Home Business Organizational Behavior Performance of Peoples Insurance Company

Limited in Bangladesh
Performance of Peoples Insurance Company Limited in
Bangladesh
Executive Summary
The report on Performance of People Insurance Company Ltd. as a General Insurance
Company in Bangladesh. has been prepared based on qualitative research as required for
completion of MBA degree from AUST University. In a developing country like Bangladesh
different insurance companies are playing a very crucial role in the economic gro!th. Though
insurance industry has significant prospects in the economy but for some reasons it has failed to
achieve its goal to some e"tent. There are #$ insurance companies in Bangladesh. Among them
%eoples Insurance &ompany 'imited is the second private insurance company and it has been
doing insurance business in the country over $( years since )*+,. The company !as established
and had been operated under the Insurance Act )*-+ since its inception until $.)$.
/hile observing the financial performance of the %eoples Insurance &ompany 'imited it has
been found that the company has faced different situation over years and that is !hy the
financial performance has some notable changes over the time period since $..$0$.)). In $..$
%I&' had a gross premium of $)$.,, million B1T !hich has been increased progressively over
years and became 2...). million B1T in $.)). At the same time net premium of the company
also has been increased from $..$ to $.)) but in $.., 3 $..# the organi4ation made
relatively lo!er net premium compared to the other years.
The entire report has been categori4ed into five chapters. In chapter one the introduction
scope ob5ective methodology and limitations of the report have been described. In &hapter t!o
there is a brief description on insurance Insurance la!s and regulatory system and regulatory
conflicts in the insurance industry in Bangladesh along !ith the emergence of establishing and
passing the ne! insurance act. 6ence the Insurance Act $.)) has been taken into focused in
this chapter specially for the non0life insurance sector7!hy the ne! act has been passed ho!
the ne! regulatory authority is !orking for the reformation and moderni4ation of the insurance
sector in Bangladesh !hat are the problems that the non0life insurance companies 8specially the
%eoples Insurance &ompany 'imited9 are facing !hile trying to follo! the ne! rules and
regulations to implement the ne! act in doing their business. Besides the huge prospects of the
insurance companies !hile the ne! act !ill be fully functional also has been identified and
described. Then chapter three of the report focuses on the %eoples Insurance &ompany 'imited
7the company overvie! its services vision mission and futures plans and it:s department. In
chapter four I also have conducted a financial analysis on the company;s performance since
$..$ until $.)) !here short descriptions of the performance have been given along !ith
necessary graphical presentations.
&ontinuously in chapter five the findings have been presented along !ith developing necessary
recommendations addressing both the regulatory authorities and the %eoples Insurance
&ompany 'imited in order to overcome the conflicting situations as !ell as to make the
prospects come true. Then conclusion has been dra!n by e"pressing hope and e"pectation on
the moderni4ation of the insurance sector in Bangladesh competing !ith its neighbors.
INTRODUCTION
This study on the performance of Peoples Insurance Company Limited as a general insurance
company in Bangladesh was carried out as an internship proect supported !y the internship
program as part of the re"uirement of completing the #asters of Business $dministration
%#B$& from $hsanullah'niversity of (cience ) Technology facilitated !y the head office of
Peoples Insurance Company Limited* The internship program was conducted over the course of
three months from +anuary ,- ./,0 through #arch0,- ./,0- and included wor1ing full2time as an
intern under the department of 3inance ) $ccounts at the head office of PICL as well as
meetings and in2depth interviews with the top management of PICL- 4ha1a- Bangladesh*
Obecti!es of the "tudy
Purpose tells the reason of the report* Before going to the organization I set my o!ectives that
guided me until I finished the report* It always 1ept me focused to !e on right trac1* The
o!ectives are to 1now the Performance of People Insurance Company Ltd* as a 5eneral
Insurance Company in Bangladesh and !uild an overall understanding on the financial
performance of People Insurance company Ltd*
Insurance industry is one of the growing sectors in Bangladesh * Peoples Insurance Company is
to !e amongst the leading insurance companies of the country with the clear perception of
upholding the principles of corporate governance and ma1ing Peoples a profita!le and growth
oriented insurance company while creating insurance awareness and culture* To ensure the
smooth operation of the concerned insurance companies- the regulatory !odies try to pass and
implement new acts ) regulations* There are 6. insurance companies in our country ) there
have !een passed several acts to regulate those companies properly* Peoples Insurance Company
Limited is a private insurance company in Bangladesh that serves with a variety of services to its
valued customers* 4ue to the limitation of my report my scope was limited to PICL and the
insurance act ./,, for the 7on2life Insurance Companies*
#ethodology
This report is primarily !ased on my e8periences from the day to day official wor1 under the
department of finance ) accounts at the head office of Peoples Insurance Company Limited* $s
my research method- I have used "ualitative data collected through meetings ) interviews with
the top management of PICL and some secondary information from the annual reports %.//9-
.//:- ./,/)./,,& of the company ) we! information from the related companies and
regulatory authorities* I have used !oth primary and secondary data in this report* The data were
collected !y different ways;
Primary Data
Primary 4ata were collected though !oth formal and informal discussions mainly with my
supervisor and senior manager of the company* Besides- I too1 participation in in2depth group
discussion and meeting which have given me the opportunity to ta1e very relevant information
regarding the particular topic of my report*
"econdary Data
(econdary data have !een collected from $nnual <eport- pu!lished articles on Insurance
industries- ournals- !rochures- and I4<$ ) PICL=s official we! sites In this report maority of
the data collection wor1s was done on a secondary data !asis*In the analysis part of the report- I
have tried to focus on the points that came out through the in2depth discussions- meetings )
interviews with the respective personnel* $nd I have also tried to find out the prospects of the
PICL as well as the other insurance companies in the same industry*
Limitations
The preparation of this report was not an easy tas1* I had to face some pro!lems ) limitations
during the preparation of this report despite the fact that I have tried my !est to prepare this
proect successfully* The limitations were;
The Insurance $ct ./,, along with rules ) regulations including the previous acts for the
insurance industry and most of the other supporting documents are written and pu!lished
in Bangla* Translating the entire act and relevant information from Bangla to >nglish was
"uite difficult*
Confidential information that no organizations inclined to share due to their !usiness
interest was another limitation*
4ata from different sources were "uite inconsistent which created some pro!lems in
ma1ing the report ) compelled me to verify the data diligently*
The data collection was full of comple8ities !ecause relevant data sources were hard to
find out*
There were so many o!stacles !ecause the company is not willing to disclose their
offerings and fle8i!ilities towards general people*
4ue to lac1 of practical e8perience- some errors might !e occurred during the study* In
spite of the ma8imum efforts was ta1en to avoid the mista1e*
Insurance
#eaning $ Definition of Insurance%
It is a contract in which one party 1nown as the insured also 1nown as assured- insures with
another party %person or organization&- 1nown as the insurer- assures or underwrites his property
or life- or the life of another person in whom he has a pecuniary interest- or property in which he
is interested- or against some ris1 or lia!ility- !y paying a sum of money as the premium* 'nder
the contract- the insurer agrees to indemnify the insured against a loss which may accrue to the
other on the happening of some event*
$ccording to encyclopediaedia- Insurance is?
