Insurance Business in Bangladesh

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and Insurance a system of spreading the risk of one to the shoulders of many. 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.

History of Insurance
In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one’s neighbor, the other neighbors must help? Otherwise, neighbors will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union). Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.

Chinese merchants traveling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel’s capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen. Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin weighing 8.35-8.42) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court.

Then the assessment was registered in special offices. The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: “[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much.” A thousand years later, the inhabitants of Rhodes invented the concept of the ‘general average’. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage. The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called “benevolent societies” which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose.

The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, “friendly societies” existed in England, in which people donated amounts of money to a general sum that could be used for emergencies. Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed. Toward the end of the seventeenth century, London’s growing importance as a center for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures.

Today, Lloyd’s of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England’s first fire insurance company, “The Fire Office,” to insure brick and frame homes. The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin’s company was the first to make contributions toward fire prevention.

Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners’ organization. In recent years, some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks. In the state of New York, which has unique laws in keeping with its stature as a global business center, former New York Attorney General Eliot Spitzer was in a unique position to grapple with major national insurance brokerages. Spitzer alleged that Marsh & McLennan steered business to insurance carriers based on the amount of contingent commissions that could be extracted from carriers, rather than basing decisions on whether carriers had the best deals for clients. Several of the largest commercial insurance brokerages have since stopped accepting contingent commissions and have adopted new business models

Bangladesh General Insurance Company Ltd (BGIC) the first ever general insurance company in Bangladesh to come up in the private sector under the scheme offered by the government of Bangladesh by virtue of the Insurance (Amendment) Ordinance 1984, and the Insurance Corporations (Amendment) Ordinance 1984. BGIC was incorporated as a public limited company under the companies act 1913 and started business on 29 July 1985 with an authorised capital of Tk 100 million divided into 1,000,000 ordinary shares of Tk 100 each. Its initial paid up capital was Tk 30 million, which rose to Tk 72 million in 1999. In May 1989, the company offered Tk 30 million for public subscription. It is listed with both Dhaka and Chittagong stock exchanges. In December 1999, the number of shareholders of the company was 4,370, who held 720,000 shares. The company was established for carrying out all types of general insurance business. It underwrites risks involved in trade and properties and thus provides their security through insurance and reinsurance services.

The major risk underwriting business of the company covers fire insurance, marine insurance, motor insurance and miscellaneous areas. By virtue of its progressive business practices as well as financial performance, BGIC has become one of the first-grade insurance companies in the country. The gross and net premium income of the company has increased consistently each year. Its net premium went up from Tk 3.21 million in 1985 to Tk 92.22 million in 1999. The net claims settled by the company amounted to Tk 2,620 only in 1985 and stood at Tk 21.42 million in December 1999. The company earned underwriting profits and pre-tax profits of Tk 1.02 million and Tk 0.84 million respectively in 1985 and Tk 70.8 million and Tk 12.28 million in 1999.

A significant amount of the investment income of BGIC is derived from its investment portfolio consisting of Pratirakkha Sanchaya Patra (Defense Savings Certificate) and shares and debentures. Total assets of the BGIC have enhanced from Tk 38.62 million in 1985 to Tk 443.91 million in 1999, when its total reserves were Tk 1,138.5 million, of which Tk 96.61 million was maintained as reserve for exceptional losses. The company paid dividend at the rate of Tk 15 per ordinary share in 1999. BGIC has its headquarters at dhaka and has 21 zonal and branch offices (31 December 1999) at different important district towns throughout the country. Its management team is headed by the managing director, who is also the member secretary of the organisation’s 16-member board of directors. [S M Mahfuzur Rahman]

Insurance is not a new business in Bangladesh. Almost a century back, during British rule in India, some insurance companies started transacting business, both life and general, in Bengal. Insurance business gained momentum in East Pakistan during 1947-1971, when 49 insurance companies transacted both life and general insurance schemes. These companies were of various origins British, Australian, Indian, West Pakistani and local. Ten insurance companies had their head offices in East Pakistan, 27 in West Pakistan, and the rest elsewhere in the world. These were mostly limited liability companies. Some of these companies were specialised in dealing in a particular class of business, while others were composite companies that dealt in more than one class of business. The government of Bangladesh nationalised insurance industry in 1972 by the Bangladesh Insurance (Nationalisation) Order 1972. By virtue of this order, save and except postal life insurance and foreign life insurance companies, all 49 insurance companies and organisations transacting insurance business in the country were placed in the public sector under five corporations.

