Name: A.K.M.

ASHIQUDDOWLA
ID: 21201001
SUBJECT: BUS 3113 (Principles & Practice of Insurance)
Assignment on: Insurance Company Analysis.
Executive Summary:

Insurers operate in a complex and competitive market in which several thousand

firms compete for business from millions of consumers with diverse needs. Over
time, a wide array of producers, marketing systems, and compensation systems
have evolved to satisfy these needs.

Recent concerns about the potential for improper alignment of incentives in the
sales process have led to questions about some of the traditional compensation
practices used in the insurance marketplace. This paper examines the role of
insurance producers and compensation in the insurance industry.

Contingent commissions, paid by the insurer to an agency that has satisfied

profitability and, in many cases, retention and growth requirements, are part of the
overall compensation system that has developed in the insurance industry.
Contingent commissions have been criticized as being harmful to insurance buyers
and as compromising the process by which insurance is placed with insurers. We
find that contingent commissions are not inherently bad for consumers (i.e.,
policyholders) and, in fact, can help to align the incentives of the insurer with the
agent. Properly structured contingent compensation arrangements seek to reward
the intermediary for various activities, including: 1) bringing accurately-priced,
properly underwritten business to the insurer; 2) assisting the insurer in retaining
existing business; 3) promoting the growth goals of the insurer; and 4) managing
the losses on business placed with the insurer. In addition, contingent commission
structures provide incentives for the producer to assist the consumer in
“improving” the risk. That is, the producer is encouraged through these
=compensation arrangements to assist the consumer in taking proper loss control
steps to mitigate the risk that the consumer faces.

Introduction:

Insurance is a contract, represented by a policy, in which an individual or entity

receives financial protection or reimbursement against losses from an insurance
company. The company pools clients' risks to make payments more affordable for
the insured. Insurance policies are used to hedge against the risk of financial losses,
both big and small, that may result from damage to the insured or her property, or
from liability for damage or injury caused to a third party.
Objective of the Study:
To study awareness of people about insurance. To determine reasons behind opting
for an insurance.  To know the most preferred policy. To determine customers
perception towards private insurance companies and their expectation form
private insurance companies.

OBJECTIVES OF THE STUDY

 To know the various investment alternatives that is mostly preferred by the

customers.

 To find out the criteria that people think about before investing in a life
insurance policy.

 To find out the level of awareness of Reliance life insurance among people.

Insurance is a unique service-based product that people purchase for peace of

mind, yet usually, hope to avoid using. Some disadvantages of buying insurance
products are general and cover most categories of protection, while others are
specific to particular sectors of the insurance market.

Scope of Studies
(a) Premiums and Costs

Premiums are costs to obtain insurance protection. Paying for something is an

obvious disadvantage to any purchase, but premiums on insurance products are
usually dependent on individual risk factors. Insurer’s base individual and family
product premiums on the potential risk of payout. Thus, people with the most need
for protection and care are going to pay higher premiums.
Additionally, insurances like health and dental often include co-pays and
co-insurances. Deductibles, which are amounts that must he paid-by the insured
before benefits kick in, are common to most insurance types. These expenses acid
to your total costs for services above and beyond premiums you pay your insurer
for benefits protection, according to Always-Health.

(b) Restrictive Benefits

Benefits provided by insurance products are a relief for the insured, but the process
of obtaining benefits and the tough choices some insured people face can be
difficult. Network insurance setups are usually flexible on providers, as long as you
use one within your network, according to Startup Biz Flub. Some health and
dental insurance products have more expensive or even limiting out-of-network
benefits. This is a problem if you need services and do riot have close access to a
networked provider.

With some insurance setups, insured people may face high out-of-pocket levels and
deductibles. This causes some to avoid receiving needed services to avoid
expensive service payments.

(c) Indirect Claims Process

In group network-type insurance setups like preferred provider organizations

(PPOs) for health insurance, medical providers submit claims for services directly
to the insurance provider, according to Always-Health. While this is convenient for
the patient, it also leaves him out of the communication process regarding service
designations and claims approvals. Your first opportunity to explain your use of
services, related to coverage, is likely after a denial. You must rely on your care
provider to accurately and effectively “code” your service as it relates to the
coverage provided by your insurer.

