EXECUTIVE SUMMARY

Insurance is a means of protection from financial loss. It is a form of risk

management, primarily used to hedge against the risk of a contingent or uncertain
loss .An entity which provides insurance is known as an insurer, insurance
company, insurance carrier or underwriter. A person or entity who buys insurance
is known as an insured or as a policyholder.
MetLife Bangladesh is the largest life insurer in the country. It serves over a
million customers and is a major employer in Bangladesh. MetLife offers financial
protection to the people of Bangladesh through a mix of traditional and innovative
products such as individual and group life insurance policies, pension schemes,
children’s education policy, Shariah based (Takaful) saving schemes and accident
and health products. The products are designed to suit people of different age
groups, professions and income ranges.
MetLife need to develop their some productive sectors. In present, a company
cannot establish properly without developing information technology. People
search their desires requirement through Internet so, insurance companies need to
develop Web address to increase both foreign and local investors. So we have
discussed about both the problem and prospects of insurance business in
Bangladesh. The progress of insurance business depends on the progress of
economic condition.
Introduction
Insurance is a means of protection from financial loss. It is a form of risk
management, primarily used to hedge against the risk of a contingent or uncertain
loss.
An entity which provides insurance is known as an insurer, insurance company,
insurance carrier or underwriter. A person or entity who buys insurance is known
as an insured or as a policyholder. The insurance transaction involves the insured
assuming a guaranteed and known relatively small loss in the form of payment to
the insurer in exchange for the insurer's promise to compensate the insured in the
event of a covered loss. The loss may or may not be financial, but it must be
reducible to financial terms, and usually involves something in which the insured
has an insurable interest established by ownership, possession, or pre-existing
relationship.
The insured receives a contract, called the insurance policy, which details the
conditions and circumstances under which the insurer will compensate the insured.
The amount of money charged by the insurer to the policyholder for the coverage
set forth in the insurance policy is called the premium. If the insured experiences a
loss which is potentially covered by the insurance policy, the insured submits a
claim to the insurer for processing by a claims adjuster. The insurer may hedge its
own risk by taking out reinsurance, whereby another insurance company agrees to
carry some of the risk, especially if the primary insurer deems the risk too large for
it to carry.

Concept of Insurance / How Insurance Works

The concept behind insurance is that a group of people exposed to similar

risk come together and make contributions towards formation of a pool of funds. In
case a person actually suffers a loss on account of such risk, he is compensated out
of the same pool of funds. Contribution to the pool is made by a group of people
sharing commonrisks and collected by the insurance companies in the form of
premiums.

Historical backround of insurance

Ancient period:

 The first methods of transferring or distributing risk in a monetary economy

were practiced by Chinese and Babylonian traders in the 3rd and 2nd
millennia BC, respectively.
 Chinese merchants traveling treacherous river rapids would redistribute their
wares across many vessels to limit the loss due to any single vessel's
capsizing.
 The Babylonians developed a system that was recorded in the famous Code
of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing
merchants. If a merchant received a loan to fund his shipment, he would pay
the lender an additional sum in exchange for the lender's guarantee to cancel
the loan should the shipment be stolen or lost at sea.
 England in the mid 18th century Merchants and shipowners very largely
insured their own ventures themselves, but the need for discounting facilities
arose after 1750 with the growing volume of bills drawn against West Indian
merchants.
 Thus some of the more important Liverpool merchants began to exercise the
functions of banking. Contents In Ancient Era Achaemenian monarchs in
Ancient Persia were presented with annual gifts from the various ethnic
groups under their control. This would function as an early form of political
insurance, and officially bound the Persian monarch to protect the group
from harm.
 At some point in the 1st millennium BC, the inhabitants of Rhodes created
the 'general average'. This allowed groups of merchants to pay to insure their
goods being shipped together. The collected premiums would be used to
reimburse any merchant whose goods were jettisoned during transport,
whether due to storm or sinkage.
 The ancient Athenian "maritime loan" advanced money for voyages with
repayment being canceled if the ship was lost. In the 4th century BC, rates
 for the loans differed according to safe or dangerous times of year, implying
an intuitive pricing of risk with an effect similar to insurance.
 The Greeks and Romans created in c. 600 BC created guilds called
"benevolent societies", which cared for the families of deceased members, as
well as paying funeral expenses of members. Guilds in the Middle Ages
served a similar purpose. The Jewish Talmud also deals with several aspects
of insuring goods. Before insurance was established in the late 17th century,
"friendly societies" existed in England, in which people donated amounts of
money to a general sum that could be used for emergencies.