! contract "policy# in $hich an individual or entity receives financial protection or
reim%ursement against losses from an insurance company. &he company pools clients' ris(s
to ma(e payments more afforda%le for the insured.
$t present- insurance is !eing used widely and !ecoming more and more popular !oth in
personal life and in the !usiness sector as a significant ris1 management tool which is primarily
used to hedge against the ris1 of a contingent- uncertain loss* Insurance contract provides
financial protection to the insured !y the insurer against a loss arising out of happening of an
uncertain event* The insured can avail this protection !y paying premium to any insurance
company with whom the contract has !een made* Insurance wor1s on the !asic principle and
concept of ris12sharing* @hen a company insures an individual entity %the insured&- there legal
re"uirements to share the ris1s associated with the insured !y the insurer- !rea1ing of which
contract creates legal !indings* $ great advantage of insurance is that it spreads the ris1 of a few
people over a large group of people e8posed to ris1 of similar type and the re2insurance system
ma1es the total ris1 at zero level in the long run* On the one hand- insurance can increase fraudA
on the other it can help societies and individuals in preparing catastrophes and in mitigating the
effects of catastrophes on households- !usiness operations and societies*
&eatures of Insurance
Insurance has various effects on society through the way that it changes who !ears the cost of
losses and damage of the insured according to the insurance contract* The distinguished common
features of any insurance are as follows;
(hifting or transferring ris1 of loss or damage of any life- asset- or property from one party to
another party*
(haring of losses !y mem!ers of the groupBcompany
One party underta1es the loss incurred on the insured property or asset of the other party*
The ris1 is sharedB accepted !y the insurer for a consideration of money from the insured
called as Premium %7o ris1 to !e assumed unless premium is received in advance&*
It is assured to the insured !y the insurer that the amount will !e paid on happening of the
specified act or event* >*g* 4eath- 3ire- Burglary- $ccident- $ny peril in (ea etc*
Parties of Insurance Contract
$s insurance !usiness has insurance contract- there are mainly two parties in the contract ?
Insurer ; % The person who underta1es the ris1 under the contract&
Insured; % The person to whom the underta1ing is given&
The Insurer can !e any of the following mentioned !elow;
$n individual
'nincorporated !ody of individuals-
Body corporate % esta!lished !y the Companies $ct&
$n $ssociation of partnership firm <egistered-
$ny other agency permitted under any other Law in Bangladesh
In order to lower the huge amount of insurance ris1- insurance companies intend to re2insure
their contract with any other %mostly larger& local of foreign insurance companies*
Prominent &eatures of Insurance La' of Bangladesh
The history of Bangladesh is a history of endless struggle* (ince the independence of
Bangladesh- its citizens have !een fighting for the improvement of their standard of living as
well as economic condition* But most of the time various accidental incidents and disasters
hamper the smooth continuation of the ourney* Over the last C/ years- many helping hand
especially insurance companies are trying to share their ris1 associated with various tas1s- assets-
operations- and even of their life* The Insurance !usiness has !een introduced ) developed in
proportion to the development of the economic growth in Bangladesh* There are 6. insurance
companies in the country- including two state2owned enterprises- the +iwan Bima Corporation
%+BC& for life insurance- and the (adharan Bima Corporation %(BC& for general insurance*
7evertheless- B4 remains !ehind its neigh!ors- !oth in terms of premium income and
penetration* Only ,*D percent of the population has life insurance coverage in Bangladesh- as
compared to C*Dpercent in Pa1istan and E*Dpercent in India %as of ./,/&*
Regulatory &rame'or( in BD
>very industry needs to !e regulated and maintained properly to ensure the conflict free
operation in any country* In this regard- Parliament of Bangladesh- on /0 #arch ./,/- passed
two insurance laws in a !id to further strengthen the regulatory framewor1 and ma1e the industry
operationally vi!rant* The new laws- came in to effect on ,9 #arch ./,/- are Insurance $ct
./,/ and I4<$ ./,/*
#aor Insurance $cts
The Insurance $ct- ,:09
Insurance <ules of ,:D9
Bangladesh Insurance %7ationalization& Order ,:E.*
The Insurance Corporations $ct- ,:E0
Insurance %$mendment& Ordinances of ,:9C
The Insurance $ct- ./,/
)istory of Insurance $ Insurance La's in Bangladesh
Insurance !usiness is not new in Bangladesh* $lmost a century !ac1- during the British rule in
India- some insurance companies started insurance !usiness transaction- !oth life and general- in
this region %former Bangal or Indian (u!continent&* This !usiness gained momentum in >ast
Pa1istan during ,:CE2,:E,- when C: insurance companies transacted !oth life and general
insurance schemes* The insurance sector was originally regulated !y the Insurance $ct- ,:09 and
after the Independence in ,:E,A the industry was governed !y the Insurance $ct ,:E0* In ./,/ a
new Insurance $ct has !een passed to modernize the sector*
*+,-.*+-/ Period%
Insurance is not a new term in this territory of Bangladesh* <ight after the great division in ,:CE-
the industry had got its momentum and C: insurance companies started to conduct their !usiness
during the Pa1istan period %,:CE2,:E,&* These companies doing insurance !usiness were of
various origins li1e British- $ustralian- Indian- @est Pa1istan and local* $t that time- ten
insurance companies had their head offices in >ast Pa1istan- .E in @est Pa1istan- and rest
elsewhere in the world* #ost of these companies were Limited Lia!ility Company* (ome of
