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Principles of Insurance & Takaful

Course Title:. Principles of Insurance & Takaful. Course Code:. FIN-4704. . Course Teacher:-. Md. Azizur Rahman Lecturer ,DBA International Islamic University Chittagong, DC. We now …… . Noor Hossain Imran E-mail: nimranbd@gmail.com. Out line of our presentation.

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Principles of Insurance & Takaful

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  1. Course Title: Principles of Insurance & Takaful Course Code: FIN-4704

  2. Course Teacher:- Md. AzizurRahman Lecturer ,DBA International Islamic University Chittagong,DC

  3. We now……. NoorHossainImran E-mail: nimranbd@gmail.com

  4. Out line of our presentation 01. History of Insurance In Bangladesh 02. Present Pattern of Insurance In Bangladesh 03. Role of Private Insurance Companies 04. Problems & Prospects of Insurance Business In Bangladesh.

  5. Marine is the oldest form of insurance, which was introduced in Northern Italy sometime between the 12th and 13th century. But the insurance business got in late 17th century. Insurance is not new business in Bangladesh. Almost a century back, during British rule in India, some insurance companies started transacting business, both life and general, in Bangladesh 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 like British, Australian, Indian, West Pakistan and local

  6. Ten insurance companies had their head offices in East Pakistan, 27 in West Pakistan, and rest elsewhere in the world. These were mostly limited liability companies.

  7. The Government of Bangladesh nationalized insurance industry in 1972 by the Bangladesh Insurance (Nationalization) Order 1972.By virtue of this order, saves and except postal life insurance and foreign life insurance companies, all 49insurance companies and organizations transacting insurance business in the country were placed in the sector under fie operations. These operations were :the JatiyaBimaCorporation,TistaBimaCorporation,KarnafuliBimaCorporation,RupsaJibonBima Corporation and SurmaJibonBimaCorpporation.TheJatiyaBima

  8. The JatiyaBima Corporation was an apex corporation only to supervise and control the activities of the other insurance corporations • Tista and KarnafuliBima Corporation were for general insurance and Rupsa and Surma for life insuance.The specialist life insurance companies or for a 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.

  9. The basic idea behind the formation of four underwriting corporations, two in each main branch of life and general that Act 1973 two: the SADHARAN BIMA CORPORATION for general business, and JIBAN BIMA CORPORATION for life 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.

  10. After1973, general insurance business became the sole responsibility of the SadharanBima Corporation. Life insurance business was carried out by the JibonBima Corporation, the American Life insurance Company, and the Postal Life Insurance ,until1 994 • The insurance corporations Act1973 were amended in 1984 to allow insurance companies in the private sector • The Act of 1984 made it a requirement for the private sector insurance companies obtain 100% reinsurance protection from the SadharanBimaCorporation.This virtually turned SadharanBima Corporation into a reinsurance organization

  11. Underwrite both public and private sector insurance business in competition with the SadharanBimaCorporation, and The government modified the system through promulgation of the Insurance Corporation (Amendment) Act1990.The changes allowed private sector insurance companies to underwrite 50% for public50% with any reinsure of their choice, at home or aboard, keeping the remaining for placement with the SadharanBima corporation.

  12. Summary • East Pakistan during 1947-1971 • The Government of Bangladesh nationalized insurance industry in 1972 by the Bangladesh Insurance (Nationalization) Order 1972. • 49 work in the JatiyaBimaCorporation,TistaBimaCorporation,KarnafuliBimaCorporation,RupsaJibonBima Corporation and SurmaJibonBimaCorpporation.TheJatiyaBima • The JatiyaBima Corporation was an apex corporation only to supervise and control the activities of the other insurance corporatio • 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

  13. Tista and KarnafuliBimaCorporation were for general insurance • Rupsa and Surma for life insuance • two in each main branch of life and general that Act 1973 two: the SADHARAN BIMA CORPORATION for general business, and JIBAN BIMA CORPORATION for life business. • After1973, general insurance business became the sole responsibility of the SadharanBima Corporation. Life insurance business was carried out by the JibonBima Corporation, the American Life insurance Company, and the Postal Life Insurance ,until1 994 • The insurance corporations Act1973 were amended in 1984 • underwrite in private sector insurance 1984 100% Act1990 50%

