETAIL WITHIN THESE CRITERIONS. MAINLY THESE REASONS ARE:

Social Problems
• Less Public Awareness :-
A vast majority of people especially in rural areas are left outside the insurance coverage. This mainly
results from the unawareness among the people. Even a large portion of people don’t have the
minimum idea of insurance. People are not aware of the benefits from the insurance policy and a great
number of people believe that insurance business is nothing but cheating and assume that insurance
policy is quite unnecessary. This negative attitude from the people is lessening the importance of
absorbing insurance policy in a large extent.

• Centralization :-
Most of the insurance companies in our country are located in urban areas and there are few branches
in rural areas. They think that they might have better scope for performing their business as the
economic condition of the urban is better than the rural areas. They don’t think that the large number of
our population reside in rural areas and if branches are expanded in rural areas then the business can
thrive if proper motivation policy is taken to aware the mass people of the rural areas. Thus this
centralization policy acts as an obstruction for the growth of insurance business in our country.
 Economic Problems
• Weak Economy :-
The development of insurance business depends to the development of economy of deferent sectors.
But in Bangladesh there are many lacking to the development of economy. Our export income in limited
and 78%income come from cloths and nightwear sector. So the types of economy are not suitable for
insurance business. Bangladesh is one of the poorest countries in the world and most of the people in
this country live under extreme poverty level. All of these people fight hard to earn their livelihood and
are marginal in relation to the expenditure with the income. It is quite impossible for them to save some
money for future need. Therefore they are quite unable to give the amount to the insurer which is called
as premium and regarded as safety or precautionary measures against any accident. The number of
people who can bear the premium to the insurance company is very few in regard to those mentioned
above. Therefore the overall poor economic condition is creating obstacle to flourish the insurance
business in Bangladesh.

• Poor financial position of the insurance companies :-

Most of the insurance companies of our country are facing financial problems. Recently government is
trying to take initiative to close some of the insurance companies because they are not maintaining the
minimum standards. They are investing their money in poor securities and business which is vulnerable
regarding getting back the money with profit. As a result most of the insurance companies are suffering
from loss years after years and for poor financial condition the insurance companies are also unable to
expand their branch which is a barrier for the growth of insurance business in Bangladesh.

• Weakness in Industrial Sector :-

Bangladesh is an agricultural country; the industrial sector of their country is poor. In our country 9.71%
are industrial labor from the total labor force. In 2004-2005 industrial productivity was only 28.88% of
the total national productivity. This focuses the weakness of our industrial sector. So these types of
weakness are one of the main barriers of insurance business.

• Higher cost of business :-

Growing cost of business is another problem that insurance companies are facing now a day. They urge
that government tax, house rent, utility, commission fee, stationeries are growing day by day. But their
businesses are not growing so fast with that rate. Besides this the policy holders are not willing to pay
too much premium with growing cost that is hampering the strategies of insurance companies. So they
are facing difficulties in running their business efficiently.

• Problems of economic bases and effective principle :-

Before independence insurance business was control by private company. But after independence
maximum insurance company take over by the government. For that reason government changed the

company management policy and applies new rules and regulations which system was very tricky and
uncomfortable for the mass people.

Political Problems
• Political instability :-
Political instability is a major problem in Bangladesh. For the instability in politics, many disruptive
situations are often created which are bad for any businesses. The people who operate various
businesses in our country often experience various types of inconvenience in running their business.
Insurance business is not an exception 0of this. Political instability and inconsistency of political courses
are a serious problem for the insurance business.

• Lack of supervision from the government :-

Lack of surveillance from government ministry encourages many insurance companies to follow some
unethical practices like make harassment to policy holder and showing less in the financial statement.
This not only destroying the reputation of the well-known insurance companies but also creates
negative impact in the mind of the people about insurance. Besides this government sometimes impose
some conflicting rules and regulation without discussing with insurance companies governing body. It
creates conflict among insurance companies with government and act as one of the main hindrances of
growing insurance business.

• Problem of planning and administration :-

Planning and administration structure are not suitable for public and private insurance business in
Bangladesh. After the change of the government, the whole planning and administrative measures are
changed which is the main constraint for long term plans. Without long term planning any permanent
development or solution of existing problems are impossible.

