This topic was my assignment of FIN-424 Course.

1. An Assignment
On
“Role of insurance company in Bangladesh Economy”
Course Title:
Management of Banking and non-Banking Financial Institutions
Course Code: FIN-424
Submitted to:
Dr. Md. Sujahangir Kabir Sarkar
Associate Professor
Department of Economics
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Submitted by:
Md. Al-amin
ID. No: 1203033;
Reg. No: 03578
(Level: 4, Semester: II)
BBA Program
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Date of Submission: 27th
0ctober, 2016
Patuakhali Science and Technology University
Dumki,Patuakhali 8602

2. Table of Contents
Topics no. Head of Topics Page no.
01.
1. Introduction
1-21.1 Introduction
1.2 Methods of insurance
1.3 Type of insurance
02.
2. Insurance Industry In Bangladesh
3-5
2.1 History of insurance in Bangladesh
0.3
3. Top 12 Insurance Companies in Bangladesh
6-7
List of Companies name
0.4
4. Functions of insurance Company
8-10
4.1 Primary Functions
4.2 Secondary Functions
0.5
5. Role of Insurance Companies in the Economic
Development of Bangladesh.
11-14
Particulars role of Insurance Company
0.6
6. Conclusion
15
Concluding remarks
0.7
7. References
16
List of references

3. 1. Introduction
1.1 Introduction:
Insurance is a means of protection from financial loss. It is a form of risk management
primarily used to hedge against the risk of a contingent, uncertain loss. An entity which
provides insurance is known as an insurer, insurance company, or insurance carrier. A person
or entity who buys insurance is known as an insured or policyholder. The insurance transaction
involves the insured assuming a guaranteed and known relatively small loss in the form of
payment to the insurer in exchange for the insurer's promise to compensate the insured in the
event of a covered loss. The loss may or may not be financial, but it must be reducible to
financial terms, and must involve something in which the insured has an insurable interest
established by ownership, possession, or preexisting relationship.
Insurance involves pooling funds from many insured entities (known as exposures) to pay for
the losses that some may incur. The insured entities are therefore protected from risk for a fee,
with the fee being dependent upon the frequency and severity of the event occurring. In order
to be an insurable risk, the risk insured against must meet certain characteristics. Insurance as
a financial intermediary is a commercial enterprise and a major part of the financial services
industry, but individual entities can also self-insure through saving money for possible future
losses
1.2 Methods of insurance:
In accordance with study books of The Chartered Insurance Institute, there are the following
types of insurance:
1. Co-insurance – risks shared between insurers
2. Dual insurance – risks having two or more policies with same coverage (Both the
individual policies would not pay separately- a concept named contribution, and would
contribute together to make up the policyholder's losses. However, in case of
contingency insurances like Life insurance, dual payment is allowed)
3. Self-insurance – situations where risk is not transferred to insurance companies and
solely retained by the entities or individuals themselves
4. Reinsurance – situations when Insurer passes some part of or all risks to another Insurer
called Reinsurer
1.3 Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give
rise to claims are known as perils. An insurance policy will set out in detail which perils are
covered by the policy and which are not. Below are non-exhaustive lists of the many different
types of insurance that exist. A single policy may cover risks in one or more of the categories
set out below. For example, vehicle insurance would typically cover both the property risk
(theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A
home insurance policy in the United States typically includes coverage for damage to the home
and the owner's belongings, certain legal claims against the owner, and even a small amount of
coverage for medical expenses of guests who are injured on the owner's property.

4.  Auto insurance: Auto insurance protects the policyholder against financial loss in the
event of an incident involving a vehicle they own, such as in a traffic collision.
Coverage typically includes:
 Property coverage, for damage to or theft of the car
 Liability coverage, for the legal responsibility to others for bodily injury or
property damage
 Medical coverage, for the cost of treating injuries, rehabilitation and sometimes
lost wages and funeral expenses
 Health insurance: Health insurance policies cover the cost of medical treatments. Dental
insurance, like medical insurance, protects policyholders for dental costs. In most
developed countries, all citizens receive some health coverage from their governments,
paid for by taxation. In most countries, health insurance is often part of an employer's
benefits.
 Life insurance is an insurance coverage that pays out a certain amount of money to the
insured or their specified beneficiaries upon a certain event such as death of the
individual who is insured. This protection is also offered in a Family takaful plan, a
Shariah-based approach to protecting you and your family.
The coverage period for life insurance is usually more than a year. So this requires
periodic premium payments, either monthly, quarterly or annually.

