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Insurance Essay

2918 words - 12 pages

INTRODUCTION:
This report has been prepared as a requirement of the insurance and risk management course. The report was based upon the overall insurance company’s problems and prospects in Bangladesh. . It can be 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. It is a 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. It can play an important role in a country’s economy. It is an old form of financial ...view middle of the document...

The privatization policy adopted in the 1980s paved the way for a number of insurers to emerge in the private sector. A total of 60 insurance companies are operating in Bangladesh till date. Of these companies, 57 are private, two state-owned and one is foreign. Insurance Directorate, under the Ministry of Commerce, is the regulatory-body of the country’s insurance sector. At present there are 44 general insurance companies running in Bangladesh.

INSURANCE FEATURES IN BANGLADESH 
• Insurance policies are sold without the policyholder even seeing a copy of the contract. 

• The amounts exchanged by the insured and insurer are unequal and depend upon uncertain future events. 

• The insured is not required to pay the premiums, but the insurer is required to pay the benefits under the contract if the insured has paid the premiums and met certain other basic provisions. 

According to the new rules the capital and deposit requirements for formation of an insurance company are as follows: 

Capital requirements:
For life insurance Company - Tk 75 million, of which 40% shall be subscribed by the sponsors. 
For mutual life insurance company - Tk 10 million. 
For general insurance company - Tk 150 million, of which 40% shall be subscribed by the sponsors.
For cooperative insurance society - Tk 10 million for life and Tk 20 million for general. 
Deposit requirements (in cash or in approved securities): 
For life insurance - Tk 4 million 
For fire insurance - Tk 3 million 
For marine insurance - Tk 3 million 
For miscellaneous insurance - Tk 3 million 
For mutual insurance Company - Tk 1.4 million 
For cooperative insurance - Tk 1.4 million 
For general insurance - Tk 1 million for each class
 Numerous institutions, associations and professional groups work to promote the development of insurance business in Bangladesh. Prominent among them are the Bangladesh Insurance Association and Bangladesh insurance academy.

In a structured risk management process, this involves:
1. Evaluating alternative techniques for treating each loss exposure;
2. Treating each loss exposure;
3. Choosing the best alternative; and
4. Monitoring the results to refine the choices.
Problem of Insurance Business in Bangladesh:
In a developing country like Bangladesh, insurance companies are playing a very important role in the economy. Though insurance industry has very prospect in the economy but for some reasons it’s totally failed to achieve its goal. If we want to know the reasons behind this hen we should look forward the following according to Bangladesh General Insurance Company Ltd.
Social Problems
Less Public awareness
A vast majority of people especially in rural areas are left outside the insurance coverage. This mainly results from the unawareness among the people. Even a large portion of people don’t have the minimum idea of insurance. People are not aware of the benefits from the insurance policy and a great number of people...

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