These corporations were: the Jatiya Bima Corporation, Tista Bima Corporation, Karnafuli Bima Corporation, Rupsa Jiban Bima Corporation,and Surma Jiban Bima Corporation. The Jatiya Bima Corporation was an apex corporation only to supervise and control the activities of the other insurance corporations, which were responsible for underwriting. Tista and Karnafuli Bima Corporations were for general insurance and Rupsa and Surma for life insurance. The specialist life companies or the life portion of a composite company joined the Rupsa and Surma corporations while specialist general insurance companies or the general portion of a composite company joined the Tista and Karnafuli corporations. The basic idea behind the formation of four underwriting corporations, two in each main branch of life and general, was to encourage competition even under a nationalised system. But the burden of administrative expenses incurred in maintaining two corporations in each front of life and general and an apex institution at the top outweighed the advantages of limited competition. Consequently, on 14 May 1973, a restructuring was made under the Insurance Corporations Act 1973. Following the Act, in place of five corporations the government formed two: the sadharan bima corporation for general business, jiban bima corporation for life business.

The postal life insurance business and the life insurance business by foreign companies were still allowed to continue as before. In reality, however, only the american life insurance company. continued to operate in the life sector for both new business and servicing, while three other foreign life insurance continued to operate only for servicing their old policies issued during Pakistan days. Postal life maintained its business as before. After 1973, general insurance business became the sole responsibility of the Sadharan Bima Corporation. Life insurance business was carried out by the Jiban Bima Corporation, the American Life insurance Company, and the Postal Life Insurance Department until 1994, when a change was made in the structural arrangement to keep pace with the new economic trend of liberalisation. The Insurance Corporations Act 1973 was amended in 1984 to allow insurance companies in the private sector to operate side by side with Sadharan Bima Corporation and Jiban Bima Corporation. The Insurance Corporations Amendment Act 1984 allowed floating of insurance companies, both life and general, in the private sector subject to certain restrictions regarding business operations and reinsurance. Under the new act, all general insurance businesses emanating from the public sector were reserved for the state owned Sadharan Bima Corporation, which could also underwrite insurance business emanating from the private sector.

The Act of 1984 made it a requirement for the private sector insurance companies to obtain 100% reinsurance protection from the Sadharan Bima Corporation. This virtually turned Sadharan Bima Corporation into a reinsurance organisation, in addition to its usual activities as direct insurer. Sadharan Bima Corporation itself had the right to reinsure its surplus elsewhere outside the country but only after exhausting the retention capacity of the domestic market. Such restrictions aimed at preventing outflow of foreign exchange in the shape of reinsurance premium and developing a reinsurance market within Bangladesh. The restriction regarding business placement affected the interests of the private insurance companies in many ways. The restrictions were considered not congenial to the development of private sector business in insurance. Two strong arguments were put forward to articulate feelings: (a) Since the public sector accounted for about 80% of the total premium volume of the country, there was little premium left for the insurance companies in the private sector to survive.

In this context, Sadharan Bima Corporation should not have been allowed to compete with the private sector insurance companies for the meagre premium (20%) emanating from the private sector; (b) Being a competitor in the insurance market, Sadharan Bima Corporation was hardly acceptable as an agency to protect the interests of the private sector insurance companies and should not have retained the exclusive right to reinsure policies of these companies. The arrangement was in fact, against the principle of laissez faire. Private sector insurance companies demanded withdrawal of the above restrictions so that they could (a) underwrite both public and private sector insurance business in competition with the Sadharan Bima Corporation, and (b) effect reinsurance to the choice of reinsurers. The government modified the system through promulgation of the Insurance Corporations (Amendment) Act 1990. The changes allowed private sector insurance companies to underwrite 50% of the insurance business emanating from the public sector and to place up to 50% of their reinsurance with any reinsurer of their choice, at home or abroad, keeping the remaining for placement with the Sadharan Bima Corporation.

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; and 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; and for cooperative insurance society, in case of life insurance – Tk 1.4 million, and in case of general insurance – Tk 1 million for each class. The government guidelines for formation of an insurance company are: The intending sponsors must first submit an application in prescribed form to the Chief Controller of Insurance for prior permission.