5. 2. Insurance Industry in Bangladesh
The growth of insurance industry in Bangladesh has made a moderate progress in 2007. Per
capita spending on insurance is still less than $3 while insurance penetration, measured on
premium as a percentage of GDP, also below 1%. According to the Bangladesh Insurance
Association, gross premium income of the country’s insurance sector has reached at Tk 38.55
billion in 2007. Of the total premium income, general insurance company’s income was Tk.
9.39 billion while Tk. 29.16 billion generated from the life insurance business. The private
sector operators consolidated their foothold in the insurance business during the last decade.
The non- life insurance company’s gross investment stood at Tk. 8.58 billion in 2007 which
was Tk. 7.72 billion in 2006. The total assets of the private non-life insurance companies
increased to Tk. 19.83 billion at the end of December 2007 from Tk. 15.50 billion as of
December 2006. Although, no upto date statistics on insurance business for 2008 is available
so far, initial estimation shows that private insurance companies are expecting around 25%
growth in the premium income. The combined premium incomes of both the non-life and life
insurers are estimated at Tk. 48.58 billion in the 2008, of which non-life’s share is Tk. 11.26
billion. Despite, political uncertainty, natural calamities, economic slowdown and lack of major
investment and infrastructure projects, the growth of insurance premium appeared reasonable.
Intensification of marketing drive and introduction of new products (policies) helped the
Insurance Companies to attain a positive business growth.
Growing importance of the industry in the financial system and its increasing economic
significance in other developing countries highlights the fact that, the industry needs a closer
attention for its future development. As different sectors of the financial system are closely
related to each other, risks of a particular sector can easily transmit to the other sectors of the
system. Therefore effective monitoring and supervision of the insurance industry is crucial not
only to guide the industry in efficient management of risks faced by economic agents but also
to mobilize long term savings for the economy, and thereby allocate the funds to facilitate long
term investment.
2.1 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

6. Fire insurance:
After marine insurance fire insurance 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 People’s 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 BimaCorporation 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 theonly 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

7. 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 company’s 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 company’s place 100% of their
reinsurance business with the SBC.

8. 3. Top 12 Insurance Companies in Bangladesh:
Insurance service in Bangladesh are developing as local people have got more conscious about
the security of what they belong. Promising service of some companies has established the trust
and people of Bangladesh turn to them on and on with optimism.
American Life Insurance Co
This is one of the earliest insurance companies in Bangladesh, working from 1952. Even
though the concept as well as the company comes from America, they have successfully
adopted it to suit the needs and expectations of Bangladeshi people and have reached the top
position in the country.
More than a million Bangladeshis depend on American Life Insurance Company (Alico) with
thousands of agents working for them, which has also created local jobs. All sorts of insurance
plans are available to suit everybody’s need in the society.
Jiban Bima Corporation
The words Jiban and Bima mean Life Insurance in Bengali (official language of Bangladesh).
This is a state owned insurance company, providing life and other kinds of insurance services
to citizens. Located in Dhaka, Jiban Bima Corporation has branches all over Bangladesh and
touches millions of people every day. It has created a wide range of plans to suit people in all
economic groups, which has proved to be a big success.
Delta Life Insurance Co Ltd
In 1984, Bangladesh Government allowed private sectors in insurance industry, which led to
the creation of Delta Life Insurance Co Ltd, started by number of Bangladeshi citizens then
working abroad. They started this because they wanted their fellow citizens to get the top class
insurance services which are common in western countries.
From their first day, Delta life insurance has been working with the same goal in mind, growing
to a large organization today. They have designed plans keeping the expectations of the society
in mind, which is the primary reason for their success.
Popular Life Insurance Co Ltd
This unique organization started its journey with the goal of reaching every insurable citizen
in Bangladesh. There were many companies, but they didn’t have means to reach out to all of
them. Popular Life Insurance Co Ltd achieved this by designing unique schemes and
campaigns to bring everyone under their protection. They achieved this by providing number
of schemes which focused on the direct benefits. They indirectly provided the protection which
is the essential reason for doing insurance. Hundreds of agents are working with public directly
to ensure the movement is constantly moving forward.
Shandhani Life Insurance Co Ltd
This organization is operating for 25 years, creating a change in the society by their ‘micro
insurance’ segment. People or the general consumers may not buy insurance mainly due to