these companies were specialized on dealing in a particular class or sector of !usiness- while
others were composite companies that dealt in more than one class of !usiness* $fter the
Independence of Bangladesh in ,:E, through the war of li!eration- the 5overnment of
Bangladesh nationalized insurance industry in ,:E. !y the Bangladesh Insurance
%7ationalization& Order ,:E.*
*+-0 12fter Nationali3ation4%
By virtue of the nationalization order- all C: insurance companies and organizations transacting
insurance !usiness in the country were placed in the sector under fie operations e8cept postal life
insurance and foreign life insurance companies* These operations were; the +atiya Bima
Corporation- Tista Bima Corporation- Farnafuli Bima Corporation- <upsa +i!on Bima 0,
Corporation and (urma +i!on Bima Corporation* The +atiya Bima Corporation was an ape8
corporation only to supervise and control the activities of the other insurance corporations which
were responsi!le for underwriting* Tista and Farnafuli Bima Corporation were for general
insurance and <upsa and (urma for life insuance* The specialist life insurance companies or for a
life portion of a composite company oined the <upsa and (urma corporations while specialist
general insurance companies or the general portion of a composite company oined The Tista and
Farnafuli corporations* The !asic idea !ehind the formation of four underwriting corporations-
two in each main !ranch of life and general- was to encourage competition even under a
nationalized system* But the !urden of administrative e8penses incurred in maintaining two
corporations in each front of life and general and an ape8 institution at the top outweighed the
advantages of limited competition* $s a result of the nationalization of the insurance industry- on
,C #ay ,:E0- a restructuring was made under the Insurance Corporations $ct ,:E0* 3ollowing
the $ct- the government formed two corporations in place of five corporations; the (adharan
Bima Corporation for general !usiness- and +i!an Bima Corporation for life !usiness* The postal
life insurance !usiness and the life insurance !usiness !y foreign companies were still allowed to
continue as !efore *In reality- however- only the $merican Life Insurance Company Limited
continued to operate in the life sector 0 for !oth new !usiness and servicing- while three other
foreign life insurance continued to operate only for servicing their old policies issued during
Pa1istan days* Postal life maintained its !usiness as !efore*
*+-0. *+5, Period %
$fter,:E0- general insurance !usiness !ecame the sole responsi!ility of the (adharan Bima
Corporation* Life insurance !usiness was carried out !y the +i!on Bima Corporation- the
$merican Life insurance Company- and the Postal Life Insurance 4epartment until ,::C- when a
change was made in the structure arrangement to 1eep place with the new economic trend of
li!eralization* The insurance corporations $ct,:E0 were amended in ,:9C to allow insurance
companies in the private sector to operate side !y with (adharan Bima Corporation and +i!an
Bima Corporation*
*+5,.*++, Period %
The Insurance Corporations $mendment $ct ,:9C allowed floating of insurance companies-
!oth life and general- in the private sector su!ect to certain restrictions regarding !usiness
operations and reinsurance* 'nder the new act- all general insurance !usiness emanating from
the pu!lic sector were reserved for the state owned (adharan Bima Corporation- which could
also underwrite insurance !usiness emanating from the private sector* The $ct of ,:9C made it a
re"uirement for the private sector insurance companies o o!tain ,//G reinsurance protection
from the (adharan Bima Corporation*This virtually turned (adharan Bima Corporation into a
reinsurance organization- in addition to its usual activities as direct insurer* (adharan Bima
Corporation itself had the right to reinsure its surplus elsewhere outside the country out after
e8hausting the retention capacity of the domestic mar1et* (uch restrictions aimed at preventing
outflow of foreign e8change in the shape of reinsurance premium and developing are insurance
mar1et within Bangladesh* The restriction regarding !usiness placement affected the interests of
the private insurance companies in many ways* The restrictions were considered not congenial to
the development of private sector !usiness in insurance* Two strong arguments were put forward
to articulate feelings; (ince the pu!lic sector accounted for a!out 9/G of the total premium
volume of the country- there was little premium left for the insurance companies in the private
sector to survive* In this conte8t- adharan Bima Corporation should not have !een allowed to
compute with the private sector insurance companies for the meager premium %./G& emanating
from the private sectorA Being a competitor in the insurance mar1et- (adharan Bima Corporation
was hardly accepta!le as an agency to protect the interest of the private sector insurance
companies and should not have retained the e8clusive right to reinsure policies of these
companies* The arrangement was in fact- against the principle of laissez faire* Private sector
insurance companies demanded withdrawal of the a!ove restrictions so that they could;
'nderwrite !oth pu!lic and private sector insurance !usiness in competition with the (adharan
Bima Corporation- and The government modified the system through promulgation of the
Insurance Corporation %$mendment& $ct,::/*The changes allowed private sector insurance
companies to underwrite D/G of the insurance !usiness emanating from the pu!lic sector and to
place up to D/G of their reinsurance with any reinsure of their choice- at home or a!oard-
1eeping the remaining for placement with the (adharan Bima corporation*
*++, 6 Present %
(ince then the Industry is growing steadily despite many !ac1 logs- several amendments were