Medieval era:

 The new insurance contracts allowed insurance to be separated from

investment,a separation of roles that first proved useful in marine insurance.
 The traditional marine insurance in the medieval times, in which an investor
lent his money to a traveling merchant, and the merchant would be liable to
pay it back if the ship returned safely. In this way, credit and sea insurance
were provided at the same time.
 In the thirteenth and early fourteenth centuries, the European traders traveled
to sell their goods across the globe and to hedge the risk of theft or fraud by
the Captain or crew also known as Risicum Gentium. However, they
realized that selling this way, involves not only the risk of loss (i.e.
damaged, theft or life Merchants have sought methods to minimize risks
since early times. Pictured, Governors of the Wine Merchant's Guild by
Ferdinand Bol, c. 1680. Medieval era of trader as well) but also they cannot
cover the wider market. Therefore, the trend of hiring commissioned base
agents across different markets emerged.
 In 1310 the Chamber of Assurance was established in the Flamish
commercial city of Bruges.
 The traders sent (export) their goods to the agents who on the behalf of
traders sold them. Sending goods to the agents by road or sea involves
different risks i.e. sea storms, pirate attack; goods may be damaged due to
poor handling while loading and unloading, etc. Traders exploited different
 measures to hedge the risk involved in the exporting. Instead of sending all
the goods on one ship/truck, they used to send their goods over number of
vessels to avoid the total loss of shipment if the vessel was caught in a sea
storm, fire, pirate, or came under enemy attacks but this was not good
practice due to prolonged time and efforts involved. Insurance is the oldest
method of transferring risk, which was developed to mitigate trade/business
risk. Marine insurance is very important for international trade and makes
large commercial trade possible. The risk hedging instruments our ancestors
used to mitigate risk in medieval times were sea/marine (Mutuum) loans,
commenda contract, and bill of exchanges.
 Nelli (1972) highlighted that commenda contract and sea loans were almost
the closest substitute of marine insurance. Furthermore, he pointed out that
for a half century, it was considered that the first marine insurance contract
was floated in Italy on October 23, 1347; however, professor Federigo found
that the first written insurance contracts date back to February 13, 1343, in
Pisa. Furthermore, Italian traders spread the knowledge and use of insurance
into Europe and The Mediterranean. In the fifteenth century, word policy for
insurance contract became standardized. By the sixteenth century, insurance
was common among Britain, France, and the Netherlands. The concept of
insuring outside native countries emerged in the seventeenth century due to
reduced trade or higher cost of local insurance. According to Kingston
(2011), Lloyd's Coffeehouse was the prominent marine insurance
marketplace in London during the eighteenth century and
European/American traders used this marketplace to insure their shipments.
The rules and regulations of insurance were adopted from Italian merchants
known as “Law Merchant” and initially these rules governed the marine
insurance across the globe. In case of dispute, policy writer and holder
choose one arbitrator each and these two arbitrators choose a third impartial
arbitrator and parties were bound to accept the decision made by the
majority. Because of the inability of this informal court (arbitrator) to
enforce their decisions, in the sixteenth century, traders turned to formal
courts to resolve their disputes. Special courts were set up to solve the
disputes of marine insurance like in Genoa, insurance regulation passed to
impose fine, on who did not obey the Church's prohibitions of usury (Sea
loans, Commenda) in 1369. In 1435, Barcelona ordinance issued, making it
 mandatory for traders to turn to formal courts in case of insurance disputes.
In Venice, “Consoli dei Mercanti”, specialized court to deal with marine
insurance were set up in 1436. In 1520, the mercantile court of Genoa was
replaced by more specialized court “Rota” which not only followed the
merchant's customs but also incorporated the legal laws in it.
 Separate insurance contracts (i.e., insurance policies not bundled with loans
or other kinds of contracts) were invented in Genoa in the 14th century, as
were insurance pools backed by pledges of landed estates. The first known
insurance contract dates from Genoa in 1347, and in the next century
maritime insurance developed widely and premiums were intuitively varied
with risks.
 These new insurance contracts allowed insurance to be separated from
investment, a separation of roles that first proved useful in marine insurance.
The first printed book on insurance was the legal treatise On Insurance and
Merchants' Bets by Pedro de Santarém (Santerna), written in 1488 and
published in 1552.