  14. After the emergence of the People’s Republic of Bangladesh in 1971, the governmentnationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95. Insurance business in Bangladesh came under this nationalization order. • Thereafter SBC was acting as the sole insurer of general Insurance till 1984. Bangladesh Government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. • The Insurance Market in Bangladesh now consists of two state-owned corporations, forty three and seventeen private sector general & life insurance companies respectively, a total of 62insurance companies. Thus the insurance sector in Bangladesh has grown up substantially and deepened remarkably with number of companies in both life and general segments. With the expansion of size of the insurance market, the volume of assets of the industry has also increased substantially.

  15. SBC is entitled to 50% of public sector business. Insurance Corporation (Amendment) Act 1990 provides that fifty percent 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 fifty percent of such business may be placed with this corporation or with any other insurers in Bangladesh. • In respect of reinsurance, the same act provides that fifty percent of a company’s reinsurance business must be placed with the SadharanBimaCorporation and remaining fifty percent may be reinsured either with this Corporation or with any insurer in Bangladesh or abroad. At present, nearly all the company’s place 100% of their reinsurance business with the SBC

  16. Formation of capital & increase of investment: Insurance companies receive premiums from insured persons. These premiums increase national capitals. By investing these capitals, national productions increase. • Reduce of hindrance of risk: every sorts of business consists of risks. These risks are more hazardous in Bangladesh. Insurance companies minimize these risks by giving privileges on loss. • Maintenance of national wealth: insurance companies not only secure financial facts, but also influence people to take necessary steps to avoid risks.

  17. Distribution of risks: insurance companies deal with lots of insured people. So risks are being distributed among them. • Extension of business: By taking all uncertain business risk insurance companies extended the field of business in our country. Insurance gives the assurance of indemnity and help to collect the capital to launch a new business and expand the existing business. • Increase of awareness: As the maximum people of our country are illiterate so they have not much knowledge about the future life and what will do to enhance the living standard. Different types of advertisement, publicity and others awareness activities of insurance company which helps to increase the awareness of general people.

  18. Increase of employment facilities: Insurance companies help to expand the business by providing capital and reducing risk. That’s why in this business organization there are lot of employment opportunity are created. • Increasing national income: Insurance companies directly help to increase national income by developing business sector and create employment opportunities in our country.

  19. Problem and prospect of insurance business in Bangladesh 1.Weak Economy: The development of insurance business dependable to the development of economy of deferent sectors. But in Bangladesh there are many lacking to the development of economy. • 2.Lack of capital: It needs to establish many branches in different country. It requires lots of capital. But lack of capital in our country. 3.Lower Rate Of Savings: In our country the average income of our people is very low. Life insurance and other insurance are mostly dependable on the saving of the people. So it creates the Problems.

  20. 4.Weakness in Industrial Sector: BANGLADESH is an agricultural country; the industrial sector of their country is poor. 6.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. 7.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.

  21. 8.When Promises Do Not Match Delivery: Customers perceive that organizations are delivering low-quality service, because different between promise level and delivery level. 9.The discrepancy between customer expectations and their perceptions of the service delivered 10.The discrepancy between customer expectations and employees’ perceptions: as a result of the differences in the under standing of customer expectations by front- line service providers.

  22. Prospect…………. 1. 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 to speared of insurance education 2. Publicity & increase of awareness: Mass publicity activities are very essential to overcome from unwillingness wrong idea, doubt & unbelief of the people this country. 3. Increase of training facilities: To continue the insurance business effective

  23. 4. Formulation of effective Principles: Long term formulation of effective principles is compulsory to continue the insurance business successfully. 5. Uphold the interest of policy holder 6. Importance to the economic development: Insurance business is depending on the development of the different sector of economic . 7. Modernization of insurance Business: In this country for developing insurance business modernization of insurance business and necessity new ideas must be added in this sector.

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