made in the Insurance Law since ,:9C* In ./,/- a 7ew Insurance $ct passed !y Parliament
called Insurance $ct- ./,/ to replace the old $ct of ,:E0* $s soon as the new insurance act has
!een passed- the old one has !ecome inactive and from now on the entire insurance industry will
!e regulated !y the new Insurance $ct ./,/*
#aor Regulatory Conflicts
>ven though the different rules ) regulations have !een made to regulate the entire insurance
industry smoothly- many situations and pro!lems regarding the implementation process caused
conflicts over time* The Conflicts
There was a restriction regarding !usiness placement under the Insurance $ct ,:09-
which affected the interests of the private insurance companies in many ways in
Bangladesh* (ince the pu!lic sector accounted for a!out 9/G of the total premium
volume of the country- there was a little percentage of premiums left for the insurance
companies in the private sector to survive*
In such situation- the withdrawal of the restriction !ecame essential* (o- the private sector
insurance companies demanded withdrawal of such restrictions so that they could;
%a& 'nderwrite !oth pu!lic and private sector insurance !usiness in competition with the (BC *
%!& >ffect reinsurance to the choice of reinsures*
Resolutions "ol!ing the Conflicts
@hen there is any pro!lem- there is the emergence of solutions* $s the insurance industry faced
significant pro!lems regarding the restrictions on !usiness placement- the regulatory !odies had
to ta1e necessary resolutions to face ) handle the situation* In this regard- the following steps
had !een ta1en !y the regulatory !odies;
The 5overnment modified the system through promulgation of the Insurance
Corporations %$mendment& $ct ,::/*
The changes through the Insurance Corporations %$mendment& $ct ,::/ allowed the
private sector insurance companies to underwrite D/G of the insurance !usiness
emanating from the pu!lic sector and to place up to D/G of their reinsurance with any
reinsures of their choice- at home or a!road- 1eeping the remaining for placement with
the (hadharon Bima Corporation %(BC&*
#any other changes were introduced such as privatization policy- which paved the way
for a num!er of insurers to emerge in the private sector*
The overhaul also includes the esta!lishment of an Insurance <egulatory $uthority
%I<$&- which would !e autonomous- and have the power to regulate the state2owned +BC
and (BC as well as all private insurance companies on an e"ual footing under a uniform
regulatory framewor1*
Reforms in Insurance "ector
In order to smooth the overall insurance !usiness in Bangladesh- the concerned authority had
always !een alert* @hile there was any pro!lem or conflicting situation arises- the authority
doesn=t sit idleA rather they try to solve it at their !est*
Considering the e8pansion of trade and commerce in the country and for reducing ris1
related pro!lems in people=s life- the new law titled Insurance $ct ./,/= has !een
enacted to update the provisions of Insurance $ct- ,:09=*
Insurance 4evelopment and <egulatory $uthority $ct ./,/= has also !een formulated
with a view to synchronizing the functions of the e8isting Insurance 4epartment with the
spirit of newly enacted Insurance $ct- ./,/ to maintain proper control and supervision of
the sector and protect the interests of policy holders and !eneficiaries under the insurance
policy*
O!er!ie' of the Ne' Insurance 2ct /7*7
Bangladesh=s insurance industry is set to start a new ourney with the passage of two new laws in
the parliament recently* The House passed two insurance laws in a !id to further strengthen the
regulatory framewor1 and ma1e the industry operationally vi!rant* The new laws are Insurance
$ct ./,/ and Insurance 4evelopment and <egulatory $uthority $ct ./,/* The government has
ta1en the pragmatic step to !oost the insurance sector*
Name The Insurance 2ct8 /7*7
$ct 7um!er ,0 of ./,/
(ummary This law is related to the matters of Insurance
#inistry #inistry of 3inance
Passing 4ate #arch /0- ./,/
4ate in 3orce Thursday- ,9 #arch- ./,/
<egulatory $uthority Insurance 4evelopment ) <egulatory $uthority
%I4<$&
Insurance $ct ./,/ and Insurance 4evelopment and <egulatory $uthority $ct ./,/ were passed
to !etter regulate the insurance industry and protect customersH interests* $nd Insurance Bill
./,/ said the !ill was moved aiming at modernizing and updating the old Insurance $ct and to
trim down the ris1s of investment in trade and commerce and of course particularly in the
insurance industry* The laws update Insurance Ordinance .//9 and Insurance <egulatory
$uthority Ordinance .//9 of the past careta1er government* Insurance 4evelopment and
<egulatory $uthority %I4<$& were passed !y the +atiya (angshad in #arch- ./,/* The newly
esta!lished I4<$ started functioning in +anuary- ./,,* There are a!out D/ rules and regulations
to !e framed under the Insurance $ct- ./,/* The I4<$ have !een wor1ing on the initial drafts
prepared under an $sian 4evelopment Ban1 %$4B&2funded Technical $ssistance %T$& proect*
The Ordinance has some notable ne' stipulations%
The much tal1ed a!out the Insurance $ct ./,/ and Insurance 4evelopment and <egulatory
$uthority $ct ./,/ were passed in the parliament on 0rd #arch- ./,/* The new ordinance has
some nota!le provisions as follows;
1*4 "etting up of a Policyholders9 Protection &und%
In order to ma1e the overall claim settlement procedure smooth and timely- the insurance
companies have to set up a special fund named IPolicyholders= Protection 3und as per the
new re"uirements of the newly passed and !eing implemented Insurance $ct ./,/*
1/4 :reater capital re;uirements for insurers%
The new Insurance $ct ./,/ raised the paid2up capital of life and non2life insurance companies
to ma1e them financially sound* The minimum paid2up capital of a life insurance company will
now rise to T1 0// million from T1 ED million and for nonlife the capital size will !e T1 C//
