Monday, February 26, 2018

Life of Insurance - Policy - 2018

  Backham Badhon       Monday, February 26, 2018

Insurance is a legitimate arrangement for spreading one's risk on many shoulders. This is a type of contract where an insurance company has agreed to meet the insured person for a certain amount of premium due to premiums due to a presumptive rate, due to insured losses.

There is a history of insurance in Bangladesh. About 100 years ago, during the British rule in India, some insurance companies started both business and general insurance business #LIST_UPDATE_24

During 1947-1971, insurance business was in good condition in East Pakistan.

At this time, 49 life and general insurance companies operated the business. The sources of these companies were spread in different countries. Among the British, Australian, Indian, West Pakistanis and East Pakistanis The headquarters of 10 insurance companies in East Pakistan, 27 in West Pakistan and the rest of the headquarters where in the world.

Apart from a few, most companies were the limited liability and were working in an arbitrary competitive economic environment. Some of these were specialized companies that were involved in certain types of business, while some were joint companies which engaged in multiple types of business.

The government of Bangladesh nationalized the insurance industry in 1972 by the President's order no. 95. This order is more familiar to Bangladesh Insurance (Nationalization) Order 1972. Apart from defense, postal life insurance, and foreign life insurance companies, all insurance companies and companies traded in this country are placed under five corporations of the public sector. These are Jatiya Bima Corporation, Teesta Bima Corporation, Karnafuli Bima Corporation, Rupsha Jeevan Bima Corporation and Surma Jeevan Bima Corporation.

National Insurance Corporation was not directly involved in the insurance business. As a top company, it supervised and controlled the activities of the four other corporations engaged in insurance business. Teesta and Karnafuli used to do a general insurance business, Rupsa and Surma worked for life insurance.

At that time, 49 insurance companies engaged in these companies were integrated with these 4 corporations. On the other hand, the life insurance part of the composite company, combined with Rupsha and Surma, and general insurance companies of general insurance companies or mixed companies are connected to Teesta and Karnaphuli.

The purpose behind the formation of 4 insurance insurers in each of the life insurance and general insurance companies was to encourage the competition under the nationalized system. But unnecessary administrative expenditure of 42 corporations and one of their top organizations has undermined the benefits gained in limited competition.

As a result, on 14 May 1973, under the Insurance Corporation Act, 1973, the infrastructural changes were made in the insurance industry. Under this Act, two corporations were established in place of 5 corporations, one is General Insurance Corporation for the general insurance business, and the other is Life Insurance Corporation for life insurance business.

Postal life insurance and life insurance by foreign companies are as active as before. In reality, only the American Life Insurance Company has continued the business of new business and services in life insurance. The remaining three companies continued to provide the necessary services to the insurance policies only during the Pakistan period.

The General Insurance Corporation is responsible for running the general insurance business. Life Insurance Corporation, Life Insurance Corporation, American Life Insurance Company and Postal Life Insurance Corporation. But during the change, the policy of economic liberalization has led to infrastructural changes in the insurance industry.

 In 1984 the amendment of the Insurance Corporation Act 1973 was brought. In addition to the general insurance and life insurance corporation, the management of insurance companies in the private sector was kept in place. The Insurance Corporation (Amendment) Act, 1984, allows the establishment of general and life insurance companies in the private sector subject to certain restrictions relating to business operations and reinsurance.

Under the new law, all the general insurance business in government financial sector is kept reserved for state-owned General Insurance Corporation. General Insurance Corporation has been given the right to conduct private business insurance business in competition with private sector insurance companies. The ban was imposed for giving some protection to state-owned General Insurance Corporation and simultaneously giving private sector insurance companies a chance to gain some experience.

There was another restriction on the reinsurance system by private sector insurance companies. Under the law, private sector insurance companies must take 100 percent of their reinsurance from the general insurance corporation and they can not go anywhere else for reinsurance. The purpose of such restriction is to create a resume premium form in which the foreign currency cannot go out of the country and in order to create a resurgent market in Bangladesh, according to the internal capability of Bangladesh.

This arrangement, in fact, turned the General Insurance Corporation into a re-insurance company. However, their direct insurance activities continued as well. But after saving the overall market capacities, the general insurance corporation's excess money is allowed to be resized outside the country.

Regulation of business is, of course, a kind of obligation, to give effect to the insurance policies of the insurance companies.

Thanks for reading Life of Insurance - Policy - 2018

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