Insurance is a legitimate way to extend one’s risk to one’s shoulders. This is a type of contract where an insurance company agrees to pay the insured if there is loss of the insured’s goods for some unforeseen reasons in exchange for receiving the premium at a fixed rate.
There is a history of insurance system in Bangladesh. During the British rule in India about 5 years ago, some insurance companies started both life insurance and general insurance business. Insurance business in East Pakistan was in good shape during the period of 3-5. At the time, 4 life and general insurance companies operated the business. The sources of these companies were spread in different countries. Among them are British, Australian, Indian, West Pakistani and East Pakistani. The headquarters of three insurance companies were in East Pakistan, 20 in West Pakistan and the rest at headquarters in the world. Except for a few, most companies were limited liability and worked in a free competitive economic environment. Some of these were specialized companies that were involved in certain types of business, while some were joint companies that engaged in multiple types of business.
The government of Bangladesh nationalized the insurance industry in 1972 with the President’s order number 1. This order is known as Bangladesh Insurance (Nationalization) Order 42. In this order, all insurance companies and companies doing business in this country, except defense, postal life insurance and foreign life insurance companies, are vested in the public sector corporation. These are National Insurance Corporation, Teesta Insurance Corporation, Karnafuli Insurance Corporation, Rupsa Jeevan Insurance Corporation and Surma Life Insurance Corporation.
The National Insurance Corporation was not directly involved in the insurance business. As a top company, it oversees and controls the operations of the other 5 corporations involved in insurance work. Teesta and Karnafuli used to do general insurance business, Rupsa and Surma worked as life insurers. At that time, the four insurance companies operating were merged with these four corporations. On the other hand, the life insurance portion of a specialized life insurance company or a composite company is linked to Rupsa and Surma, and the general insurance company of a particular company or a mixed company to Tista and Karnafuli. The main objective behind the formation of 2 insurance companies in each of the life insurance and general insurance companies was to encourage competition under the nationalized system. But the unnecessary administrative expense of the 12 corporations and one of their top companies underscores the benefits of limited competition. As a result, on 7 May, under the Insurance Corporation Act 3, the insurance industry made structural changes. Under this law, 2 corporations are established in place of 5 corporations, one for the general insurance business. General Insurance Corporation , and the other is Life Insurance Corporation for the life insurance business.
Postal life insurance and life insurance by foreign companies are as active as before. In reality, however, the only American life insurance company to continue its new business and services is life insurance. The remaining three companies only continue to provide the required services of the insured policies during the Pakistan period.
All the responsibility of running a general insurance business falls on the general insurance corporation. Life insurance is the responsibility of life insurance corporation, American life insurance company and postal life insurance corporation. However, due to the economic liberalization policy, there are structural changes in the insurance industry. Amendment of Insurance Corporation Act-1 was brought in 7. In addition to the general insurance and life insurance corporation, the management of insurance companies in the private sector is maintained. Insurance Corporation (Amendment) Act 1, It allows for the establishment of general and life insurance companies in the private sector, subject to certain restrictions on the conduct of business and reinsurance. Under the new law, all public business insurance business is reserved for state-owned general insurance corporation. General Insurance Corporation is also empowered to compete with private sector insurance companies to conduct private financial sector insurance business. The ban was imposed to provide some protection to state-owned general insurance corporations, as well as giving private sector insurance companies some experience. There was another restriction on the reinsurance system by the private sector insurance company. The law says, Private sector insurance companies must take 5 percent of their reinsurance cover from the general insurance corporation and they cannot go anywhere for reinsurance. The purpose of such sanctions is to create an environment in which the foreign currency can go out of the country in the form of reinsurance premiums and so that a reinsurance market can be developed according to Bangladesh’s internal capability. This arrangement actually turns the general insurance corporation into a reinsurer. However, their direct insurance activities continue as well. However, after the consolidation of the total market cap, additional money from the general insurance corporation is allowed for re-insurance outside the country. to create. This arrangement actually turns the general insurance corporation into a reinsurer. However, their direct insurance activities continue as well. However, after the consolidation of the total market cap, additional money from the general insurance corporation is allowed for re-insurance outside the country. to create. This arrangement actually turns the general insurance corporation into a reinsurer. However, their direct insurance activities continue as well. However, after the consolidation of the total market cap, additional money from the general insurance corporation is allowed for re-insurance outside the country.
Restrictions on business are in fact a type of obligation that is insured upon to insure the insurance policies of the insurer. As a result of this situation, all insurance policies related to Bangladesh’s property, including all imports and exports under the naval insurance policy, are mandated to be completed by the insurance company of Bangladesh.
The idea of private sector entrepreneurs imposing such restrictions is not conducive to the growth of the private sector. Conservationism does not help with the expected growth of the barrier. This is because since the public sector economy controls 5 percent of the total premium amount, there is only a 20 percent premium left for private sector companies to survive. Nonetheless, general insurance corporations are allowed to compete with private companies engaged in business with a small share of private premium deposits (20 percent).
Private insurers claim to completely override the above limitations so that they can compete with the general insurance corporation, both in the public and private sector insurance business, and re-insure them to the insurer of their choice. As a result, the existing arrangements were changed by the Insurance Corporation (Amendment) Act 1. Changes are:
1. Private sector insurance companies can make up to 5 percent of the private sector insurance business.
2. Individual insurance companies can cover up to 5 percent of their reinsurance to any insurer in the country or abroad. The remaining 5 percent is kept under the general insurance corporation. Although specified in the law, the real situation in the insurance market was different.