million from T1,D/ million under Basel2II* 3or 3inancial Institutions %3Is-& full implementation
of Basel2II has !een started in +anuary /,- ./,. %Prudential 5uidelines on Capital $de"uacy and
#ar1et 4iscipline %C$#4& for 3inancial Institutions&* 7ow- 3Is in Bangladesh are re"uired to
maintain T1* , !illion or ,/G of Total <is1 @eighted $ssets as capital- whichever is higher*
104 Creation of bro(erage houses for insurance policies%
The new Insurance $ct ./,/ %section 00& said that !ro1erage houses %Ban1s- financial
institutions or any middleman companyBorganization& should !e created for insurance policies*
'nder the section D9%,&- none can give money of commission to any!ody e8cept the certain
agents or !ro1erage houses in order to launch or e8pand any insurance !usiness in Bangladesh*
The distri!ution of the commission must !e as follows;
0DG of the premium in the first year*
,/G of the renewed premium in the second year*
DG of the renewed premium in the 0rd year and on after *
1,4 #andatory sol!ency margins for insurers%
$ll authorized life assurance companies are closely regulated !y the I<$* <egular internal and
e8ternal audit activity and strict reporting re"uirements ensure that the companies comply with
the regulator=s safeguardsA one of those safeguards is a solvency margin* The solvency margin is
the comparison !etween what a company owns %its assets& and what it owes %it lia!ilities& and
indicates the ratio of assets to de!t* Therefore the solvency margin provides a good indicator of
the financial sta!ility of that company* The I<$BI4<$- as the regulator- monitors any falls in
solvency !elow a certain percentage*
>ach and every insurance company has to 1eep a mandatory solvency margin following a
certain percentage %which has not yet !een fi8ed& and !y using a certain formula %which has not
yet !een esta!lished& according to section C0 %,& of the Insurance $ct ./,/*
1<4 2llo'ing foreign in!estment in the insurance sector%
The Insurance $ct ./,/ said the sector needs to !e managed properly and !e strengthened !y
reducing !usiness ris1s- and local and international insurance laws need to !e harmonized
considering the socio2economic aspect of the country and protect the interest of policy2holders
and other !eneficiaries*
1=4 Reduction of the number of directors from /7 to *<%
The insurance act !ars a director of an insurance company to !ecome director of any other
financial institution including !an1s* 'nder the Insurance $ct ./,/- the num!er of the directors
cannot e8ceed ,D- while it was ./ under the Insurance $ct ,:09*
1-4 Categori3ation of Insurance Business%
The section D %,& of the Insurance $ct ./,/ proposed that insurance company to !e categorized
as life= and non2life= instead of life= and general= and it have replaced the Insurance $ct ,:09*
(o- from now on the insurance companies in the entire insurance sector in Bangladesh will !e
categorized as life and non2life insurance companies under the new insurance act*
Ne' 2dditions by the 2ct8 /7*7%
The newly passed Insurance $ct ./,/ has some nota!le new additions- which were a!sent in the
previous Insurance $ct of ,:09* Therefore- the entire insurance industry is facing some new
practice while implementing the new act in the insurance !usiness* The new additions !y the new
act are as follows;
Creation of Ne' Regulatory 2uthority%
Insurance <egulatory $uthority %I<$& will !e esta!lished for the Insurance sector* There are 6.
insurance companies %see $ppendi8& operating in the country and they need to !e regulated
under comprehensive laws and guidelines and need to !e supervised !y a strong regulatory
authority* The Insurance $ct ./,/ said the sector needs to !e managed properly and !e
strengthened !y reducing !usiness ris1s- and local and international insurance laws need to !e
harmonized considering the socio2economic aspect of the country- and to protect the interest of
policy holders and sta1eholders of the insurance industry in Bangladesh* The 7ew Insurance $ct
provides for the composition of such $uthority- its terms ) conditions* The I<$ will have the
power to;
#a1ing regulation for Insurance Industry and delegation of powers-
>sta!lishment of the Insurance <egulatory 3und-
>sta!lishment of Insurance $dvisory Committee-
Power to ma1e any future rules or amendments- etc
The Insurance 4evelopment and <egulatory $uthority $ct ./,/ said the authority will comprise
a chairman and four mem!ers and they will loo1 after the whole sector* The enactment of the law
will a!olish the department of insurance under the 3inance #inistry of Bangladesh* Premium
charged !y the companies will !e determined !y a committee formed !y the authorities and it
will also investigate any irregularities of the companies- the act said* To create a vi!rant
insurance sector- the industry got its recognition from the government and a new Insurance
$ct./,/ has !een passed to replacing the old Insurance $ct of ,:E0*
Legal &rame'or( for Islami Insurance%
Islamic Insurance was already in Bangladesh !ut it was now !ought under legal framewor1 !y
this new $ct ./,/* 'nder the section E %,& of the Insurance $ct ./,/- no insurance company is
allowed to do !oth Islami Insurance !usiness and non2life insurance !usiness together* If any
company have !oth of this !usinesses- then according to section E %.& of the new act it has to
give up one and can continue any of these two* $nd the decision has to !e informed to the
insurance authority within si8 month of forming the !usiness authority* However- the claim of
the previous policy holders shall !e settled according to the previous Insurance act of ,:09*
4uring ,::: ) onward many insurance companies have !een given license to underwrite Islami
insurance !usiness without having proper law- rules and regulations to guide them* It is not
proper to allow Islami insurance !usiness without having legal !ac1ing and- therefore- this
!usiness has !een !rought under the am!it of new law*
#icro Insurance Business%
