History Of Insurance
Business 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.
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.
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 SadharanBima
Corporation for general insurance and, JibanBimaCorporation for life insurance
in Bangladesh. In other words SadharanBima 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 company’s reinsurance business must be
placed with the SadharanBima 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.