History Of Insurance Business In Bangladesh:

History of Insurance in Bangladesh:

The origin of insurance is lost in antiquity. However, there is no evidence that insurance in its
present form was practice prior to the twelfth century. A brief chronological historical
development of the various branches of insurance is given below:
Marine Insurance:
Marine is the oldest form of insurance and came first in the list. This type of insurance probably
began in northern Italy sometime during the 12th& 13thcentury and gradually the concept was
rather transferred to or taken over by the United Kingdom. During the 13th/ 14thcentury the
Italian merchants went to UK and along with the merchandise carried with them the trading
customs including the concept of marine insurance. Marine insurance as such was not being
practiced as a separate specialized entity during that time since it were the merchants who used
to transact marine insurance business side by side with their general trading activities
Fire insurance:
After marine insurance fire insurance has been developed in present form. It had been observed
in Anglo-section Guild form for the first time where the victims of the fire hazards were given
personal assistance by providing necessaries of life. It15 had been originated in Germany in the
beginning of sixteenth century. The fire insurance got momentum in England after the great fire
in 1666 when the fire losses were tremendous.
Life insurance:
The third in the list of development is the life insurance business. The earliest policy of which
there is a record dates back to 1583. During this period only short term polices were used be
issued meaning that only at the death of the life assured during the term period the money was to
be paid. On survival nothing was payable. In 1693 Halley introduced the mortality table giving a
definite value to risk of death. In 1974, the life Assurance Act was passed in the British
parliament requiring the presence of insurable interest before one could effect a life policy on the
life of another. All these gradually gave life assurance a sound, systematic and scientific basis as
we see in the present day.2.3 Development of Insurance in Bangladesh Insurance is not a new
idea or proposition to the people of Bangladesh
Current pattern of Insurance in Bangladesh:
After the emergence of the Peoples Republic of Bangladesh in 1971, the government
nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95.By
virtue of this order, all companies and organization transacting all types of insurance business in
Bangladesh came under this nationalization order. This was followed by creation of five
insurance companies in the life and non-life sector. Further changes were brought on 14th
May,1973. Through the enactment of Insurance Corporation Act VI, 1973 which led to creation

of two corporations namely Sadharan Bima Corporation for general insurance and, Jiban
Bima Corporation for life insurance in Bangladesh. In other words Sadharan Bima
Corporation (SBC) emerged on 14th May, 1973 under the Insurance Corporation Act (Act No.
VI) Of 1973 as the only state owned organization to deal with all classes of general insurance &
re-insurance business emanating in Bangladesh. 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 private sector availed the
opportunity promptly and came forward to establish private insurance companies through
promulgation of the Insurance Corporations (Amendment) Ordinance (LI of 1984) 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. 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. 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. In respect of reinsurance, the same act provides that fifty percent of a
companys reinsurance business must be placed with the Sadharan Bima Corporation and
remaining fifty percent may beer insured either with this Corporation or with any insurer in
Bangladesh or abroad. At present, nearly all the companys place 100% of their reinsurance
business with the SBC.
Parliament on 03 March 2010 passed two insurance laws in a bid to further strengthen the
regulatory framework and make the industry operationally vibrant. The new laws, came in to
effect on 18 March 2010, are Insurance Act 2010 and IDRA 2010.
There are 77 insurance companies operating in the country and they need to be regulated under
comprehensive laws and guidelines and supervised by a strong regulatory authority. The
Insurance Act 2010 said the sector needs to be managed properly and he strengthened by
reducing business risks, and local and international insurance laws need to be harmonized
considering the socio-economic aspect of the country, and protect the interest of policy holders
and other beneficiaries.
Vision
To make the insurance industry the premier financial service provider in the country and beyond
focusing an efficient corporate sector and capital market securing ever evolving aspiration of
society penetrating deep into all segments for high economic growth.

Mission
Our mission is to protect the interest of the policy holders and other stakeholders under insurance
policy, supervise and regulate the insurance industry effectively, ensure orderly and systematic
growth of the insurance industry and for matters connected therewith or incidental thereto.
Value
Ethical norms, unbiased treatment, integrity, blind review, high standard, continuous
improvement.
Insurance Act:
THE

INSURANCE

ACT,

1938