The new Insurance $ct ./,/ is ma1ing way for the #icro Insurance Business opportunities in
the insurance sector of Bangladesh which has a great prospect for the small and medium
enterprises as well as the growing !usinesses especially in the rural areas2 2
#icro insurance can !e a great prospective area for the insurance !usiness in our country
especially in the rural areas* #ost of the people of our country are una!le to have costly
and long term insurance policies since a great portion of the country=s population is from
lower ) middle income class*
#icro insurance can !e provided to individual personnel or to small !usiness owners
against little insurance premiums and with easy terms and conditions* @hen they will
afford to minimize their ris1s at a lower price- they will ta1e that opportunity and they
will !ecome to get used to it* This can cover a huge portion of the society who can !e a
prospective target mar1et for this !usiness*
Changes Bought by the Ne' 2ct
The Insurance $ct has not only !rought the new additions- !ut also has !rought some eye2
catching changes in some significant areas that e8isted in the previous insurance act* The
changes !rought !y the Insurance act ./,/ are descri!ed shortly !elow;
Capital Re;uirements%
$n insurer transacting life insurance !usiness would !e re"uired to have a minimum paid2up
capital of T1* 0// million while the minimum paid2up capital for non2life insurer would !e T1*
C// million*
"pread of Business in Rural 2reas%
Provision has !een made to induce insures to underta1e such parentage of his !usiness in the
rural areas or in social sectors as may!e specified !y the $uthority- This provision would
encourage savings among the people in the rural areas and social sectors on the one hand- and
provide financial security to the insurer- on the other*
Reinsurance 2broad%
The present mandatory provision for reinsurance of general insurance with the state2owned
(adharan Bima Corporation %(BC& has !een rela8ed* $n insurer may reinsure with any other
insurer inside or outside Bangladesh*
Penalty %
'nder the new insurance law- ma8imum penalty for any violation will !e T1* ,/ la1h in fine
while the minimum fine will !e T1* D/-///* If the violation continues- an additional fine of T1*
D-///per day will !e imposed*
Pro!ision for &oreign In!estment%
@ith a view to attracting foreign investment in the insurance sector in Bangladesh- foreign
investors would !e allowed to hold or su!scri!e to the share of an insurance company up to a
prescri!ed ma8imum %the ma8imum limit has not yet !een set&*
The role of Insurance in >conomic De!elopment
The management of ris1 is a fundamental aspect of entrepreneurial activity* >ntrepreneurs
manage the ris1 of accidental loss !y weighing the costs and !enefits of each alternative* In a
structured ris1 management process- this involves; %,& identifying the e8posures to accidental
lossA%.& evaluating alternative techni"ues for treating each loss e8posureA %0& choosing the !est
alternativeA and %C& monitoring the results to refine the choices* Those who do not apply a
structured process still ma1e decisions a!out ris1- although sometimes !y default rather than
design* The scope of an economyHs insurance mar1et affects !oth the range of availa!le
alternatives and the "uality of information to support decisions* 3or e8ample- a manufacturer
might produce only for the local mar1et- forgoing more lucrative opportunities in distant mar1ets
in order to avoid the ris1 of losing goods in shipment* Transport insurance can mitigate this loss
e8posure and ena!le the manufacturer to e8pand* (imilarly- to avoid the ris1 of total loss from
drought- commercial farmer may 1eep half of hissed in reserve* Crop insurance can protect
against drought and permit all of the seed to !e planted for a smaller premium than the cost of
holding half in reserve* Thus pu!lic policies that encourage insurance operations improve the
economyHs productivity !y !roadening the range of investments* Insurers also contri!ute
specialized e8pertise in the identification and measurement of ris1* This e8pertise ena!les them
to accept carefully specified ris1s at lower prices than non2specialists* They also have an
incentive to collect and analyze information a!out loss e8posures- since the more precisely they
measure the cost of ris1- the more they can e8pand* $s a result- the insurance mar1et generates
price signals to the entire economy- helping to allocate resources tom reproductive uses* Insurers
also have an incentive to control losses- which is a significant social !enefit* By offering
discounts for seat !elts- smo1e detectors- or other measures that reduce the fre"uency or severity
of losses- they lower their eventual claims costs- in the process saving lives and reducing inuries*
On the investment side- due to the long term nature of their lia!ilities- sizea!le reserves- and
predicta!le premiums- life insurance providers can serve an important function as institutional
investors providing capital to infrastructure and other long term investments as well as
professional oversight to these investments* Of course- these !enefits are fully realized only in
mar1ets where insurance providers invest su!stantial portion of their portfolios domestically* The
net result of well functioning insurance mar1ets should !e !etter pricing of ris1- greater
efficiency in the overall allocation of capital and mi8 of economic activities- and higher
productivity* Importantly- these uni"ue functions of insurance should !e complementary to
!an1ing and financial sector deepening more !roadly* 3or instance- insurance facilitates credit
transactions such as the purchase of homes and cars and !usiness operations- while depending in
turn on well functioning payment systems and ro!ust investment opportunities*
Insurance Companies in Bangladesh;
$ccording to Bangladesh Ban1- there are 6/ private ) . pu!lic insurance companies in
Bangladesh?
