Specimen of an Assignment

Subject: Principles of Insurance

Assignment-Performance of a Life Insurance Company

Introduction

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 specialised in dealing in a particular class of business, while others were composite companies that dealt in more than one class of business.

The postal life insurance business and the life insurance business by foreign companies were still allowed to continue as before. In reality, however, only the American life insurance company. continued to operate in the life sector for both new business and servicing, while three other foreign life insurance continued to operate only for servicing their old policies issued during Pakistan days. Postal life maintained its business as before As many as 62 insurance companies are currently operating in the country. Of them, 19 are life insurance and 43 general insurance companies.

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Year -2009

Name of the Company

Premium Income

Net premium Net claims Income

Tax Dividend Investment Fixed Deposits1st Year Renewal

Group term & others

Total

National Life Ins. Co. Ltd.

819,066,552

2,685,349,069

33,432,689

3,537,848,310

3,534,101,019

1,354,934,490

20,713,347

-

2,788,301,710

4,837,223,854

Delta Life Ins. Co. Ltd 823,020,913

2,449,959,507

138,861,336

3,411,841,756

3,382,289,805

1,771,829,269

-

-

4,901,770,766

5,059,354,660

Comments/Observation

Performance of ……………life insurance company…

We can observe from the above table that this company earned net premium income Tk 3537848310 wheras paid claim Tk 1354934490 .That means ……………% claim paid from Net premium. This life company has remarkable investment Tk….. 2788301710.

………………………………………………………………………………………………….

Bangladesh Insurance Market

The government of Bangladesh nationalised insurance industry in 1972 by the Bangladesh Insurance (Nationalisation) Order 1972. By virtue of this order, save and except postal life insurance and foreign life insurance companies, all 49 insurance companies and organisations 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 1973, general insurance business became the sole responsibility of the Sadharan Bima Corporation. Life insurance business was carried out by the Jiban Bima Corporation, the American Life insurance Company, and the Postal Life Insurance Department until 1994, when a change was made in the structural arrangement to keep pace with the new economic trend of liberalisation.

The privatisation policy adopted in the 1980s paved the way for a number of insurers to emerge in the private sector. This resulted in a substantial growth of premium incomes, competition, improvement in services, and introduction of newer types of business in wider fields hitherto untapped. Prior to privatisation, the yearly gross premium volume of the country was approximately Tk 900 million in general insurance business and approximately Tk 800 million in life insurance business. In 2000, premium incomes rose to Tk 4,000 million in general insurance business and Tk 5,000 million in life insurance business.

Conclusion

In the life sector, the rate of annual growth is around 25-27 per cent. This is otherwise quite impressive. But in a country with population of 140 million the per capita insurance it is very low which is, in per capita terms, only approximately Tk. 150, while in Pakistan this amount is more than Pakistan rupee 300 and in India more than Indian rupee 700. Some 700 to 900, out of every thousand population, are covered by insurance in most developed countries viz, the USA, France, Japan, the UK etc. Even in some developing countries like Pakistan, India, and Thailand this number is 100, 150 and 70 respectively. But this number is not yet more than 10 in Bangladesh. Insurance premium as a percentage of GDP is around 14 per cent for Japan, 13 per cent for South Africa, 12 per cent for South Korea, 9.0 per cent for UK and 2.0 per cent in India while for Bangladesh it is less than 0.1 per cent. Undercutting of premium rates especially in group insurance, high rate of rebate in tabular rates of premium, high lapse ratio, acute shortage of professionally qualified executives, low return on investment of insurance fund compared to other investments etc., are some of the acute drawbacks. All these problems hamper seriously the development of life insurance in Bangladesh.