Legal Problems
• Too much complexity :-
To take an insurance policy there are great number of rules and regulations which must be compelled by
the insured person. And into those rules a vast number of complexities are present there. Therefore the
people are discouraged to take insurance policy because they think that the complexities will create
extra pressure on their mind which may hamper other jobs.
 Other Problems
• Lack of capital :-
The broadness of insurance business is helpful to survey. It needs to establish many branches in
different country. It requires lots of capital. But lack of capital in our country creates the problem of
insurance business.

• Lack of skilled staff :-

There needed a lot of educated and skilled staff for insurance business. But Insurance companies
perform their activities by recruiting marketing agent and they try to convince the people to take a
policy. Most of the cases the agents are not properly trained and they don’t know the right process to
catch potential people to make their policy holders. Therefore these field level agents are unable to
fulfill their target and act as a constraint in the insurance business. Lack of skilled and trained staff the
insurance business in our country is not wide.

• Limitations of insurance knowledge :-

The scope of education about insurance is so much little in our country. The education about insurance
is very limited in syllabus of our primary and higher education. It is a hindrance in our insurance
business.

• Lack of training :-
The people who are concerned with insurance business are not trained. There are no sufficient
institutions in our country to give training to employees and entrepreneur. Spread of insurance business
in Bangladesh failed for lack of proper training by the employees specially the field employees of
insurance companies. Still there are not enough training centers to provide proper training regarding
insurance activities for the officials of insurance company. Though there is one insurance training center
in Bangladesh it totally failed to achieve its target in insurance field.

• Insufficient service :-
The insurers or companies are not able to give the proper services to the insured people. In Bangladesh
insurance company people failed to provide better service to the mass people that’s why the people
who want to take the insurance policy they loss their interest from insurance. At same time in foreign
country insurance workers goes to customer’s house and offices regularly to aware themselves and
influence them to take insurance policy. In that’s case Bangladesh insurance company people are not
that much expert. So the people are not interested to involve themselves and their properties with
insurance business.
• Lack of exposure :-
Another main problem in the country is that the media is unconcerned to send the right message
regarding insurance to the people. As a result a large portion of population is completely unaware about
the insurance policy. Another problem is that the insurance company does not provide adequate
information in the company’s websites which can fulfill the queries of their potential customers and
satisfy themselves to buy an insurance policy.

• Absence of business ethics :-

Some insurance companies create harassment on the policy holders or sometimes on the dependents of
the policy holders when they want back their money after death or maturity. The insurance companies
show different causes in order to make delay to return back the money at expected time. Sometimes
they are eager to pay less than the desired amount by creating various circumstances such as they try to
say that the disaster of the subject matter of the policy is not responsible due to their activities. Besides
this some field officials also create some illegal acts. They often try to give false information to the
people for buying a policy. And these kind of illegal acts create bad reputation to the insurance
companies and hindrance the overall insurance business. Those who are harassed by the insurance
companies discourage other not to take an insurance policy.

• Lack of motivation program towards public :-

According to Green Delta Life Insurance Company the people of our country are not much motivated by
the company to take insurance policy for safeguarding themselves against any kind of risk. Almost every
time they failed to understand the people that insurance policy makes their life risk free all time. For
lack of motivation among the mass people insurance companies are always lagging behind from their
expected target.

• Lack of information technology :-

Another problem is they do not use any web address, which is essential for a large leasing company.
They can provide more information to its client by using web site.

• Delay in payments of claims :-

The insurance companies in our country are not fully able to pay the claim of insured as when claimed.
That is another problem of insurance in Bangladesh.

• Traditional Method :-
The modern and technological methods are not followed in insurance business in our country. All most
all insurance company ran their business in traditional way. It is a hindrance of insurance business.
Whereas foreign companies are using modern systems like computerized system; our local company
does not want to change themselves.

• Shortage of Fund :-
Most of the policyholders cannot continue their policies owing to price spiral and shortage of fund.

• Lower Rate of Savings :-

People of Bangladesh have a very small saving potentially and thus have less or no disposable income.
Maximum people are live under poverty line. In 2004-2005 our internal saving was only 20.16% of total
GDP. Life insurance and other insurance are mostly dependable on the saving of the people. Thus they
are left with little amount, which may not deemed to sufficient for the payment of premiums. This factor
discourages many to buy life insurance policy. So it creates the Problems.

• Not Knowing What Customers Expect :-

Based on interviews, the authors found that executives’ perceptions of superior quality service are
largely congruent with customers’ expectations. Customers’ expectations versus management
perceptions are the result of the lack of a marketing research orientation, inadequate upward
communication and too many layers of Management.