Modern era

 Insurance became more sophisticated in Enlightenment era Europe, and

specialized varieties developed. Some forms of insurance developed in
London in the early decades of the 17th century.
 For example, the will of the English colonist Robert Hayman mentioned two
"policies of insurance" taken out with the diocesan Chancellor of London,
Arthur Duck. Of the value of £100 each, one related to the safe arrival of
Hayman's ship in Guyana and the other was in regard to "one hundred
pounds assured by the said Doctor Arthur Ducke on my life".

2.4 Historical Background of Insurance in Bangladesh

 Insurance is not a new business in Bangladesh. Almost a century back,

during British rule in India, some insurance companies started transacting
business, both life and general, in Bengal. Insurance business gained
 momentum in East Pakistan during 1947-1971, when 49 insurance
companies transacted both life and general insurance
 Schemes. These companies were of various origins British, Australian,
Indian, West Pakistani and local. Ten insurance companies had their head
offices in East Pakistan, 27 in West Pakistan, and the rest elsewhere in the
world. These were mostly limited liability companies. Some of these
companies were specialized in dealing in a particular class of business, while
others were composite companies that dealt in more than one class of
business.
 The government of Bangladesh nationalized insurance industry in 1972 by
the Bangladesh Insurance (Nationalization) Order 1972. By virtue of this
order, save and except postal life insurance and foreign life insurance
companies, all 49 insurance companies and organizations transacting
insurance business in the country were placed in the public sector under five
corporations. These corporations were: the Jatiya Bima Corporation, Tista
Bima Corporation, Karnafuli Bima Corporation, Rupsa Jiban Bima
Corporation, and Surma Jiban Bima Corporation. The Jatiya Bima
Corporation was an apex corporation only to supervise and control the
activities of the other insurance corporations, which were responsible for
underwriting. Tista and Karnafuli Bima Corporations were for general
insurance and Rupsa and Surma for life insurance. The specialist life
companies or the life portion of a composite company joined the Rupsa and
Surma corporations while specialist general insurance companies or the
general portion of a composite company joined the Tista and Karnafuli
corporations.

 After independence of Bangladesh, insurance industry was nationalized.

Subsequently through the enactment of Insurance Corporation Act VI, 1973,
two corporations namely Sadharan Bima Corporation (SBC) for general
insurance and, Jiban Bima Corporation for life insurance were established in
 Bangladesh. SBC was acting as the sole insurer of general insurance till
1984. Between 1985 to 1988 first generation of private general insurance
companies were emerged as Bangladesh Government allowed the private
sector to conduct business in all areas of insurance for the first time in 1984.
A total of 16 private general insurance companies were registered in that
phase. In 1996 another 8 private general insurance companies were
registered.
 The third generation of private general insurance companies, which included
18 companies, came into operation between1999 and 2001. The general
insurance market in Bangladesh now consists of 43 private sector insurance
companies and 1 state owned insurance company. Insurance Corporation
(amendment) Act 1990 provides that 50% of all insurance business relating
to any public property or to any risk or liability appertaining to any public
property shall be placed with the SBC and the remaining 50% of such
business may be placed with this corporation or with any other insurers in
Bangladesh. But for practical reason and in agreement with the Insurance
Association of Bangladesh SBC underwrites all the public sector business
and 50% of that business is distributed among the existing 43 private general
insurance companies equally under National Co-insurance Scheme.

MetLife (World)
MetLife is one of the world's leading financial services companies, providing
insurance, annuities, employee benefits and asset management to help its
individual and institutional customers navigate their changing world.
Founded in 1868, MetLife has operations in more than 40 countries and holds
leading market positions in the United States, Japan, Latin America, Asia, Europe
and the Middle East.
MetLife has helped generations of people around the world protect their finances,
property, family and future. In the process, we have shown our commitment to
safeguarding families, serving communities and strengthening society as a whole.
MetLife history (Bangladesh)
MetLife Bangladesh is the largest life insurer in the country. It serves over a
million customers and is a major employer in Bangladesh with over 16,000 field
force and employees. Established in 1952, the company was popularly known as
‘ALICO’ until its acquisition by MetLife, Inc. globally in November 2010 when it
was co-branded as ‘MetLife Alico’ and later as ‘MetLife’ in 2015.

MetLife offers financial protection to the people of Bangladesh through a mix of

traditional and innovative products such as individual and group life insurance
policies, pension schemes, children’s education policy, Shariah based (Takaful)
saving schemes and accident and health products. The products are designed to suit
people of different age groups, professions and income ranges.