Definition of Insurance:
Insurance is a legal contract between two parties- the insurance company (insurer)
and the individual (insured), wherein the insurance company promises to
compensate for financial losses due to insured contingencies in return for the
premiums paid by the insured individual. In simple words, insurance is a risk
transfer mechanism, where you transfer your risk to the insurance company and get
the cover for financial loss that you may face due to unforeseen events. And the
amount that you pay for this arrangement is called premium. There is insurance
available for various risks, starting from your life to mobile phones that you use. In
the end, it’s essential to protect what is ‘important’ to you.

Insurance companies of Bangladesh:

Insurance service in Bangladesh are developing as local people have got more
conscious about the security of what they belong. Promising service of some
companies has established the trust and people of Bangladesh turn to them on and
on with optimism. These are the 12 top insurance companies in Bangladesh.

1. American Life Insurance Co

This is one of the earliest insurance companies in Bangladesh, working from 1952.
Even though the concept as well as the company comes from America, they have
successfully adopted it to suit the needs and expectations of Bangladeshi people
and have reached the top position in the country.

More than a million Bangladeshis depend on American Life Insurance Company

(Alico) with thousands of agents working for them, which has also created local
jobs. All sorts of insurance plans are available to suit everybody’s need in the
society.

2. Jiban Bima Corporation

The words Jiban and Bima mean Life Insurance in Bengali (official language of
Bangladesh). This is a state owned insurance company, providing life and other
kinds of insurance services to citizens.

Located in Dhaka, Jiban Bima Corporation has branches all over Bangladesh and
touches millions of people every day. It has created a wide range of plans to suit
people in all economic groups, which has proved to be a big success.
3. Delta Life Insurance Co Ltd
In 1984, Bangladesh Government allowed private sectors in insurance industry,
which led to the creation of Delta Life Insurance Co Ltd, started by number of
Bangladeshi citizens then working abroad. They started this because they wanted
their fellow citizens to get the top class insurance services which are common in
western countries.

From their first day, Delta life insurance has been working with the same goal in
mind, growing to a large organization today. They have designed plans keeping the
expectations of the society in mind, which is the primary reason for their success.

4. Popular Life Insurance Co Ltd

This unique organization started its journey with the goal of reaching every
insurable citizen in Bangladesh. There were many companies, but they didn’t have
means to reach out to all of them. Popular Life Insurance Co Ltd achieved this by
designing unique schemes and campaigns to bring everyone under their protection.

They achieved this by providing number of schemes which focused on the direct
benefits. They indirectly provided the protection which is the essential reason for
doing insurance. Hundreds of agents are working with public directly to ensure the
movement is constantly moving forward.

5. Shandhani Life Insurance Co Ltd

This organization is operating for 25 years, creating a change in the society by their
‘micro insurance’ segment. People or the general consumers may not buy
insurance mainly due to cost. Shandhani life insurance approached them with
smaller policies which are a good start, and would bring them to the regular fold,
as they grow socially and economically.

With this focus, Shandhani Life Insurance Co Ltd reached out to hundreds of
thousands of poor people, while keeping the focus on big customers as well. This
approach has helped this company to reach the top position with a great impact on
the society.

6. Meghna Life Insurance Co Ltd

This company was started by many Bangladeshis who wondered if they can
participate in the growth of the nation. They decided a life insurance company
would be the ideal start and with their dream, Meghna Life Insurance Co Ltd was
born in 1996. They focused on providing services at the right price, with modern
facilities.

Their efforts, in the next decade, brought this company to a great reputation in the
country. They work with people from all backgrounds and provide services to all
kinds of individuals and corporate organizations.

7. Takaful Islami Insurance Ltd

Being an Islamic country, Bangladesh’s needs with respect to any investment may
be guided by their religious principles too. Hence, most insurance companies
provide policies keeping this in mind and Takaful Islamic Insurance Ltd specializes
in providing unique schemes, which are Islamic in nature.