LI"T O& T)> IN"UR2NC> CO#P2NI>" IN PUBLIC ">CTOR
"l? No? Name of the Insurance Company
7*? (adharan Bima Corporation%5en* Ins&
7/? +i!an Bima Corporation %Life Ins*&
%(ource ; I4<$&
LI"T O& T)> LI&> IN"UR2NC> CO#P2NI>"%
"l? No? Name of the Insurance
Company
/,* $merican Life Insurance
Company %3oreign Company&
/.* Baira Life Insurance Company
Ltd*
/0* 4elta Life Insurance Company
Ltd*
/C* 3arest Islami Life Insurance Co*
Ltd*
/D* 5olden Life Insurance Ltd*
/6* Homeland Life Insurance
Company Ltd*
/E* #eghna Life Insurance Company
Ltd*
/9* 7ational Life Insurance Company
Ltd*
/:* Padma Islami Life Insurance
Company Ltd*
,/* Popular Life Insurance Company
Ltd*
,,* Pragati Life Insurance Ltd*
,.* Prime Islami Life Insurance
Company Ltd*
,0* Progressive Life Insurance
Company Ltd*
,C* <upali Life Insurance Company
Ltd*
,D* (andhani Life Insurance
Company Ltd*
,6* (unflower Life Insurance
Company Ltd*
,E* (unlife Insurance Company Ltd*
LI"T O& T)> NON.LI&> IN"UR2NC> CO#P2NI>"%
"l? No Name of the Company
/,* $grani Insurance
Company Ltd*
/.* $sia Insurance Ltd*
/0* $sia Pacific 5en
Insurance Co* Ltd*
/C* Bangladesh Co2
operatives Ins* Ltd*
/D* Bangladesh 5eneral
Insurance Co* Ltd*
/6* Bangladesh 7ational
Insurance Co*Ltd*
/E* Central Insurance
Company Ltd*
/9* City 5en* Insurance
Company Ltd*
/:* Continental Insurance
Ltd*
,/* Crystal Insurance
Company Ltd*
,,* 4esh 5en* Insurance
Company Ltd*
,.* >astern Insurance
Company Ltd*
,0* >astland Insurance
Company Ltd*
,C* >8press Insurance Ltd*
,D* 3ederal Insurance
Company Ltd*
,6* 5lo!al Insurance Ltd*
,E* 5reen 4elta Insurance
Co* Ltd*
,9* Islami Commercial
Insurance Co* Ltd*
,:* Islami Insurance
Bangladesh Ltd*
./* +anata Insurance
Company Ltd*
.,* Farnaphuli Insurance
Company Ltd*
..* #eghna Insurance
Company Ltd*
.0* #ercantile Insurance
Company Ltd*
.C* 7itol Insurance
Company Ltd*
.D* 7orthern 5en*Insurance
Company Ltd*
.6* Peoples Insurance
Company Ltd*
.E* Phoni8 Insurance
Company Ltd*
.9* Pioneer Insurance
Company Ltd*
.:* Pragati Insurance Ltd*
0/* Pramount Insurance
Company Ltd*
0,* Prime Insurance
Company Ltd*
0.* Provati Insurance
Company Ltd*
00* Pura!i 5en Insurance
Company Ltd*
0C* <eliance Insurance Ltd*
0D* <epu!lic Insurance
Company Ltd*
06* <upali Insurance
Company Ltd*
0E* (onar Bangla Insurance
Company Ltd*
09* (outh $sia Insurance
Company Ltd*
0:* (tandard Insurance Ltd*
C/* Ta1aful Islami Insurance
Ltd*
C,* 4ha1a Insurance Ltd*
C.* 'nion Insurance
Company Ltd*
C0* 'nited Insurance
Company Ltd*
CO#P2N@ OA>RI>B
Peoples Insurance Company Limited
Peoples Insurance Company Limited is the second private insurance company and it is a relia!le
insurance company in the insurance landscape in Bangladesh* The company was founded in
,:9D in order to provide non2life insurance services in the country* CustomersH satisfaction is the
company=s main concern* Peoples Insurance Company always tries to value its customer- and
provides the entire needed safeguard to them* The company helps its customers to get them set
soon again and to march with time*
(ince its inception- the company is providing a variety of services to its customers* Peoples
Insurance Company Limited had !een proud to stand !eside itsH valued customer and the
sta1eholders when they are in any ris1 caused !y disaster or accident* In order to operate
!usiness through 0C !ranches throughout the country- the company has created a great
opportunity of employment for a large num!er of peopleA a nota!le num!er of which is female*
Through its !usiness responsi!ility and also through its corporate social responsi!ility %C(<&- the
company is always a friend of its valued customer*
The summarized information a!out the Peoples Insurance Company Limited is shown in the
ta!le !elow;
Peoples Insurance Company Limited at a Glance
4ate of Incorporation 0, #arch ,:9D
O!tained Certificate for Commencement of
Business
0, #arch ,:9D
<egistered with the 4epartment of Insurance 0, +uly ,:9D
$uthorised Capital T1* D/*// Crore
Issued- (u!scri!ed and Paid up Capital T1*,D*// Crore
Listing in 4ha1a (toc1 >8change .: +uly ,::/
Listing in Chittagong (toc1 >8change ,/ Octo!er ,::D
Prospectus Issued for 3loatation of Pu!lic
(hares
,6 $ugust ,::/
$mount of Pu!lic (u!scription T1* 0*// Crore
<egistration of Land at 06- 4il1usha
CB$-4ha1a2,/// %#easuring ,6*9D Fatha&
/D #arch ,::9
Inauguration of .. storied Building
Construction wor1 at 06- 4il1usha CB$-
4ha1a2,///
/: +une ,:::
Bonus (hare Issued J .DG In .//C
Bonus (hare Issued J ,//G In .//D
Bonus (hare Issued J 00*00G %0;,B& In .//9
Bonus (hare Issued J ./G In .//:
<ight (hare Issued J ,//G %,<;,& In .//:
Listed with C4BL Cth +uly .//D
Credit <ating !y C<I($L =$H
Aision8 #ission and &uture Plan of PICL
Aision of Peoples Insurance Company Limited %
The mission of the company is to reach at zenith point of providing "uality service and hence
achieving highest corporate goal and customer satisfaction* The slogan of PICL is Kmanush
manusher +annaL
#ission of Peoples Insurance Company Limited%
The dignity and well !eing of all people %especially the !usiness houses and their interests& are
ensured through insurance protection services in order to produce value for the shareholders all
the way through customer- employee and general people satisfaction*
&uture Plans%
The Company has underta1en various realistic future plans which include the following plans to
!e implemented?