9. cost. Shandhani life insurance approached them with smaller policies which are a good start,
and would bring them to the regular fold, as they grow socially and economically.
With this focus, Shandhani Life Insurance Co Ltd reached out to hundreds of thousands of poor
people, while keeping the focus on big customers as well. This approach has helped this
company to reach the top position with a great impact on the society.
Meghna Life Insurance Co Ltd
This company was started by many Bangladeshis who wondered if they can participate in the
growth of the nation. They decided a life insurance company would be the ideal start and with
their dream, Meghna Life Insurance Co Ltd was born in 1996. They focused on providing
services at the right price, with modern facilities. Their efforts, in the next decade, brought this
company to a great reputation in the country. They work with people from all backgrounds and
provide services to all kinds of individuals and corporate organizations.
Takaful Islami Insurance Ltd
Being an Islamic country, Bangladesh’s needs with respect to any investment may be guided
by their religious principles too. Hence, most insurance companies provide policies keeping
this in mind and Takaful Islamic Insurance Ltd specializes in providing unique schemes, which
are Islamic in nature.
This company operates in both life and nonlife sectors. It has established a very effective
network to work with the entire nation via its officers. This works particularly well in the
individual insurance policies.
Pragati Insurance Co Ltd
This is a leading non-life insurance company in Bangladesh. It provides schemes such as
Mediclaim Insurance, Accident Insurance, Building Insurance, Factory Based Insurance,
Aviation Insurance, Home Insurance etc. Based on the type of the insurance and the way
Bangladesh culture sees it, they have designed their policies so that it is accepted well. Their
success journey is a proof to this. Today, the company has reached a top position by getting a
credible rating by number of financial analysis companies. They invest in the right areas to
improve their value to investors. As a result, it has grown to a top position in the country.
Padma Life Insurance Co Ltd
This is another Islamic insurance company in Bangladesh with a great track record and success.
It focuses on Life insurance segment, earning the confidence of Bangladeshi public from all
walks.
Their plans are designed keeping the security as well as growth aspects in mind. Depending on
the need of the customer, they will be able to choose the best one that suits them and get
maximum returns.

10. Sunlife Insurance Co Ltd
Started by businessmen from various fields, this company focuses on customer security and
benefits from 2000. They went public in 2012 and today, operating as one the top insurance
companies in Bangladesh.
Specialty of this company is its focus on even the smallest member of the society. Their officers
work with all kinds of people to ensure they are sufficiently protected. This has brought a social
change, as well as a successful company.
Golden Life Insurance Co Ltd
This company splits its services into two parts, macro insurance and micro insurance. Based
on the needs of its customers, it selects the right scheme. This approach has given them great
many opportunities to grow with full support of public.
Headquartered in Dhaka, Golden Life Insurance Co Ltd has branches all over the country and
the officers of the company work directly with public to educate them about their insurance
needs. This direct approach is the primary reason for Golden Life Insurance Co Ltd growing
to the top position in Bangladesh.
Rupali Life Insurance Co Ltd
Established in year 2000, this company has grown from a small position to a large success,
mainly due to its strong backbone support from investors and the passionate work from agent
officers. Their schemes are designed to suit the segments they work on, which has connected
well with the customers.
They focus on promoting local talent. This ensures that the representatives of Rupali Life
Insurance Co Ltd will never be a stranger to the potential prospects. This approach has created
jobs for the country and helped many people stay protected helping the society.
As their vision statement says, they want to be the “best life insurance company of choice
among Life Insurance Companies”. This goal is the primary motivation for their staff, resulting
in this success. On the process, they have ensured financial security for hundreds of thousands
of Bangladeshi citizens