MetLife Bangladesh at a Glance:

Established: 1952
Registered Name: American Life Insurance Company
Market Leader: Since 1997
Number of Customers: More than 1 million
Number of Sales Offices: 9
Number of Customer Touch Points: 14
Number of Agencies: 217
Number of Unit Offices: 56
Number of Financial Associates: 16,000 +
Primary Products & Services: Individual Life Insurance, Accident & Health,
Group Life and Health, Employee Benefits, Annuities, etc.
Financial Strength: AAA Credit Rating in Bangladesh
Awards & Recognitions: Received top tax payers’ award from NBR, Bangladesh
Key Management:
Syed Hammadul Karim
General Manager, Bangladesh
Jafar Sadeque Chowdhury
Chief Distribution Officer
Nafis Akhter Ahmed
Chief Agency Officer
Ala Uddin
Chief Financial Officer

Head Office:
MetLife Building
18 - 20 Motijheel C.A.
Dhaka – 1000

MetLife Vision:
 Company’s vision is to become the premier insurance organization and the
insurer of first choice in Bangladesh with a sound reputation for
dependability, professionalism and the highest standard of customer
services.
 Building profitable and socially responsible financial institution focused on
Market and Business with Growth potential, thereby assisting Reliance
Insurance Company and stakeholders to build a just, enlightened, healthy
democratic and poverty free Bangladesh.

MetLife Mission
  Grow significantly and achieve significant nonlife insurance market share.
 Continue delivering attractive returns to our shareholders. Become a caring
organization and employer of choice.
 Invest in top quality human resources and develop full potentials of
employers by providing continued training and insurance education.

MetLife Objectives
• The objectives and principles of Investment operations of the Insurance
Company are:
• To invest fund strictly in accordance with the principles.
• To diversify its investment portfolio by size of investment, by sectors (public &
private), by economic purpose, by securities and by geographical area including
industrial, commercial & agricultural.
• To ensure mutual benefit both for the Insurance Company and the investment-
client by professional appraisal of investment proposals, judicious sanction of
investment, closes and constant supervision and monitoring thereof.
• To make investment keeping the socio-economic requirement of the country in
view.

Products and Services

Life insurance:
MetLife's individual life insurance products and services comprise term life
insurance and several types of permanent life insurance, including whole life,
universal life, and final expense whole life insurance. These services vary in
regards to the duration and amount of coverage available and whether a medical
exam is required for coverage. The company also offers group life insurance,
provided through employers, which consists of term life, permanent life, and
accidental death and dismemberment coverage.MetLife is the largest life insurer in
the United States, based on life insurance in-force.
Dental:
MetLife offers group dental benefit plans for individuals, employees, retirees and
their families and provides dental plan administration for over 20 million people.
Plans include MetLife's Preferred Dentist Program (PPO) and the Safeguard
DHMO (available for both individuals and employees in CA, FL, TX, NJ and
NY.). As of May 2010, MetLife's dental PPO network included over 135,000
participating dentist locations nationwide while the dental HMO network included
more than 13,000 participating dentist locations in California, Florida and Texas.
MetLife also administers dental continuing education program for dentists and
allied health care professionals, which are recognized by the American Dental
Association (ADA) and the Academy of General Dentistry (AGD).

Disability:
MetLife provides disability products for individuals as well as employee and
association groups who receive them through their employer. For individuals, the
company's individual disability income insurance can replace a portion of lost
income if an individual is unable to work due to sickness or injury. MetLife offers
several individual disability income policies, including MetLife Income Guard,
OMNI Advantage, OMNI Essential, Business Overhead Expense, and Buy-Sell.
The policy options provided by the company vary in terms of eligibility and the
provided coverage. For groups, MetLife offers short term disability insurance and
long term disability insurance. Short term disability insurance is structured to
replace a portion of an individual's income during the initial weeks of a disabling
illness or accident. Long term disability Insurance serves to replace a portion of an
individual's income during an extended period of a disabling illness or accident.
The company also maintains an absence management product which allows
employers to track and manage both planned and unplanned employee absences.
The product, which MetLife calls MetLife Total Absence Management, is
structured for businesses with 1,000 or more employees.

Annuities:
MetLife is among the largest providers of annuities in the world, recording $22.4
billion in sales during 2009.[106] MetLife offers annuities which consist of fixed
annuities, variable annuities, deferred annuities and immediate annuities. In 1921,
MetLife was the first company to issue a group annuity contract. More recently in
2004, it was the first insurer to introduce a longevity insurance product. As of
December 31, 2009, MetLife globally managed group annuity assets of $60 billion
with $34 billion of transferred pension liabilities and provided benefit payments to
over 600,000 annuitants per month.