This company operates in both life and nonlife sectors. It has established a very
effective network to work with the entire nation via its officers. This works
particularly well in the individual insurance policies.

8. Pragati Insurance Co Ltd

This is a leading non-life insurance company in Bangladesh. It provides schemes
such as Mediclaim Insurance, Accident Insurance, Building Insurance, Factory
Based Insurance, Aviation Insurance, Home Insurance etc. Based on the type of the
insurance and the way Bangladesh culture sees it, they have designed their policies
so that it is accepted well. Their success journey is a proof to this.

Today, the company has reached a top position by getting a credible rating by
number of financial analysis companies. They invest in the right areas to improve
their value to investors. As a result, it has grown to a top position in the country.

9. Padma Life Insurance Co Ltd

This is another Islamic insurance company in Bangladesh with a great track record
and success. It focuses on Life insurance segment, earning the confidence of
Bangladeshi public from all walks.
Their plans are designed keeping the security as well as growth aspects in mind.
Depending on the need of the customer, they will be able to choose the best one
that suits them and get maximum returns.

10. Sunlife Insurance Co Ltd

Started by businessmen from various fields, this company focuses on customer
security and benefits from 2000. They went public in 2012 and today, operating as
one the top insurance companies in Bangladesh.

Specialty of this company is its focus on even the smallest member of the society.
Their officers work with all kinds of people to ensure they are sufficiently
protected. This has brought a social change, as well as a successful company.

11. Golden Life Insurance Co Ltd

This company splits its services into two parts, macro insurance and micro
insurance. Based on the needs of its customers, it selects the right scheme. This
approach has given them great many opportunities to grow with full support of
public.

Headquartered in Dhaka, Golden Life Insurance Co Ltd has branches all over the
country and the officers of the company work directly with public to educate them
about their insurance needs. This direct approach is the primary reason for Golden
Life Insurance Co Ltd growing to the top position in Bangladesh.

12. Rupali Life Insurance Co Ltd

Established in year 2000, this company has grown from a small position to a large
success, mainly due to its strong backbone support from investors and the
passionate work from agent officers. Their schemes are designed to suit the
segments they work on, which has connected well with the customers.
They focus on promoting local talent. This ensures that the representatives of
Rupali Life Insurance Co Ltd will never be a stranger to the potential prospects.
This approach has created jobs for the country and helped many people stay
protected helping the society.
As their vision statement says, they want to be the “best life insurance company of
choice among Life Insurance Companies”. This goal is the primary motivation for
their staff, resulting in this success. On the process, they have ensured financial
security for hundreds of thousands of Bangladeshi citizens.

Problems & Prospects of Insurance:

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.In this report the major problems
in performing insurance business has been classified into some major criteria
which are social, economic, political, legal and other reasons.The actual problems
are discussed in detail within these criterion’s

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
believe that insurance business is nothing but cheating and assume that insurance
policy is quite unnecessary. This negative attitude from the people is lessening the
importance of absorbing insurance policy in a large extent.

Centralization
Most of the insurance companies in our country are located in urban areas and
there are few branches in rural areas. They think that they might have better scope
for  performing their business as the economic condition of the urban is better than
the rural areas. They don’t think that the large number of our population reside in
rural areas and if branches are expanded in rural areas then the business can thrive
if proper motivation policy is taken to aware the mass people of the rural areas.
Thus this centralization policy acts as an obstruction for the growth of insurance
business in our country.