After necessary scrutiny the Chief Controller shall forward the application with his recommendation to the Ministry of Commerce. After further scrutiny, the Ministry of Commerce shall submit its views to the Cabinet Committee constituted for this purpose. The decision of the Committee, if affirmative, should be sent back to the Ministry of Commerce which in turn should send it back to the Chief Controller of Insurance for communicating the same to the sponsors.

The sponsors would then be required to apply in a prescribed form to the Registrar of Joint Stock Companies to get registration as a public liability company under the Companies Act. Memorandum and Articles of Association duly approved by the Controller of Insurance would have to be submitted with the application. Once the registration process was completed the sponsors would have to obtain permission of the securities and exchange commission to issue share capital. Reinsurance arrangements would have to be made at this stage. After all the above requirements were fulfilled the licence to commence business under the Insurance Act 1938 is to be obtained from the Chief Controller of Insurance. Application can only be made subject to government announcements in this regard. The control over insurance companies, including their functions relating to investments, taxation, and reporting, are regulated mainly by the Insurance Act 1938 and the Finance Acts.

The privatisation policy adopted in the 1980s paved the way for a number of insurers to emerge in the private sector. This resulted in a substantial growth of premium incomes, competition, improvement in services, and introduction of newer types of business in wider fields hitherto untapped. Prior to privatisation, the yearly gross premium volume of the country was approximately Tk 900 million in general insurance business and approximately Tk 800 million in life insurance business. In 2000, premium incomes rose to Tk 4,000 million in general insurance business and Tk 5,000 million in life insurance business. Up to 2000, the government has given permission to 19 general insurance companies and 10 life insurance companies in the private sector. Insurers of the country now conduct almost all types of general and life insurance, except crop insurance and export credit guarantee insurance, which are available only with the Sadharan Bima Corporation.

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. Bangladesh Insurance Association was formed on 25 May 1988 under the Companies Act 1913. It is registered with the Registrar of Joint Stock Companies and has 30 members. It aims at promoting, supporting and protecting the interests and welfare of the member companies. Surveyors and insurance agents occupy a prominent position in the insurance market of Bangladesh. The surveyors are mainly responsible for surveying and assessing general insurance losses and occasionally, for valuation of insurance properties, while the agents work to procure both life and general insurance business against commission. The system of professional brokers has not yet developed in Bangladesh. However, it is a common practice of the insurers to engage salaried development officers for promotion of their insurance business. [AH Choudhury]

Sadharan Bima Corporation (SBC) established on 14 May 1973 under the Insurance Corporation Act 1973. Its authorised capital was Tk 50 million, later raised to Tk 200 million by the Ordinance VIII of 1986. In 1999, the paid capital of the corporation was Tk 100 million, which was fully subscribed by the government. [pic][pic] The total number of insurance companies registered in Pakistan up to 1968 was 81, of which 41 were foreign. Of the 40 indigenous companies, 10 were registered in East Pakistan and 30 in West Pakistan. 21 of the foreign companies had their origin in UK, 8 in India, 5 in USA, 3 in New Zealand and the remaining four in Australia, Canada, France, and Hong Kong (one in each). Ten of the 40 Pakistani companies were engaged exclusively in life insurance business, 21 in life and other businesses, and 9 in other businesses only. Foreign companies concentrated more on non-life insurance.

Two of them did life insurance business only and one did life as well as general insurance. About 75 insurance companies, including 10 locally incorporated ones had insurance business in East Pakistan. Following the independence of Bangladesh, both life and general insurance business in the country was nationalised by the Bangladesh Insurance (Nationalisation) Order 1972. Five corporations were established to absorb, own and control the businesses of the 75 existing insurance companies. These new corporations were: Bangladesh Jatiya Bima Corporation, Karnafuli Bima Corporation, Tista Bima Corporation, Surma Jiban Bima Corporation, and Rupsa Jiban Bima Corporation. In 1973, the government decided to integrate life and general insurance companies into two corporations. Accordingly, the jiban bima corporation was formed to take over the undertakings of Surma Jiban Bima Corporation and Rupsa Jiban Bima Corporation. Karnafuli Bima Corporation and Tista Bima Corporation were integrated into Sadharan Bima Corporation. In that year, the government also decided to merge Bangladesh Jatiya Bima Corporation with the newly formed Sadharan Bima Corporation.