• The Wrong Service-Quality Standards :-

Arises when there is a discrepancy between what managers perceive that customers expect and the
actual standards that they (the managers) set for service delivery. This gap may occur when
management is aware of customers’ expectations but may not be willing or able to put systems in place
that meet or exceed those expectations.

• The Service-Performance Gap :-

Organizational policies and standards for service levels may be in place but is front line staff following
them? A very common gap in the service industry is the difference between organizational service
specifications and actual levels of service delivery. Service specifications versus service delivery is the
result of role ambiguity and conflict, poor employee-job fit and poor technology-job fit, inappropriate
supervisory control systems, lack of perceived control and lack of teamwork.

• When Promises Do Not Match Delivery :-

Customers perceived that organizations are delivering low-quality service when a gap appears between
promised levels of service and the service that are actually delivered. This gap is created when
advertising, personal selling or public relations Over-promise or misrepresent service levels. Service
delivery versus external communication may occur as a result of inadequate horizontal communications
and propensity to over-promise.

• The discrepancy between customer expectations and employees’

perceptions :-
The discrepancy between customer expectations and employees’ perceptions rely as a result of the
differences in the understanding of customer expectations by front-line service providers.

• Dearth of Underwriter :-
In Bangladesh, there is a serious dearth of life insurance underwriters and for that reason-underwriting
decision is delayed to the detriment of the sales force and the proposed policyholders.

• Low Per Capita Income :-

Poor economic condition is considered to be the main reason for poor life insurance penetration in
Bangladesh. The country has a very low per capita income and over 50% of our total population lives
below the poverty line. Inability to save or negligible savings by a vast majority of population kept them
away from the horizon of life insurance.

• Religious Superstition :-
Religious attitude of the people also stands against efficient insurance. The religious people believe that
the future is uncertain, it is in the hand of Allah and they do not think it necessary to buy life insurance
policy for them.

• Poor Knowledge of Agents :-

The marketing of insurance is greatly hampered in the remote village of Bangladesh where the agents
are appointed from respected locality. This is because; educated young people are seemed to be
reluctant to become insurance agents. Therefore, persons finding no job or persons having lesser
knowledge become insurance agents whom cannot acquaint themselves fully with the whereabouts of
insurance. Such agents cannot play efficient role in convincing a prospective policyholder.

• Illiteracy :-
Mass illiteracy is another factor that adversely affects the marketing of insurance. About 70% of the
population is floating in the sea of ignorance. Illiteracy leads one to think that the insurance is
deception; it is no value in life. They cannot think rationality because they do not know what is
insurance and what its importance as security for future.
• Lack of Remainder :-
Increase in liability lack of reminder notice from the insurance company causes for discontinuation of
policy.

NOW-A-DAYS PEOPLE OF BANGLADESH ARE SO MUCH AWARE OF THEIR FUTURE . THEY TRY THEIR BEST
LEVEL TO BE INSURED THEMSELVES AGAINST ANY TYPE OF HAZARD . IT IS A GOOD SIGN FOR INSURANCE
MARKET IN BANGLADESH . E VERY INSURANCE COMPANY ALSO TRIES TO OVERCOME THE PROBLEMS . S O WE
CAN HOPE THAT IF THE INSURANCE COMPANY CAN OVERCOME EVERY PROBLEMS REGARDING INSURANCE
MARKETING IN BANGLADESH THEN THE INSURANCE MARKETING IN BANGLADESH WILL BE FACILITATED.

 PROSPECTS :-
AS WELL AS THE PROBLEMS MENTIONED ABOVE THERE ARE MANY GOOD SIGNS FOR THE INSURANCE
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 .

• 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 live under extreme poverty level and
want to avoid insurance policy number of potential policy holders in Bangladesh is growing with growth
of the population. There is somewhat relationship between growing populations with the number of
public vehicle. 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 opens greater scope for every kind of
insurance business that results in growing prospect for insurance companies.

• Higher GDP :-
The GDP of our country is increasing than the previous years which results in increase 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 in the income more and more people are now willing to take an insurance policy for
safeguarding themselves from any danger.

• New businesses 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 company to 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 to take 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 these
insurance companies are also trying to eradicate the negative attitude of people towards the insurance
company by organizing various programs such as seminars, programs including social responsibilities
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 term insurance policies. Micro insurance can
be provided to individual personnel or to small business owners against little insurance premiums and
with easy terms and conditions. When they will afford to minimize their risks at a lower price, they will
take 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.