11. 4. Functions of insurance company:
Insurance is defined as a co-operative device to spread the loss caused by a particular risk over
a number of persons who are exposed to it and who agree to ensure themselves against that
risk. Risk is uncertainty of a financial loss. It should not be confused with the chance of loss
which is the probable number of losses out of a given number of exposures.
It should not be confused with peril which is defined as the cause of loss or with hazard which
is a condition that may increase the chance of loss.
Finally, risk must not be confused with loss itself which is the unintentional decline in or
disappearance of value arising from a contingency. Wherever there is uncertainty with respect
to a probable loss there is risk.
Every risk involves the loss of one or other kind. The function of insurance is to spread the loss
over a large number of persons who are agreed to co-operate each other at the time of loss. The
risk cannot be averted but loss occurring due to a certain risk can be distributed amongst the
agreed persons. They are agreed to share the loss because the chances of loss, i.e., the time,
amount, to a person are not known.
Anybody of them may suffer loss to a given risk, so, the rest of the persons who are agreed will
share the loss. The larger the number of such persons the easier the process of distribution of
loss, In fact; the loss is shared by them by payment of premium which is calculated on the
probability of loss.
In olden time, the contribution by the persons was made at the time of loss. The insurance is
also defined as a social device to accumulate funds to meet the uncertain losses arising through
a certain risk to a person insured against the risk.
The functions of insurance can be studied into two parts (i) Primary Functions, and (ii)
Secondary Functions.
4.1 Primary Functions:
(i) Insurance provides certainty:
Insurance provides certainty of payment at the uncertainty of loss. The uncertainty of loss can
be reduced by better planning and administration. But, the insurance relieves the person from
such difficult task. Moreover, if the subject matters are not adequate, the self-provision may
prove costlier.
There are different types of uncertainty in a risk. The risk will occur or not, when will occur,
how much loss will be there? In other words, there are uncertainty of happening of time and
amount of loss. Insurance removes all these uncertainty and the assured is given certainty of
payment of loss. The insurer charges premium for providing the said certainty.
(ii) Insurance provides protection:
The main function of the insurance is to provide protection against the probable chances of
loss. The time and amount of loss are uncertain and at the happening of risk, the person will
suffer loss in absence of insurance. The insurance guarantees the payment of loss and thus

12. protects the assured from sufferings. The insurance cannot check the happening of risk but can
provide for losses at the happening of the risk.
(iii) Risk-Sharing:
The risk is uncertain, and therefore, the loss arising from the risk is also uncertain. When risk
takes place, the loss is shared by all the persons who are exposed to the risk. The risk-sharing
in ancient time was done only at time of damage or death; but today, on the basis of probability
of risk, the share is obtained from each and every insured in the shape of premium without
which protection is not guaranteed by the insurer.
4.2 Secondary functions:
Besides the above primary functions, the insurance works for the following functions:
(i) Prevention of Loss:
The insurance joins hands with those institutions which are engaged in preventing the losses
of the society because the reduction in loss causes lesser payment to the assured and so more
saving is possible which will assist in reducing the premium. Lesser premium invites more
business and more business cause lesser share to the assured.
So again premium is reduced to, which will stimulate more business and more protection to the
masses. Therefore, the insurance assist financially to the health organisation, fire brigade,
educational institutions and other organisations which are engaged in preventing the losses of
the masses from death or damage.
(ii) It Provides Capital:
The insurance provides capital to the society. The accumulated funds are invested in productive
channel. The dearth of capital of the society is minimised to a greater extent with the help of
investment of insurance. The industry, the business and the individual are benefited by the
investment and loans of the insurers.
(iii) It Improves Efficiency:
The insurance eliminates worries and miseries of losses at death and destruction of property.
The carefree person can devote his body and soul together for better achievement. It improves
not only his efficiency, but the efficiencies of the masses are also advanced.
(iv) It helps Economic Progress:
The insurance by protecting the society from huge losses of damage, destruction and death,
provides an initiative to work hard for the betterment of the masses. The next factor of
economic progress, the capital, is also immensely provided by the masses. The property, the
valuable assets, the man, the machine and the society cannot lose much at the disaster.

