Professional Documents
Culture Documents
in Bangladesh
Insurance is a system of spreading the risk of one to the shoulders of many and which is a
legal contract whereby the insurers, on receipt of a consideration known as premium, agree
to indemnify the insured against losses arising out of certain specified unforeseen
contingencies or perils insured against. Insurance is not a new business in the Bangladesh it
almost a century back, during British rule in India, some insurance companies started
transacting business operation , both life and general, in Bengal. Insurance business
enlarged momentum in East Pakistan during 1947-1971, when there are 49 insurance
companies transacted their business operation both life and general insurance schemes and
these companies were of various beginnings with British, Australian, Indian, West Pakistani
and local. Then ten (10) insurance companies had their head offices in the East Pakistan, 27
in West Pakistan, and the rest elsewhere in the world. These were mostly limited liability
companies and 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 (BD) nationalized the 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
Burgaining
power of
suppliers
compettitive
rivalry within
the industry
Threat of
substitutes
burgaining
power of
buyers
II. Scarcity of resources: This is another factor influencing the threat of new entrants.
Poor economic condition is considered to be the main reason for poor life insurance penetration
in Bangladesh. Most of the policyholders cannot continue their policies because shortage of fund
which causes Scarcity of resources to the insurer.
III. Government restrictions or legislation: The government of Bangladesh has reformed the
financial sector in the 1990s. In order to promote the insurance industry of Bangladesh the
government has undertaken some reforms program in the insurance sector. The government
passed the Insurance Development and Regulatory Authority Act, 2010 in the Jatiya Sangshad
for establishing the Insurance Development and Regulatory Authority (IDRA), this act includes
some favorable aspects which facilitate the efforts of new entrepreneurs who are trying to enter
the insurance industry.
Power of Buyers: This means to what extent the clients or customers of the
insurance company are influencing the business of the company. One individual client doesnt
affect the activities or profitability of the insurance company compared to large clients. Large
corporate clients have a lot bargaining power with the insurance company. For example large
clients such as airlines and pharmaceutical companies pay millions of dollars a year in premiums
to the insurance company. The insurance company tries to hold onto these valued customers by
offering them insurance policies and contract favoring their (clients) interests.
Amount
Proportionate
Investment (%)
nvestment
2,576,351,967
35.48%
Outstanding Premium
130,668,575
1.80%
5.58%
550,784,831
7.59%
1,542,658,763
21.25%
11.02%
1,251,593,480
17.24%
ntangible assets
1,473,050
0.02%
2,258,719
0.03%
7,261,272,266
Associate
Risk
Credit
Particulars
Amount
637,875,000
hare premium
364,150,080
Proportional
to
Total Liabilities (%)
3,901,534,253
53.73%
868,512,659
22.26%(of Reserve)
2,914,724
0.07%(of Reserve)
687,088,167
17.61%(of Reserve)
General reserve
170,000,000
4.36%(of Reserve)
120,000,000
3.08%(of Reserve)
Revaluation reserve
2,053,018,703
52.62%(of Reserve)
273,086,344
Non-controlling interest
344
5,176,646,021
Associate
Risk
Particulars
Amount
Proportional
to
Total Liabilities (%)
658,163,955
9.06%
281,874,870
42.83%(of BoF)
265,351,755
40.32%(of BoF)
76,171,042
11.57%(of BoF)
34,766,288
5.28%(of BoF)
Premium deposit
35,960,887
0.50%
1,390,501,403
19.15%
Associate
Risk
Bank overdraft
72,253,488
Total liabilities
2,084,626,245
7,261,272,266
Credit Ris