• Health Insurance :-
The insurance companies of Bangladesh can be developed health insurance policy as large scale like
other developed and developing countries. That increases the scope of insurance business in
Bangladesh. Though there are some insurance companies created this at small range but that not
enough to meet the crying need of health insurance in nearby decades.

• Marriage Insurance :-
Bangladesh is Muslim country. So marriage plays a vital role in our social life. Now a day’s it become
costly. Guardians of daughters as well as sons face this problem that is why they want to overcome this
problem. This situation creates a vast opportunity for insurance business in Bangladesh.

• 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 company may expand and they can offer different
types of non-traditional insurance services such as, personal accident insurance, travel insurance,
burglary insurance and pension scheme.
• Scope of investment :-
Insurance companies can usually make more profit from investment activities than from their regular
insurance business. The private insurance companies are realizing this fact and playing role in the
financial market. Insurance companies are making large investment in government bonds, ICB projects
and in private sector business. There are opportunities to enhance profit through effective and efficient
money management by employing capable and experienced personnel. Scope of investment expansion
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 dynamic insurance 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 need oriented
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 people engage in farming and
fishing. The uncertainty of agriculture due to crop failure caused by climate variation, drought, cyclone,
flood and pests affects farmer income as well as government revenue. Furthermore, in the last few
years commercialization has occurred in some sections of the agricultural sector. Increase in investment
in the agricultural sector is creating a new opportunity for insurance industry. Various agricultural
insurance services are becoming common these days. Demand for insurance protection against crop
loans, livestock loans, fisheries loans and equipment loans are also increasing day by day.

• Business sector :-
Nowadays in Bangladesh the SME plays an important role in the economic 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 more in the economy .Thus insurance business has a bright
prospect in business sector in a developing country like Bangladesh

• Education sector :-
Insurance companies can provide different types of scheme to expand education plan insurance. In
Bangladesh the higher educational facilities is not as rich as developed countries. It is very costly except
public sectors educational institutions. So, education sector should create vast facilities for insurance
business in future.
• Development of new policy :-
SBC has long been the sole reinsures in Bangladesh and private insurance companies were 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 with SBC and the rest to private reinsurance companies. About 70% of premium
income from 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 new
opportunities to them. This will initiate open competition between the SBC and the private reinsures
within the country and will reduce the reinsurance cost and increase efficiency. This amendment of the
existing rules can be another important policymaking that will facilitate the insurance business in
Bangladesh. The private insurance companies can argue in favors of their capability to act as reinsures
on the basis of the fact that the total capital belonging to the government owned general insurance
company’s is Tk. 550 million while the private sector insurance companies ownTk.2500 million.

The policy holders are very much worried about the settlement of claims. Ordinary people also consider
it main constraint. Therefore, instance companies should settle the claims as quickly as possible to
create a healthy public image. For this purpose the claim settlement procedure can be simplified and the
insurers can provide proper written guidelines of claim settlement to the policyholders. 

FINALLY, IF THE ABOVE STEPS CAN BE TAKEN MORE AND MORE PEOPLE IN BANGLADESH
WILL BE INTERESTED IN BUYING INSURANCE.
 THE ROLE OF LIFE INSURANCE
COMPANIES IN THE ECONOMY OF
INSURANCE INDUSTRY IN BANGLADESH

More important than simply improving their market share the market itself has dramatically
expanded during this period. The total life market grew BDT 6 billion (US$ 99 million) over
the past five years. Virtually all of this increase is related to private sector activities, while the
growth of public sector life insurers has remained relatively flat, as shown in Figure 1.

• Industry Performance :-

Specially in terms of the life insurance business, the industry has been growing dramatically
with substantial premium gains each year since 1989. Fund balances have at least recently
kept up with this growth. However, even with the rapid growth, insurance density for
Bangladesh in 2003 was a mere US$ 2.1 spent on insurance per capita for the year which is
the lowest insurance density of the eighty-eight countries assessed by Swiss Re. Insurance
spending as a percentage of GDP in Bangladesh is also among the lowest, at 0.57 percent only
Saudi Arabia is lower on the list.
The Bangladesh Insurance Association (BIA) notes in its 2002 annual report that the recent
growth in life premiums “was due to the expansion of life business in the country through the
introduction of new products like Delta Life ” and others like it.