13. 5. Role of Insurance Companies in the Economic Development of Bangladesh
— 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.
— 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 lunch a new business and expand the existing
business.
— Provide safety and security:
Insurance provide financial support and reduce uncertainties in business and human life. It
provides safety and security against particular event. There is always a fear of sudden loss.
Insurance provides a cover against any sudden loss. For example, in case of life insurance
financial assistance is provided to the family of the insured on his death. In case of other
insurance security is provided against the loss due to fire, marine, accidents etc.
— Generates financial resources:
Insurance generate funds by collecting premium. These funds are invested in government
securities and stock. These funds are gainfully employed in industrial development of a country
for generating more funds and utilised for the economic development of the country.
Employment opportunities are increased by big investments leading to capital formation.
— Life insurance encourages savings:
Insurance does not only protect against risks and uncertainties, but also provides an investment
channel too. Life insurance enables systematic savings due to payment of regular premium.
Life insurance provides a mode of investment. It develops a habit of saving money by paying
premium. The insured get the lump sum amount at the maturity of the contract. Thus life
insurance encourages savings.
— Promotes economic growth:
Insurance generates significant impact on the economy by mobilizing domestic savings.
Insurance turn accumulated capital into productive investments. Insurance enables to mitigate
loss, financial stability and promotes trade and commerce activities those results into economic
growth and development. Thus, insurance plays a crucial role in sustainable growth of an
economy.

14. — Medical support:
A medical insurance considered essential in managing risk in health. Anyone can be a victim
of critical illness unexpectedly. And rising medical expense is of great concern. Medical
Insurance is one of the insurance policies that cater for different type of health risks. The
insured gets a medical support in case of medical insurance policy.
— Spreading of risk:
Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of
insurance is to spread risk among a large number of people. A large number of persons get
insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated
out of funds of the insurer.
— Source of collecting funds:
Large funds are collected by the way of premium. These funds are utilised in the industrial
development of a country, which accelerates the economic growth. Employment opportunities
are increased by such big investments. Thus, insurance has become an important source of
capital formation.
Others Contribution
 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
 Reinsurance Services:
Sadharan Bima Corporation in its role as a re-insurer has lent support to the private insurance
companies in Bangladesh in a big way. In view of the huge networth and retention capacity,
SBC has accepted both treaty and facultative businesses from the private insurance companies.
SBC also accepts reinsurance business from overseas market through its intermediaries and as
well as directly.
 Industrial development through equity participation:
SBC plays a vital role in the industrial development of Bangladesh. SBC is the sponsor
shareholder of Investment Corporation of Bangladesh, Industrial Development and Leasing
Company, National Tea Company Limited, National Housing Finance and Investment Ltd,
Aramit Ltd, Central Depository BD Ltd.etc. SBC has huge amount of fixed deposit reserve
with various commercial banks in Bangladesh.
 Risk Improvement Services:
SBC would always endeavor to deliver the best customer services for the fulfillment of
insurance, reinsurance and risk management needs and problems to the insurance market in

15. Bangladesh. On the other hand, SBC provides risk improvement services to its valued clients
through Pre-underwriting inspection services. SBC has the opportunity to take the necessary
help and advice from the foreign reinsurer regarding risk improvement techniques.
 Human resources development for insurance industry:
To develop the human resource for the insurance industry in Bangladesh. SBC has
arranged professional training for its officers & staffs both within the country and
abroad. SBC also arranged professional training for the officers of the private insurance
companies operating in Bangladesh.
 Obtaining financing. Consumers cannot obtain a loan to purchase a home, car, boat or
airplane without proof of insurance. Likewise, business owners and would-be
entrepreneurs cannot obtain financing to buy a commercial building or commercial
equipment, or to otherwise invest in their business, without proof of insurance. Lenders
won’t lend without proof of insurance, because the risk would be too high. Without
financing, businesses are unable to expand, and when businesses are unable to expand,
they do not create jobs. In fact, they may lay off some of their employees. Without jobs,
consumers have less money to spend and the economy stagnates. Over time, peoples’
quality of life suffers because their income decreases.
 Expanding business. Whether businesses are launching a new product, signing a new
sales contract or purchasing a new company, the business needs assurances that the
other party is conducting business in good faith. Insurance provides the necessary
protection, in case business doesn’t proceed as planned. Likewise, businesses would be
reluctant to hire new employees if not for workers’ compensation insurance, which
protects the employer while providing the employee with income when an accident
temporarily puts the employee out of work.
 Paying claims. The U.S. insurance industry pays out more than $300 billion a year in
policy benefits and claims. These funds help insured consumers and businesses recover
from their losses, whether it’s a loss of property, the loss from a lawsuit or the loss of a
loved one. Funds paid out by insurers enable people to rebuild, maintain their lifestyle
after a breadwinner dies or becomes disabled, and replace property that is stolen or
damaged. For businesses, payment from claims may be necessary for a business to
continue operating, but insurance is also used to plan for succession, protect intellectual
property and pay damages from unanticipated liability. As just one example of the
benefit of insurance, consider the rebuilding taking place in New York and New Jersey
as a result of damage caused last year by Superstore Sandy. While some claims are still
being worked out, insurance companies will end up contributing $10 billion to $20
billion toward the damages caused by Sandy.
 Funding development. Funds from premiums that are not used to pay claims and
operating expenses are invested by insurance companies. Insurers have $1.4 trillion
invested in the U.S. economy, according to the Insurance Information Institute (III).
 Insurance companies invest in bonds that are used to finance major projects, both in the
public sector and the private sector. They invest in commercial and retail development,
apartment buildings and other projects. They also invest in stocks, which increases
prices, to the benefit of all investors.

