Course Name: Insurance Concepts and Coverage

Course Code: FNB 304

Title: An assignment on the overview of insurance industry in Bangladesh.

Submitted To

Prodip Chandra Bishwas

Lecturer

Submitted By

Md. Tajbid Ahmed

ID: 1702
Batch: 12th
Session: 2020-2021

Department of Finance and Banking

Faculty of Business Studies
Jahangirnagar University, Savar, Dhaka – 1342

Date of Submission: March 29, 2024

History
Insurance has played a crucial role in mitigating risk and providing financial security for
individuals, businesses, and societies. In ancient times, communities relied on informal risk-
sharing arrangements, such as ancient Chinese merchants diversifying goods across multiple
vessels to reduce the risk of maritime accidents, and Mediterranean cultures pooling resources to
assist those who suffered losses. During the Middle Ages in Europe, guilds and trade
associations offered mutual assistance to members facing financial losses due to fire, theft, or
death, based on principles of solidarity and cooperation. Marine insurance emerged in response
to risks during maritime trade, with contracts dating back to the 14th century in Italian cities like
Genoa and Pisa. The birth of modern insurance occurred in 17th-century England, notably with
the establishment of Lloyd's of London, initially focusing on marine insurance and later
expanding to standardized contracts and risk assessment methodologies. The 18th and 19th
centuries witnessed the expansion of insurance coverage beyond marine to include fire insurance
and the establishment of the first life insurance company in London in 1706. Industrialization in
the 19th century spurred significant growth in the insurance industry, leading to government
regulation to ensure solvency and the rise of actuarial science in pricing products. In the 20th
century, insurance became a global industry with technological advances like computerization
and the internet, facilitating efficiency and accessibility. New insurance products emerged to
address emerging risks such as cyber, environmental liability, and terrorism insurance.
Throughout its evolution, insurance has adapted to changing societal needs and economic
conditions, remaining a vital tool for managing risk and providing financial stability. The
evolution of insurance continues in the 21st century, with technological advancements
revolutionizing the industry through digital platforms, big data analytics, and artificial
intelligence. Insurers are adapting to changing consumer needs and preferences, offering
customizable policies, usage-based insurance, and innovative risk management solutions.
Moreover, environmental concerns and emerging risks such as cyber threats and pandemics are
reshaping the insurance landscape, prompting insurers to develop new products and pricing
models to address these challenges. As the world becomes increasingly interconnected and
complex, insurance remains an essential tool for managing risks and protecting against
unforeseen events, ensuring individuals and organizations can navigate uncertainties with
confidence and resilience.

Introduction
The insurance industry in Bangladesh stands as a vital pillar in the country's economic landscape,
offering protection against various risks and fostering financial security for individuals and
businesses alike. With its origins dating back to the early 20th century and further formalized
post-independence, the sector has undergone significant evolution, guided by regulatory
frameworks and market forces. Bangladesh, a country endowed with a diverse economy
encompassing agriculture, manufacturing, and services, faces an array of risks ranging from
natural disasters to health emergencies and property damage. Against this backdrop, insurance
plays a pivotal role in mitigating these risks, offering a crucial safety net for economic actors and
contributing to overall financial stability. Regulated by the Insurance Development and
Regulatory Authority (IDRA) since 2010, the insurance industry in Bangladesh comprises a
diverse ecosystem of insurers, reinsurers, brokers, and intermediaries, offering a broad spectrum
of insurance products and services tailored to meet the unique needs of individuals, businesses,
and specific industries. As Bangladesh continues its journey towards economic growth and
resilience, the insurance sector stands poised to play an instrumental role in supporting this
trajectory, ensuring a more secure and prosperous future for the nation and its citizens. In recent
years, the industry has witnessed notable developments and trends that reflect both challenges
and opportunities. These include a growing demand for insurance products, particularly in the
life insurance segment, driven by factors such as increasing awareness of financial planning,
changing demographics, and a growing emphasis on long-term financial security. Moreover,
technological advancements have led to innovations in distribution channels, underwriting
processes, and customer engagement, reshaping the industry's landscape and enhancing its
efficiency and accessibility. However, the sector also faces challenges such as regulatory
compliance, market competition, and risk management, which necessitate ongoing efforts to
adapt and innovate. Despite these challenges, the insurance industry in Bangladesh remains
resilient and dynamic, poised to capitalize on emerging opportunities and contribute significantly
to the nation's economic development and societal well-being.
Current Scenario of Insurance Industries in Bangladesh
The insurance industry in Bangladesh has undergone significant growth, with the assets of both
life and non-life insurance companies reaching Tk 63,629.05 crores by the end of 2022, marking
a 3.34% increase from the previous year. Total investments amounted to Tk 49,293 crore, with a
total policy count of Tk 1.13 crore, supporting a workforce of 40,575 individuals and 42,673
agents. The industry's total annual premium reached Tk 14,392 crore, contributing 0.4% to the
GDP in 2021. Despite hosting 81 insurance companies, with 35 specializing in life insurance and
46 in non-life insurance, challenges persist, particularly regarding low penetration in the life
insurance sector due to a lack of awareness and trust among consumers. Bangladesh's penetration
ratio stands at 0.46 percent, below global standards. In 2022, property insurance emerged as the
largest sub-sector, followed by marine, aviation, and transit (MAT), reflecting the industry's
diversified landscape and substantial contributions to Bangladesh's economic fabric. Looking
ahead, the Bangladesh insurance market is poised for further growth, with a gross written
premium of BDT166.1 billion ($1.8 billion) in 2022, projected to achieve a Compound Annual
Growth Rate (CAGR) exceeding 6% during 2023-2027. Key segments include life insurance and
general insurance, with notable players such as MetLife, Sadharan Bima Corporation, National
Life Insurance, Green Delta Insurance, Reliance Insurance, and Pioneer Insurance.
Digitalization, child planning, and AI integration are notable trends shaping the sector's
trajectory, exemplified by MetLife Bangladesh's launch of the "My Child’s Education Protection
Plan" to raise public awareness. Overall, the Bangladesh insurance industry presents significant
opportunities for expansion and development, underscored by robust market dynamics and
evolving consumer preferences. With the continued adoption of technological advancements and
strategic initiatives, the industry is poised to play an increasingly vital role in fostering financial
security and stability in Bangladesh's evolving economy. These trends and developments
highlight the sector's potential for growth and innovation, positioning it as a key contributor to
the nation's economic resilience and prosperity. There are some major types of insurance that are
being offered in our country- Life Insurance, Health Insurance, Auto Insurance, Homeowners
Insurance, Disability Insurance, Travel Insurance, Fire Insurance, Business Insurance and so on.
Recently, this sector is going through dynamic challenges. But if pivotal steps are implemented
accordingly then it can flourish our economy.