Reflective of the insurance density and penetration levels, the BIA notes that despite
satisfactory growth, the vast majority of people in the rural areas are yet to be covered under
life policies.

A CASE STUDY OF DELTA LIFE

INSURANCE COMPANY LIMITED

• COMPANY OVERVIEW & ITS ACTIVITIES :-

Delta Life Insurance Company Limited was incorporated in November 10, 1986 and is mainly
engaged in Ordinary Life (OL), Group Insurance (GI), Health Insurance (HI) business and non-
traditional micro insurance business under the name of Gono-Grameen Bima (GN-GRB). The
Company is a publicly traded Company and its shares are listed on the Dhaka Stock Exchange
and Chittagong Stock Exchange.

Delta Life’s Present Workforce :-

                   Head office and ordinary life              = 1200

                   Gono-Grameen Bima                           = 2121

                   Development                                        = 21679

                   Total                                                      = 25000

Delta Life Insurance Co. Ltd. established mainly through the initiative of a group of Bangladeshi
professionals then working abroad along with a few enthusiastic local entrepreneurs, started its
operation in December, 1986 after the Government of Bangladesh allowed the private sector to
operate in the insurance sector in 1984 to carry on the business of insurance in the Private
Sector. It soon made a mark in the life insurance arena by not only being the leader among the
private sector indigenous companies, but by undertaking and successfully implementing
innovative and welfare oriented life insurance schemes. It introduced an array of conventional
life and group insurance products – many of which were the first in Bangladesh. For the first
time, health insurance products were also introduced by Delta Life. But more importantly, in
fulfillment of the avowed commitment towards social development, Delta Life for the first time
not only in Bangladesh but probably in the World, devised and introduced micro-life insurance-
cum-savings products specially suited to the needs and pockets of poor people of the country
who constitute more than 80% of the people of Bangladesh.

Two projects of the company namely Grameen Bima for the rural people and Gono Bima for the
poor and marginal savers of the urban areas were initiated to devote themselves exclusively to
marketing and management of these innovative products.

We are happy to report that we have achieved a good measure of success although there is a
long way to go. These schemes that we have introduced have created great stir and enthusiasm
among the general mass who, before these projects started functioning, could not even dream
of owning a policy that provides the much needed life insurance coverage along with facility of
regular savings on a long-term basis. At a later stage i.e. in the year 2002, the projects were
merged into a division of Delta Life, namely, Gono-Grameen Bima Division. The GNGRB Division
has been growing at a first rate of more than 25% p.a. for the last couple of the years and is
poised to maintain this growth rate at least in the next five years or so. Delta Life can take pride
in moulding the saving habits of the lower and middle class people and transforming them into
prospective policyholders. The potential is now so strongly perceived that all life insurance
companies – old and new alike – operating in the country have started own micro insurance
products.

• INDUSTRY OVERVIEW :-
A brief explanation as to the growth of life insurance business in Bangladesh is in order here.
Bangladesh declared independence from the Pakistani rules on March 26, 1971 following which
she had to witness a bloody liberation struggle with the occupation forces lasting for 9 months
before they were defeated. Insurance business which was exclusively carried on in private
sector before independence was nationalized after liberation in 1972 primarily to address the
emerging situation of eroding public confidence in the industry that was left staggeringly short
of resources in the face of huge losses caused by the war of liberation. After a series of
experimentation, a state-owned body, namely Jiban Bima Corporation (JBC), established in
May, 1973 for transacting the life insurance business, took over the assets and liabilities under
life portfolios of all erstwhile private insurance companies and started business in its own
name.

However, things did not improve; rather, in many respects became more exacerbating and the
Government then thought it better to allow private sector participation in insurance business.
Since inception, Delta Life set before itself a high standard of all round performance
coextensive with professional soundness and proficiency.

Vision :-

1. We will be the premier life Insurance Company in Bangladesh.

2. “Adding value” will be the operative words of organization.
3. We will serve our customers with respects and will provide the best solution of their
needs.
4. We will be a Company with qualified professional who will work together as a team and
serve with dignity and the highest level of integrity. We believe an excellence and
customers with service beyond their expectations.

Goal :-

1. Provide financial security to our customers with insurance policies that are most suitable
for them.
2. Make life insurance an easy saving instrument and a profitable one with attractive
bonus and improved customer service.
3. Collect small savings from the people of our country and invest the accumulated savings
in profitable nation building enterprises.