As the single state-owned institution to handle all types of general insurance business in Bangladesh, Sadharan Bima Corporation did 100% of the business until 1984. Through the Insurance (Amendment) Ordinance 1984 and Insurance Corporations (Amendment) Ordinance 1984, the government allowed operation of insurance companies in the private sector. In 1990, the government further  allowed private sector insurance companies to underwrite 50% of public sector business and the remaining 50% was kept reserved for Sadharan Bima Corporation. Private insurance companies were also given option to insure 50% of their re-insurable business with any local or foreign insurance companies. SBC distributes 50% of all public sector insurance businesses to private general insurance companies on an equal basis. SBC underwrites private sector business and competes with private companies in the underwriting business. Private insurance companies have the option to re-insure 50% of their re-insurable business with any local or foreign insurance companies. But in practice, they do not exercise the option.

Instead, they re-insure 100% of their re-insurable business with SBC, which offers better terms and conditions. SBC also provides insurance coverage to some non-traditional (sometimes, non-profitable) businesses like livestock rearing, shrimp culture, air travel, sickness and dread disease insurance. In addition, the corporation manages the export credit guarantee scheme. In 1999, SBC earned gross premiums of Tk 616.86 million, comprising fire insurance (Tk 162.63 million), marine insurance (Tk 221.74 million) and miscellaneous insurance (Tk 232.49 million). Re-insurance income of the corporation was Tk 1,362.06 million. Having wider capacity, the corporation retains maximum portion of risks that come from direct underwriting and reinsurance acceptance. Commission earned by the corporation from foreign re-insurers was Tk 150 million in 1999, when reinsurance commission paid by SBC to other companies was Tk 429.03 million. Net premium incomes of SBC were Tk 1,146.41 million in that year after adjusting reinsurance accepted and ceded. Net claims settled by the company during the year amounted to Tk 470.06 million, of which Tk 140 million for fire, Tk 276.76 million for marine, and Tk 52.83 million for miscellaneous insurance.

On 31 December 1999, the corporation’s net underwriting profit stood at Tk 163.86 million and of this amount, Tk 83.93 million was derived from marine insurance. The corporation earned investment incomes of Tk 307.15 million in 1999 and the investments were in FDR, shares and debentures, and leasehold and other properties. Net profit of the corporation in that year was Tk 430.32 million consisting  of net underwriting profit, interest, investment income, rents and others. At the end of the year, the corporation contributed an amount of Tk 295.31 million to the national exchequer as tax and profit. On 31 December 1999, total assets of SBC were valued at Tk 5,353.19 million. The management of the corporation is vested in a 7-member board of directors appointed by the government of Bangladesh.

Chief executive of the corporation is the managing director, who is assisted by 5 general managers, 7 deputy general managers and 10 assistant general managers. There are six different departments in the SBC. These are: (a) Administration, Establishment and Real Estate, (b) Finance and Accounts, (c) Head Office Claims, (d) Reinsurance, (e) Underwriting, Planning and Development, and (f) Export Credit Guarantee Scheme. The corporation has 1,694 employees. Its head office is at Dhaka and it has six regional offices at Dhaka, Chittagong, Rajshahi, Khulna, Narayanganj, and Comilla, two regional offices at Sylhet and Mymensingh, and 108 branch and unit offices throughout the country. [S M Mahfuzur Rahman]

Jiban Bima Corporation (JBC) established on 14 May 1973 under the Insurance Corporation Act 1973 with an authorised capital of Tk 200 million divided into 2 million ordinary shares of Tk 100 each. The paid up capital of the corporation is Tk 50 million fully subscribed by the government. The corporation is engaged in life insurance business under the provisions of the Insurance Act 1938, Insurance Rules 1958, Insurance Corporation’s Rules 1977, and related other laws enforceable in Bangladesh.[pic][pic] The total number of insurers registered in Pakistan up to 1968 was 81, of which 40 were constituted or incorporated in Pakistan and the remaining 41 in other foreign countries. Of the 40 indigenous companies, 10 were registered in East Pakistan and 30 in West Pakistan. Of the foreign companies, 21 originated in the UK, 8 in India, 5 in USA, 3 in New Zealand and one each in Australia, Canada, France, and Hong Kong. Ten of the 40 Pakistani companies were exclusively engaged in life insurance business, 21 in life and other business, and 9 in other business only. Foreign companies concentrated more on non-life insurance.