The amount of capital and deposit required to set up an insurance company are as follows:
1. Capyital requirements Life insurance company Tk 1 million, 5% of which is paid by the entrepreneur; Traditional Mutual Life Insurance Company: Tk 1 million; General insurance company: 1 million, 5 percent of it paid by the entrepreneur; Cooperative Insurance Society Tk 20 million for life insurance and Tk 20 million for general insurance.
2. Deposit requirements Every insurance company will have to deposit money at different rates according to different insurance in the form of cash or approved defense form at the time of filing the application for registration. For example, life insurance: 3 million rupees; General insurance: Tk 20 million; Mutual insurance company: Tk 1 million; Cooperative Insurance Society Tk 20 million.
Since the formation of an insurance company is one of the policy issues of the government, it is mandatory to follow several rules. The principles are:
1. Interested entrepreneurs need to apply in the prescribed form along with the authority to get advance approval.
2. After the necessary selection, the authorities will send the application along with its recommendations to the Ministry of Finance.
3. The Ministry of Finance will send it to the Cabinet Committee for decision-making after further scrutiny.
4. If the decision of the committee is positive then the application should be sent back to the Ministry of Finance and from there it will be forwarded to the authority to inform the entrepreneur.
5. The entrepreneur will then have to apply to the Registrar of Joint Stock Companies in the prescribed form to get registered as a Public Liability Company under the Companies Act. Memorandum and Articles of Association duly approved by the Authority shall be filed with the application.
6. Upon completion of registration, the entrepreneur will have to seek approval from the Securities Exchange Commission to release the company’s capital shares.
7. Re-insurance formalities need to be completed at this stage.
8. If the above mentioned conditions are met then the authority to apply for a license to start a business under Insurance Act 20 should apply. (Application can only be made subject to official announcement). Insurance companies are governed by the Insurance Act 20 Finance Act, and the Insurance Development and Management Authority Act 20, along with the investment activities, taxation and reporting of insurance companies.
Due to the privatization policy, several insurance companies have made their debut in the private sector since the beginning of the year. As a result, the amount of money available from the premium has increased significantly. This growth is made possible by the discovery of new types of businesses from a wide range of areas of competition, advanced services and unresolved. Prior to privatization, the annual gross premium of the country was Tk 1 million in the general sector and Tk 1 million in the life insurance sector. At present, the amount has been increased to Tk 1 million for general insurance and Tk 1 million for life insurance.
There are currently 5 general insurance companies and 1 life insurance company doing business in Bangladesh market. The state-owned Life Insurance Corporation and General Insurance Corporation, other than in the company include: Leading Insurance Company, United Insurance Company Limited, Islami Insurance Bangladesh Limited, Eastland Insurance Company Ltd, Eastern Insurance Company Limited, Asia Insurance Company Limited, the Asia-Pacific insyurena Saw Company Ltd, Continental Insurance Limited, Karnaphuli Insurance Company Limited, grinadelta Insurance Company Limited, Janata Insurance Company Ltd, Dhaka Insurance Limited, Delta Life Insurance Company Limited, Northern General Insurance Company Limited, National Life Insurance Company Ltd, Popular Life Insurance company Ni Limited, Pioneer Insurance Company Limited, the People’s Insurance Company Ltd, Purobi Insurance Company Limited, Pragati Insurance Company Ltd, Progressive Life Insurance Company Limited, morning Insurance Company Limited, Prime Insurance Company Limited, Prime Islami Life Insurance Limited, Phoenix Insurance Company Ltd., Far East Salami Life Insurance Company, Federal Insurance Company Limited, Bangladesh Co-operative Insurance Company Ltd, Bangladesh General Insurance Company Limited, Bangladesh National Insurance Company Ltd, MetLife American Life Insurance Company Ltd, Mercantile Insurance Company Limited, Meghna Insurance Company Ltd, Meghna Lai F Insurance Company Limited, Reliance Insurance Limited, Rupali Insurance Company Limited.
Insurance companies in the country operate almost all types of general and life insurance services without grain insurance and export loan guarantees. These 2 special insurance are only for general insurance corporation.
In Bangladesh, numerous organizations, associations, professional groups work for the development and expansion of insurance business. Some of these notable are:
It was formed under the Companies Act of Bangladesh Insurance Association on May 27, 9 and registered with the Joint Stock Company Registrar. The members of this association number 1 and its purpose is to develop, expand, cooperate and protect the interests of the member companies.
Bangladesh Insurance Academy Bangladesh Government established it for the purpose of developing professional education, organizing and providing education on insurance and research on insurance.
Surveyors and Brokers: Insurance business surveyors and brokers occupy an important place in Bangladesh. Surveys have the responsibility of calculating and surveying general insurance losses and sometimes determining the value of an insured’s property. On the other hand, brokers conduct general and life insurance business in exchange for commissions. Insurance companies also hire salaried development officers.
Professional broker system has not yet been established in Bangladesh. The conventional insurance method is the purchase of direct insurance by the insurer. [AKAH Chowdhury]