• BACKGROUND OF THE DELTA LIFE INSURANCE COMPANY LIMITED AT A GLANCE :-

Facts and figures about Delta Life Insurance Company Ltd.

Year of establishment of the company :                             1986

Founder Chairman and Managing Director :                     Late Shafat Ahmed Chowdhury

Present Chairman :                                                                Mr. SyedMoazzem Hussain

Present Managing Director :                                                 Mr. Das Deba Prashad

Present Deputy Managing Director :                                  Mr. A B M Saiful Haque

First Policy Issued :                                                              December 17, 1986

Introduction of Grameen Bima :                                          December 1988

Introduction of Gono Bima :                                                October 08, 1993

Delta BRAC Housing :                                                        September 08, 1996

Delta Care Hospitalization Plan (Group) :                           October 19, 1996

Introduction of Health Insurance :                                      December 04, 1999

Merging of Gono and Grameen Bima :                              January 04, 2003

Establishment of Delta Insurance Institute :                       March 07, 2006

• POLICY CONDITIONS :-

Surrender Value :-

After payment of two full years’ premium, the policy acquires cash surrender value which is
quoted on request unless stated in the policy itself.

Loan :-

At anytime after a cash surrender value is available under the policy and while the policy is in
force, the policyholder may obtain, subject to the company’s existing rules, a loan on the policy
up to 90% of the cash surrender value.

Age Proof :-

Age of life assured as declared while applying for the policy has to be authenticated with an age
proof document acceptable to the company. The company reserves the right to require proof
of age of the life assured before paying any claim under the policy if not admitted earlier.

Settlement Option :-

Payee may elect to receive the proceeds of the policy in installments instead of in a single sum
in such a manner as may be agreed upon with the company.

Suicide :-

Should the life assured commit suicide, whether the assured be then sane or insane, within two
years from the commencement date or from reinstatement of the policy, then the liability of
the company shall be limited to the refund of all premiums paid under the policy less
indebtedness, if any, at the time of such death.
Bonus :-

DLIC pays attractive bonuses to its with-profit policies. The present rate of  policy bonuses are
as following:

a) A compound reversionary bonus @ 5% of paid up sum assured. This bonus is not paid on the
installments withdrawn from the date of such withdrawal.

b) A simple reversionary bonus ranging from Tk. 10 to Tk. 15 per thousand sum assured per
year depending on term.

c) A terminal bonus equal to 10% to 12% of sum assured at maturity of policy depending on
terms if the policy would have been in force for at least 2/3rd of its term.

• AVERAGE RATE OF BONUS :-

On the basis of the three types of bonuses the Company now pays to its with profit policies, the
average bonus earned by a Tk. 1, 00,000 sum assured endowment policy per thousand sum
assured per year shall be as following :

Term of Policy           Total bonus at maturity         Average rate per thousand per S.A. year

10 years                               Tk. 52,000                                                 Tk. 52

15 years                                Tk. 81,000                                                 Tk. 54

20 years                                Tk. 1,15,000                                              Tk. 58

Delta Life first launched Micro-insurance product in 1988 through its Grameen Bima Project
(GRB) to cater to the necessity of economic protection against premature death and of
disability as well as providing a way for regular savings for the poor and low-income group of
people living in villages. Later it started another project in 1994, namely, Gono Bima (GNB) for
the urban poor and the low income class. These projects are now merged under the name of
Gono-Grameen Bima Project (GN-GRB). The initial problems apart, the project started to yield
impressive results right from the beginning by creating great interest among the target
population who could not even perceive an institutional arrangement through which the ever
present problems of insecurity of life could be addressed. To suit the needs and pockets of the
target people, and for efficient management of these portfolios, some of the age-old traditional
concepts of carrying on life insurance business had to be diluted and in some cases replaced by
simple and straightforward practices. Yet, the results are so encouraging that Delta Life is now
regarded far and wide as the undisputed leader espousing the cause of welfare of teeming
millions and its experiences are now used to advantage not only by indigenous companies but
also other micro-savings organizations abroad.

• POLICY DOCUMENTS AND MICRO INVESTMENT (LOAN) :-

Upon acceptance of the proposal, a pass book is issued to the policyholder detailing all terms
and conditions of the policy. The pass book serves as the purpose of recording of all payments
made by him towards the policy. There is one group policy document for the policyholders of
each Thana or Block. For individual policyholders the passbook serves as policy document.