Auto & Home:

MetLife Auto & Home is the brand name for MetLife's nine affiliate personal lines
insurance companies. Collectively these companies offer personal lines property
and casualty insurance policies in all 50 states and the District of Columbia. The
flagship company in the MetLife Auto & Home group, Metropolitan Property and
Casualty Insurance Company, was founded in 1972.MetLife Auto & Home
companies presently have over 2.7 million active policies and service 58 of the
Fortune 100 companies.

MetLife's home insurance includes homeowners insurance, condo insurance,

renters insurance, insurance for landlords, and mobile home insurance.The
available policies for MetLife's home insurance provide coverage for possessions,
property damage from natural disaster or theft, and various legal expenses incurred
resulting from injuries sustained on an individual's property. The companies also
sell RV, ATV, boat, mobile home, collectible vehicle, and motorcycle policies and
offers flood insurance policies as a participant in the National Flood Insurance
Program (NFIP), which is managed by the federal government. MetLife’s various
types of coverage for auto insurance include liability protection, collision and
comprehensive coverage, personal injury protection, rental car coverage, and
uninsured and underinsured motorist’s coverage. Through an arrangement with
Hyatt Legal Plans, a subsidiary of MetLife, MetLife Auto & Home underwrites
group legal plans in many states.

It was the first national insurer in the United States to offer identity-theft resolution
services at no extra premium and as of 2012 continues to do so today in most
United States. In 2010, MetLife Auto & Home began offering their Grand Protect
plan in most states. This Grand Protect policy simplifies complex insurance needs
by combining a client's home, valuable items, autos, RVs, and boats into one
comprehensive policy package. The ultimate benefits to the consumer are having
one bill, only one deductible, comprehensive coverage, and typically lower rates
than trying to get each policy individually.

Other products:
MetLife's products also include critical illness insurance. Financial services include
fee-based financial planning, retirement planning, wealth management, 529 Plans,
banking, and commercial and residential mortgages. The company also provides
retirement plan and other financial services to healthcare, education, and not-for-
profit organizations. The MetLife Center for Special Needs Planning is a group of
planners which serve families and individuals with special needs. In 2014, MetLife
launched MetLife Defender, a digital identity theft protection product.

Why Bangladeshi people are no interested in insurance?

In a developing country like Bangladesh, there is a great role of insurance. But 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. If we want to know the reasons behind this hen we should look forward
the following according to Bangladeshi Insurance Company. In this report 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:

2.7.1 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.

2.7.2 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.

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.

2.7.3 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.

2.7.5 Other problems

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.

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.

Poor Services to Consumers: An important reason for the dismal performance of

insurance business in Bangladesh is poor client services provided by the insurance
companies. The public image of service from life insurance institutions is very
poor.

Lack of Reliability:

Peoples have lacking of reliability on the insurance company, because many

insurance companies do not make payment they agree to pay in time of selling
policy to the people.

Lack of faith upon insurers is one of the fundamental reasons for which insurance
business cannot strong position in Bangladesh. Most of the respondents have said
that insurance in Bangladesh couldn’t achieve the fullest faith of people. At one
side, insurance business is not well known to the general people and on the other
side; the known people are dubious about its service. Public image about services
of insurance companies is very poor. Majority of the insurance concerns and
almost all non-policy holders confessed this very frankly and counted it as a
burning constraint behind the progression of insurance business in Bangladesh.
This feeling of distrust is very intense in the case of life insurance as life insurance
contract is usually made for a longer period of time. The non-policy holders argued
that the motive of insurance companies is to be a millionaire overnight.

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:

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.

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.

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.

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.

Illeteracy:

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.

Negligence of Policy Holders:

Many of the policyholders have expressed that; their policies lapsed for their own
negligence to pay premium in time.

Image: High lapses of life insurance policies do much to harm insurance image.

Initiatives to motivate people to start the insuranc:

In our country the problems that exist in insurance business cannot be overcome
over aright .It needs long term planning. Besides making the people aware the
insurance businessman should come forward with govt. to make this business
famous. Coming from the existing problems following steps should be taken to
motivate people to start the insurance:

1. 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.

1. Increase Publicity

We know by proper publicity it is easy to market anything. Insurance is one

type of unsought goods. So, people are not so much aware of it. High
publicity and insurance knowledge can led the people to make insurance
policy more and more. Mass publicity activities are very essential to
overcome from unwillingness wrong idea, doubt & unbelief of the people
 this country. The people media can provide an effective help regarding
country interest.