16.  The International Association of Insurance Supervisors (IAIS) noted that by
investing in bonds and other securities issued by financial institutions, insurance
companies provide “an important contribution to the financial soundness of banks and
more broadly to financial stability. In a similar fashion insurers are also allocating
capital to the real economy by purchasing debt securities of industrial companies or
through real estate investments.”
 Paying taxes. Insurance companies and their employees pay taxes, which fund
government programs that help needy people, contribute to education, protect the
country, and maintain and expand the infrastructure.
 Managing their business. The III notes that there are 6,115 insurance companies in
the United States, and they accounted for 2.6 percent ($398 billion) of the country’s
gross domestic product (GDP) in 2011. The U.S. insurance industry employed 2.3
million people in 2012, including 1.4 million who worked directly for insurance
companies.

17. 6. Concluding Remarks:
To conclude, I would like to mention that the whole internship period was a significantly
knowledgeable journey for me which allowed me to learn and improve my skills and I hope
the significant experience will allow and help me to build a better career in future. I think
Insurance Industry is playing a significant role in the economic improvement of Bangladesh
through its risk sharing operations which motivate investment in many important businesses.
The government has now embarked on a reform program me in the insurance sector to promote
a vibrant insurance sector in our country. As a first step towards achieving the objective, the
Insurance Act, 2011 in replacement of the previous Insurance Act, 1938, and the Insurance
Development and Regulatory Authority Act, 2011 also has been passed for establishing a
stronger insurance sector in Bangladesh. I am upbeat that the new laws will help the entire
insurance industry of Bangladesh to face the challenges of the time and thus bring dynamism
in this sector. While I am genuinely joyous, I also would like to say that the proper
implementation of the new act is extremely important. As the Insurance Act 2011 is for the
insurance industry, the concerned authority should consider the interests of the insurance
companies of Bangladesh as well as the stakeholders ‘interests. Strict transparency and
discipline need to be there where around 3.0 million people are involved. In this regard I
support the stand of the Bangladesh Insurance Association that has stressed the need for
formation of the Insurance Development and Regulatory Authority and formulate necessary
rules and regulations to make the new laws effective and purposeful.
In the era of globalization, domestic market should be well organized while the legal
framework should be effective to address the changed circumstances in the business and socio-
economic entities. In order to meet the challenges caused by changes, the Insurance Ordinance
2011 should be kept as flexible as practicable so that any change in the operational procedure,
accounting, actuarial standard that would be needed in future inline without change in the
international and domestic environment could be made without further amendment to the
Ordinance. The new Insurance Act 2011 promised to bring the positive changes and I am
looking forward for the beginning of a Globally Competitive Modern Insurance Sector in
Bangladesh.

18. 7. Reference:
01. Dhaka stock exchange ltd/Sector wise company list/ insurance company
02. Google.com/search-insurance definition & insurance overview.
03. Investopedia.com/terms/i/insurance.asp
04. AftabMulla/functions-of-insurance/slideshare.net
05. pwc.com/../insurance/../insurance-risk-co..
06. toptenbrandlist.blogspot.com/2012/history-of-insurance-business
07. en.wikipedia.org/wiki/insurance