• MICRO INVESTMENT (LOAN) :-

GN-GRB gives small project loans to its policyholders on group liability basis. No collateral is
required. There is 20% service charge on the loans, which is calculated at a flat rate and added
to the principal amount. The loan, together with the service charge, is repayable in 12 equal
monthly installments. The repayments are collected from door to door by the organizers.
Recently a decision has been taken to establish small collection booths in the villages. A person
must be a policyholder and pay premiums for at least one year before being eligible for a loan.
The maximum loan given is Taka 5,000/=(US$ 100.00) per policyholder. The loans are for
income generating activities (IGA) only. Policyholders form a committee of 5 to 7 members. 3
policyholders selected by the committee are given the first loan. After recovery of 3
installments from each of the first three borrowers, the next 3 are given their loans and so on.
As a general rule, 60% of the premium income of an area and 40% of the repaid loan of an area
are available for loan in that area. Also 100% of premium collection of a committee is available
for loan to that committee.

• GROUP LIFE INSURANCE :-

Immediate financial support to an insured member and/or his family in case of devastating
events like-death, disability, disease as well as retirement. Group Insurance has already
established its importance as a component of ³Employee Benefit Package´ in Bangladesh.
Exclusive features of Group Insurance are: Insurance coverage to a number of individuals under
a single contract.

Group Insurance is an instrument for providing life insurance coverage (protection) to a number
of individuals under a single contract (policy) who are associated together for a common
interest other than insurance.

It is the most cost effective means to provide :

 Simple insurable conditions.

 Easy administrative procedure.
 Prompt claim settlement.
 Affordable premium.
  Tax exemption on premium.

Delta Life offers a host of Group-Life Insurance schemes from which an organization/employer
may choose for benefits of its members/employees, as may best serve their interest according
to organizational setup.

To be treated as a group, the following criteria need to be fulfilled :

 A ‘Group’ Should comprise of at least 15 members.

 It should be a legitimately organized body.

Group clients of Delta Life Insurance Company Limited include :

 Semi-Government organization, autonomous bodies.

 Private, Non-Government Organizations (NGO’s).
 Educational & Financial Institutions.
 Public Limited Companies.
 Associations, Business organizations etc.

Group Life Insurance Schemes offered by Delta Life are of two types :

 Traditional Schemes: for insurance coverage of members/employees of a group.

 Exclusive Schemes: for insurance coverage of clients of financial institutions.

Traditional Scheme :-

These are the commonly offered ³Group-Life Insurance´ schemes and are also known as

Basic Schemes :-

These are:

 Group Term Life Insurance Scheme (GT):————————–} Short Term Contract

 Group Term Life with Premium Refund Scheme (GTR)——}
 Group Endowment Life Insurance Scheme (GEN)————-} Long Term Contract
 Group Pension Scheme (GP)———————————–}

There are several variants of Basic Schemes. Examples of two variants of GTR are:

• GTR-100/10: Group Term Life with 100% Premium Refund after 10 years

• GTR-50/10 : Group Term Life with 50% Premium Refund after 10 years
 Features Basic Schemes
Group Term Life Group Term Life with Group Endowment
& (GT) Premium Refund (GTR) Scheme(GEN)

Benefits
Age  Limit  for  Insurance 18 years  to 60 18 years to 60 Years 18 yrs. to the age
Coverage Years of retirement (max. 60
yrs)
Duration of  Contract 3 years in each spell 10 years or 15 years in Continuous Contract, if
each spell not terminated
Scope for Inclusion & Yes Yes Yes
Exclusion
Scope for Inclusion& Yes Yes Yes
Exclusion
Scope for Alteration of Yes Yes Yes
Sum Assured
Premium Rate Single & Fixed Single & Fixed Variable; age
(irrespective of age (irrespective of age) dependant premium rate
Low}
Benefits:
Death (payment of Insured Yes Yes Yes
amount on death)
Maturity Benefit None None Payment of Sum Assured
as per contract during
retirement
Premium Refund None Refund of Premium as None
per contract on
retirement or
completion of term.
Payment of surrender
value in case of non
completion of term
Profit Share Provided to large None None
groups only

Exclusive Schemes :-

These are schemes, especially designed for financial institutions, in order to secure their
investment and adorn the product to make it attractive to customers as well as to protect
interest of the client. Few examples are :-
Home Loan Insurance :-

Scheme for ‘Home Loan Borrowers´ of Delta Brac Housing.