2. Spread of insurance education:

To make the insurance business people should be made aware about the
helpless & necessity of insurance. For this purpose effective steps must be
taken too speared of insurance education.

3. Increase of training facilities:

To continue the insurance business effective standard training facilities must

be arranged for the manager & workers who are employed in this business.
Insurance business is very complex and technical. To perform this business
properly, obviously it needs vast knowledge regarding its performance. To
achieve vast knowledge training has no alternative. So training is very
necessary to overcome problem in insurance.

4. Formulation of effective Principles:

Long term formulation of effective principles is compulsory to continue the

insurance business successfully. To run the insurance smoothly, it is
mandatory to implement the principles strictly. If everyone follows
principles and rules, achieving goal is possible.

5. Uphold the interest of policy holder:

Success of this type of business is depended on the trust of insured persons.

To gain the trust insurance companies should come forward to compensate
the real injured as soon as possible.

6. Importance to the economic development:

Insurance business is depended on the development of the different sector of

economic .So insurance business can never be developed by retaining the
weak situation of the sectors including industry commerce transportation.

7. Development of management:
 Like every sector insurance is affected by mismanagement in Bangladesh.
Management can play a vital role in the development of insurance business.
When there will be coming good managerial environment in insurance then
a good performance can be done easily.

8. Modernization of insurance business:

Modernization of insurance business means to make the business much more

modern and suitable for new generation. New policies can be introduced if it
is familiar to other world. Everyone try to improve the present condition and
serve clients more properly. More modern insurance business must attract
the clients.

9. Govt. monitoring system:

The private insurance companies are not so much aware about the govt. rules
and regulations. For this reason, sometimes unreal competition created in the
market. So, proper govt. monitoring system should be introduced.

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. Every insurance company also tries to overcome
the problems. So 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.

Impact on Our Economy

Insurance business contributes to develop economic condition of Bangladesh. As a
result,

 Creating more savings,

 Makes capital formation,

  Develops trade and commerce

 Creates more employment,

 Social security,

 Provides security of asset and human life by taking risk

 Collect money from society for investment,

 Improve standard of living,

 Generate employment facilities,

 Increase export provides security by taking risk etc.

Comments and Suggestion

From the presiding discussions of the report, we can realize that the policy
makers within the government and the insurance company should adopt effective
measures in order to make good use of the opportunities and to tackle the
threats for ensuring a healthy development of the insurance industry. The
following actions are suggested.
 The insurance companies of Bangladesh should practice marketing through
the use of promotional tools such as advertising, sales promotion, public
relation and publicity, personal selling and direct marketing.

 In order to create the growth of insurance business in our country,

insurance companies should expand their target market by providing
responsive services and establish efficient departments to perform such
task.

 Government must minimize the restrictions on premium so that insurance

companies can fix their premium according to their demand. This will
increase the profitability of the insurance companies.

 One of the basic requirements for the insurance industry to have sustained
growth is to enhance training facilities. Bangladesh Insurance Academy is
 providing training facilities and professional education to those engaged in
insurance business in the country. The syllabus, curriculum and training
programs of the academy need to be modified to meet the modern needs
of the insurance industry.

 To regain and maintain a positive public image the insurance companies

should overcome the dissatisfaction in regards to services and claim
settlements and should maintain a service standard.

 The collected premium should be invested in large and beneficial sectors so

that insurance companies can return their clients expected return in timely.

 Government should have a regulatory body for the surveillance on

insurance companies so that they must perform their business maintains
the ethical issues properly.

 Insurance companies need to modify their recruitment strategies within

creased focus on the marketing and sales training because, insurance being
a service marketing industry it requires special attention.

 In response to the opportunity of growing market the insurance companies

can expand their target market by identifying and providing responsive
services. In order to do so each company should established and effectively
operate research and development department.

Conclusion
In present insurance is too much important to the business and individual sector.
Most of the companies provide more or less same services. For this reason the
competition is increasing day by day between the insurance companies. On the
other hand some new insurance companies are going to start businesses in the
competent market. MetLife need to develop their some productive sectors. In
present, a company cannot establish properly without developing information
technology. People search their desires requirement through Internet so, insurance
companies need to develop Web address to increase both foreign and local
investors. So we have discussed about both the problem and prospects of insurance
business in Bangladesh. The progress of insurance business depends on the
progress of economic condition.