Illustration of an Insurance company: Reliance Insurance

Limited
Established in 1988, Reliance Insurance Limited (RIL) stands as a pioneering private sector non-
life insurance company in Bangladesh, boasting 34 years of operational excellence. With a keen
focus on adaptability and client satisfaction, RIL has emerged as a trusted provider, offering
comprehensive non-life insurance services across the nation. Led by Chairman Ms. Shahnaz
Rahman, the company operates 32 branches and a workforce of 314 employees, underscoring its
extensive reach. Despite challenges posed by the COVID-19 pandemic, RIL has exhibited
resilience, earning a gross premium income of BDT 3,140.35 million in 2021, demonstrating
robust financial performance. Governed by the Insurance Development & Regulatory Authority
of Bangladesh since 2010, RIL consistently adheres to regulatory standards while maintaining its
competitive edge. The company's commendable performance has been further affirmed by its
receipt of a "AAA" surveillance rating from CRISL for 2020, reaffirming its standing as a
reliable player within the Bangladesh insurance landscape. Celebrating its 25th anniversary in
2014, RIL continues to evolve, leveraging technological advancements and strategic initiatives to
enhance its offerings and customer experience. As RIL looks towards the future, it remains
poised to navigate evolving market dynamics and seize new opportunities for growth, further
solidifying its position as a leading force in Bangladesh's insurance sector. Reliance Insurance
Limited, founded in Bangladesh as a private non-life insurance company in 1988, has 32
branches across the country, employing 314 individuals. Under the provisions of the Insurance
(Amendment) Ordinance 1984, RIL commenced operations and celebrated its 25th anniversary
in 2014, offering a 25% cash dividend to shareholders in 2020. The company has been regulated
by the Insurance Development & Regulatory Authority of Bangladesh since 2010, with CRISL
awarding RIL a "AAA" surveillance rating for 2020, recognizing its financial stability and
performance. Despite the challenges posed by COVID-19, RIL reported a gross premium income
of BDT 2,937.12 million in 2020, with an underwriting profit of BDT 470.98 million and
investment income of BDT 377.64 million. Furthermore, RIL distributed a 25% cash dividend to
shareholders at its 33rd Annual General Meeting and remains committed to delivering top-notch
services and enhancing customer satisfaction.

Conclusion
Based on the comprehensive exploration of the insurance industry in Bangladesh presented
throughout this assignment, it is evident that the sector plays a pivotal role in the country's
economic landscape, providing crucial protection against various risks and fostering financial
security for individuals and businesses. The historical journey of insurance, from its ancient
origins to its modern evolution, highlights its enduring importance in mitigating risks and
promoting resilience. In Bangladesh, the sector has undergone significant transformation, from
the nationalization era to the liberalization and privatization reforms of the 1980s and 1990s,
leading to a diversified and dynamic industry ecosystem. Today, the insurance industry in
Bangladesh stands poised for further growth and innovation, driven by technological
advancements, changing consumer preferences, and emerging trends such as digitalization and
AI integration. The current scenario reflects substantial assets, investments, and premium
contributions, underlining the sector's significant economic impact. Challenges persist, including
low penetration rates and regulatory compliance, but initiatives aimed at addressing these
obstacles are underway, signaling a promising future for the industry. The case study of Reliance
Insurance Limited exemplifies the resilience and adaptability of industry players, showcasing
commendable financial performance and strategic initiatives amidst challenging circumstances.
As Bangladesh navigates through evolving market dynamics and uncertainties, the insurance
sector remains a vital instrument for managing risks and promoting financial stability. Moving
forward, continued collaboration between industry stakeholders, regulators, and policymakers
will be crucial in driving sustainable growth and ensuring the sector's continued contribution to
the nation's economic resilience and prosperity. In conclusion, the insurance industry in
Bangladesh stands at a critical juncture, poised to capitalize on emerging opportunities and
navigate challenges to fulfill its role as a cornerstone of the country's economic development and
societal well-being.