Depositor’s Insurance :-

Scheme for ‘Smart Plant´ Depositors of Dhaka Bank Ltd.

Premium :-

For traditional schemes: Premiums are usually payable annually in advance before
commencement of insurance.

For exclusive schemes: A single premium is payable for the whole period of coverage before
commencement of insurance.

Bonus :-

DLIC pays attractive bonuses to its with-profit policies. The present rate of  policy bonuses are
as following:

a) A compound reversionary bonus @ 5% of paid up sum assured. This bonus is not paidon the
installments withdrawn from the date of such withdrawal.

b) A simple reversionary bonus ranging from Tk. 10 to Tk. 15 per thousand sum assured per
year depending on term.

c) A terminal bonus equal to 10% to 12% of sum assured at maturity of policy dependingon
terms if the policy would have been in force for at least 2/3rd of its term.

Average Rate of Bonus :-

On the basis of the three types of bonuses the Company now pays to its with profit policies, the
average bonus earned by a Tk. 1,00,000 sum assured endowment policy per thousand sum
assured per year shall be as following:

Term of Policy Total bonus at maturity Average rate per thousand per
S.A. year
10 Years Tk. 52,000 Tk . 52
15  Years Tk. 81,000 Tk.  54
20  Years Tk. 1,15,000 Tk.  58
• THE INCOME SOURCES OF DELTA LIFE INSURANCE COMPANY LIMITED ARE GIVEN
BELLOW :-

 Income Sources
 1st year premium
 Renewal premium
 Home loan premium
 Interest on home loan
 Late fee
 Alteration fee
 Re-writing fee
 Policy stamp fee
 Loan bond fee
 Policy loan recovery
 Interest on policy loan
 Motor cycle loan recovery
 Interest on Motor cycle loan
 By-cycle loan recovery
 Interest on By-cycle loan
 Linces fee
 Proposal form
 Calendar
 Dairy
 Telephone Index
 Visiting Card
 Rate book
 Delta barta
 Uttaron
 Application fee for home loan
 Application fee for Delta care hospitalization
 Premium

RECOMMENDATIONS :-
It is an auspicious for Delta Life as a well reputed leading insurance company of Bangladesh.
This has been able to attract customer. Delta Life facing extensive competition from the new
entrants and the other insurance company. So, to increase market share and to retain
customers it should take proper policy and strategies that can play vital role on the present
competitive situation in the insurance sector. The following measures should be under taken to
improve more the insurance business of Delta Life :
  The findings of this study observed that the executives of DLICL, have little judgment
(idea) about their customers. So in this case, training program should be under taken to
develop the interpersonal dealings of the DLICL employees.
 As both clients and beneficiaries are influenced by most of the same factors. So DLICL
should give importance or priorities to allure customers by developing or formulating
the same strategies or policies for clients and beneficiaries.
 As the bank choice of customers (both clients and beneficiaries) are related with the
customers satisfaction, so it should improved the performance of promises in time,
personal attention to the clients, tangible Insurance facilities and courteous and
knowledge of insurance employees.
 “Quality of the DLICL management”, “Reputation of DLICL”; “personal relationship with
the employees” and “Location of DLICL office” implies the implicit cause of insurance
choice such as perceived risk by customer. So the management of DLICL should take the
corrective measures to reduce the financial risk, performance risk, physical risk, social
risk and psychological risk perceived by customers.
 The choice factors of bank implicate the customers perceptions of value including two
sides total customer value and total customer cost. Total customer value included
product value, service value, personnel value, and image value whereas total customer
cost includes monetary cost, time cost, and energy const and psychic cost. So the
management of DLICL should try to equalize the value between the two sides.

CONCLUSION :-
Delta Life insurance Company is one of the leading insurance Company in Bangladesh. The
performance of Delta life Insurance company is getting better day by day. Its premium, assets,
claims meeting, utilization of income is getting better in last five years. The study is about the
activities of delta Life Insurance Company limited, its cash payments, claims meeting, premium
collection, service offered, products etc. The study also has showed that the factors are related
with the customer perceived risk and customer’s value and cost furthermore, the study has
identified that the DLICL customer (both Clients and beneficiaries) are influenced by most of the
same factors. Here Delta life insurance company limited could improve its marketing strategy
for customer satisfaction. Overall we can see that Delta life insurance Company limited is one of
the progressive Insurance Company in Bangladesh for its servicing and its better  performance.