Two of them did life insurance business only, one did life as well as general insurance. The number of insurance companies that had business in East Pakistan was 75, of which 10 were locally incorporated ones. Following the independence of Bangladesh in 1971, both life and general insurance business in the country was nationalised under the Bangladesh Insurance (Nationalisation) Order 1972. Five corporations were established to absorb, own and control the businesses of the 75 existing insurance companies and these new corporations were Bangladesh Jatiya Bima Corporation, Karnafuli Bima Corporation, Tista Bima Corporation, Surma Jiban Bima Corporation and Rupsa Jiban Bima Corporation. In 1973, the government decided to integrate the life and general insurance companies into two corporations, and accordingly, the Jiban Bima Corporation was formed to take over the undertakings of the Surma Jiban Bima Corporation and Rupsa Jiban Bima Corporation. The Karnafuli Bima Corporation and the Tista Bima Corporation were integrated into sadharan bima corporation. In that year, the government also decided to merge the Bangladesh Jatiya Bima Corporation with the newly formed Sadharan Bima Corporation.

Until 1985, Jiban Bima Corporation was the only institution to handle life insurance business in Bangladesh. Through the Insurance (Amendment) Ordinance 1984 and Insurance Corporations (Amendment) Ordinance 1984, the government allowed the private sector to establish insurance companies. Up to December 2000, at least 17 private sector insurance companies came into being and made the life insurance business competitive, which however, had little impact on the business performance of the Jiban Bima Corporation. The corporation offers 15 different types of life insurance schemes. These are whole life assurance, endowment assurance, child protection policy, children endowment, anticipated endowment assurance, pension scheme policy, single payment policy, mortgage protection policy, group term insurance policy, group endowment policy, group variable endowment policy, group pension policy, grameen bima policy, joint life endowment policy, and progressive premium policy. In 1998, the corporation earned gross premiums of Tk 1,402.8 million, which comprised first-year premiums (Tk 401.2 million), renewal premiums (Tk 913.0 million), and group insurance premiums (Tk 88.6 million). It paid Tk 493.7 million to settle life insurance claims under various schemes.

Business management expenses of the corporation stood at Tk 629.2 million and it earned operating profits of Tk 279.9 million. The net incomes from its investments and other sources were Tk 189.2 million. In 1998, the corporation sold 65,086 new individual policies and the sum assured was Tk 5,723 million. The number of policies on female lives was 10,244 and the sum assured in these policies was Tk 700.2 million. The number of policies written in the rural areas under its rural business scheme was 44,209 with a sum assured of Tk 3191.4 million. The corporation issued 47,925 policies with the amount assured of Tk 3,824.4 million under its non-medical business scheme in the year. The total number of organisations and persons covered, sum assured and premiums earned under the Group Insurance Scheme figured 340 organisations, 707,900 persons, Tk 1,7575.6 million and Tk 88.6 million respectively. At the end of the year 1998, the corporation had 315,735 individual life policies in force with a sum assured of Tk 23,742 million. Of these policies 310,555 with an amount assured of Tk 23,727.4 million were underwritten by the corporation itself and the remaining, with a sum assured of Tk 14.6 million, were underwritten by the company’s old units.

Conversely, a total number of 43,641 individual policies with a sum assured of Tk 3,047.0 million were lapsed during the year. The corporation has Re-Insurance Treaty with Swiss Re-Insurance Company of Switzerland and Munich Re-Insurance Company of Germany. The retention limit in respect of underwritten risk of the corporation up to 1998 was Tk 1 million. Jiban Bima Corporation is also working as a re-insurer of 2 private Life Insurance Companies of Bangladesh. On 31 December 1998, the book value of investments and loans of the corporation including term deposits with banks stood at Tk 3,328.6 million and the investment portfolio included loans on mortgage of property, loans on insurers policies, investment in government securities, debentures of companies, bridge finance advance, investment in shares of companies, house property and land, and term deposit with banks.

On that date, the total assets of the corporation were valued at Tk 4,340.49 million. The management of the corporation is vested in a 7-member board of directors appointed by the government. The managing director is the corporation’s chief executive. He is assisted by 2 general managers, 6 deputy general managers and 2 assistant general managers. In December 1998, the corporation had 1,772 employees. The corporation has 8 divisions in its head office at Dhaka and 19 zonal/regional offices. On 31 December 1998, the corporation had 30,747 active agents. It has no full time actuary and it takes services of an actuary of Pakistan. It has a Claims Review Committee under the supervision of the Technical Affairs Division and the committee, upon request of claimants, reviews the declined claims and makes recommendations for payment on ex-gratia basis.