Economic Problems
Poor economic conditions
Bangladesh is one of the poorest countries in the world and most of the people in
this country live under extreme poverty level. All of these people fight hard to earn
their livelihood and are marginal in relation to the expenditure with the income. It
is quite impossible for them to save some money for future need. Therefore they
are quite unable to give the amount to the insurer which is called as premium and
regarded as safety or precautionary measures against any accident. The number of
people who can bear the premium to the insurance company is very few in regard
to those mentioned above. Therefore the overall poor economic condition is
creating obstacle to flourish the insurance business in Bangladesh.
Poor financial position of the insurance companies
Most of the insurance companies of our country are facing financial problems.
Recently government is trying to take initiative to close some of the insurance
companies because they are not maintaining the minimum standards. They are
investing their money in poor securities and business which is vulnerable
regarding getting back the money with profit. As a result most of the insurance
companies are suffering from loss years after years and for poor financial
condition the insurance companies are also unable to expand their branch which
is a barrier for the growth of insurance business in Bangladesh.
Higher cost of business
Growing cost of business is another problem that insurance companies are
facing now a day. They urge that government tax, house rent, utility, commission
fee, stationeries are growing day by day. But their businesses are not growing so
fast with that rate. Besides this the policy holders are not willing to pay too much
premium with growing cost that is hampering the strategies of insurance
companies. So they are facing difficulties in running their business efficiently.
Problems of economic bases and effective principle
Before independence insurance business was control by private company. But
after independence maximum insurance company take over by the government.
For that reason government changed the company management, policy and
applies new rules and regulations which system was very tricky and
uncomfortable for the mass people.
Political problems
Political instability
Political instability is a major problem in Bangladesh. For the instability in politics,
many disruptive situations are often created which are bad for any businesses.
The people who operate various businesses in our country often experience
various types of inconvenience in running their business. Insurance business is
not an exception of this. Political instability and inconsistency of political courses
are a serious problem for the insurance business.
Lack of supervision from the government
Lack of surveillance from government ministry encourages many insurance
companies to follow some unethical practices like make harassment to policy
holder and showing less in the financial statement. This not only destroying the
reputation of the well known insurance companies but also creates negative
impact in the mind of the people about insurance. Besides this government
sometimes impose some conflicting rules and regulation without discussing with
insurance companies governing body. It creates conflict among insurance
companies with government and act as one of the main hindrances of growing
insurance business.
Legal Problems
Too much complexity
To take an insurance policy there are great number of rules and regulations
which must be compelled by the insured person. And into those rules a vast
number of complexities is present there. Therefore the people are discouraged to
take insurance policy because they think that the complexities will create extra
pressure on their mind which may hamper other jobs.

SWOT Analysis:
Recommendation for Insurance Business of Bangladesh
From the presiding discussions of the report, we can realize that the policy
makers within the government and the insurance company should adopt effective
measures in order to make good use of the opportunities and to tackle the
threats for ensuring a healthy development of the insurance industry. The
following actions are suggested

● The insurance companies of Bangladesh should practice marketing through the

use of promotional tools such as advertising, sales promotion, public relation and
publicity, personal selling and direct marketing.
● In order to create the growth of insurance business in our country, insurance
companies should expand their target market by providing responsive services
and establish efficient departments to perform such task.
● Government must minimize the restrictions on premium so that insurance
companies can fix their premium according to their demand. This will increase
the profitability of the insurance companies.
● One of the basic requirements for the insurance industry to have sustained
growth is to enhance training facilities. Bangladesh Insurance Academy is
providing training facilities and professional education to those engaged in
insurance business in the country. The syllabus, curriculum and training
 programs of the academy need to be modified to meet the modern needs of the
insurance industry.
● To regain and maintain a positive public image the insurance companies should
overcome the dissatisfaction in regards to services and claim settlements and
should maintain a service standard.
● The collected premium should be invested in large and beneficial sectors so that
insurance companies can return their clients expected return in timely.
● Government should have a regulatory body for the surveillance on insurance
companies so that they must perform their business maintaining the ethical
issues properly.
● Insurance companies need to modify their recruitment strategies with increased
focus on the marketing and sales training because, insurance being a service
marketing industry it requires special attention.
● In response to the opportunity of growing market the insurance companies can
expand their target market by identifying and providing responsive services. In
order to do so each company should established and effectively operate
research and development department.

Conclusion:
Insurance is a large investment and you will most likely purchase multiple policies
throughout your lifetime. It is essential that you know what each type of insurance
covers and how it works so you can make the best decision about what to buy. Do
not base your decision on just what is cheapest, but look at what it provides.