To computerize the entire operation system within the shortest possi!le time
To impart e8tensive training for the employees at home and a!road* 3ield force %,//G&
has to !e properly groomed up*
To e8pand CompanyHs operations to all commercially important places of the country
gradually*
To introduce new products depending on the demand of the mar1et*
To o!serving #arch as the KClient (ervice #onthL in every year*
To follow K(ervice 3irst than Business K!y e8peditious and udicious settlement of claim
#aCimum #anagement >Cpenses
4ue to the increased price of various products used in any office or !usiness- the Peoples
Insurance Company Limited along with other insurance companies e8isting in the insurance
sector of Bangladesh are having a great load of continuously increasing management e8penses as
well as other e8penses* However- there has not !een made any change in the ma8imum
percentage of management e8penses since ,:09 under the new Insurance $ct ./,,- the company
cannot show the actual management e8penses if it e8ceeds the certain percentage*
"er!ices of Peoples Insurance Company Limited
(ince its inception- PICL is serving a variety of services to its valued customers* Currently- the
company has .C types of non2life insurance services through its 0C !ranches located in .0
districts throughout the country* The names of the services offered ) provided !y PICL are
given !elow;
Name of the "er!ices Pro!ided by PICL
,* 3ire Insurance ,0* Cash2in2safe Insurance
.* Industrial K$ll <is1sL Insurance ,C* Cash2on2counter Insurance
0* #arine Cargo Insurance ,D* Pu!lic Lia!ility Insurance
C* #arine Hull Insurance ,6* Personal $ccident Insurance
D* #otor Insurance ,E* PeoplesHs Personal $ccident Insurance
6* ContractorHs K$ll <is1sL Insurance ,9* @or1menHs Compensation Insurance
E* >rectionL$ll <is1sL Insurance ,:* 5oods2in2transit Insurance
9* #achinery Brea1down Insurance ./* Comprehensive Travel Insurance
:* 4eterioration of (toc1 Insurance .,* Over2seas #edi2claim Insurance
,/* Boiler ) Pressure Messel Insurance ..* K$ll <is1sL Insurance
,,* Burglary ) House!rea1ing Insurance .0* 3idelity 5uarantee Insurance
,.* Cash2in2transit Insurance .C* Ban1 Loc1ers Insurance
Location of Branches of Peoples Insurance Company Limited in Bangladesh
There are < departments in peoples insurance company Ltd? Those are%
$s per the #B$ degree completion re"uirement of $'(TBusiness(chool- $'(T'niversity- I
had !een appointed in the three2month internship program under the 4epartment of 3inance and
$ccounts at the head office of Peoples Insurance Company Limited- Bangladesh* 4uring the
internship2training program I have wor1ed in different significant programs underta1en !y the
3inance ) $ccounts department of the company* 3ortunately- I had the advantage of wor1ing in
the very friendly atmosphere in the Head office of PICL* Here I had the chance to learn a great
deal*
The &inance $ 2ccounts Department%
The department of 3inance ) $ccounts %3)$& is responsi!le for all matters relating to 3inance
and $ccounting functions of the Peoples Insurance Company Limited* To ena!le it perform its
statutory responsi!ility- the department is structured into D different sections as shown in the
figure 0*,* $ll these divisions however reports administratively to the C3O through the 45# )
5# of the respective department* $s an intern- I had wor1 with the unior e8ecutives luc1ily
under the supervision of the C3O shown in the graph !elow;
Responsibilities in &inance $ 2ccounts Department%
The finance ) accounts department of PICL ta1es responsi!ility for organizing the financial and
accounting affairs including the preparation and presentation of appropriate accounts- and the
provision of financial information for managers ) sta1eholders* It is the one of the most
important departments of the head office of Peoples Insurance Company Limited* One can have
a complete view of the functions and monthly e8penses of the company from the finance )
accounts department* The functions the department include managing- controlling and recording
the inflow and outflow of cash from the daily !asis to monthly and annual !asis* It is very
difficult o! to record all the e8penditure of the company which increases the importance of
account department in the company* The !asic functions of the department of finance ) accounts
are as follows;
Planning ) esta!lishing !udget
Posting %'nderwriting- ournals etc*&
Billing and 1eeping proper record
Petty cash management
Ban1 reconciliation
#aintain cash !oo1 ) !an1 !oo1
Preparation of financial statements
$nalysis of financial statements
Ta8 ) M$T calculation
Preparation ) su!mission of organization contri!uted ta8 return of the employees to
7B<
Conducting internal audit through the internal control unit
3inancial reporting to the management ) to the sta1eholders when necessary
#aintaining payroll
#aintaining liaison with the !an1s ) other financial organizations etc*
Responsibilities assigned on me%
The profita!ility of a company can !e udged through the analysis of its accounts record* #aor
wor1 of account is done in company head office located at 4il1usha- #otiheel- 4ha1a* One can
have a complete picture of the different activities and e8penses !y sitting in Ithe department of
3inance ) $ccounts* 3rom this perspective it was a 1nowledgea!le e8perience for me to wor1 in
this department as an intern throughout the three2month internship period* On the very first day
my on2site supervisor- #r* (i! (an1ar (aha- 3L#I%I&- 3C$- who is designated as the Chief
3inancial Officer %C3O& gave me an overall view of the various functions performed !y the
department* 4uring the internship period- I learnt a lot not only a!out the I$ccounts !ut also
various other activities of the Insurance company* Besides- #r* (i! (an1ar (aha- the 5#- 45#-
) the (r* e8ecutives of the concerned department were very helpful and co2operative over the
three2month internship period* I learnt a!out various functions of the department of 3inance )
$ccounts* @ith the help of my supervisor- I was a!le to manage internal control tools and other
related financial documents of the head office* He along with the other respected personnel of the
department were helpful enough to ta1e out time from their !usy schedule to teach me how to
maintain records relating to !an1 !oo1- cash !oo1* The main wor1 of accounts is done in the
company=s head office* The manager- #r* $*(*#* $!dul $wal %(aleh& supervised me a!out
different activities of the department of finance and accounts* He was responsi!le for
I#anaging Ban1 <econciliation ) Mariance $nalysis which is a tough o! and I helped him
along with the +r* >8ecutives in doing this tas1 during the period of my internship* @or1ing in
this department was a very 1nowledgea!le ourney for me*
4uring the training period- I was a!le to get a complete idea of the wor1ing of an insurance
company* It was a very 1nowledgea!le e8perience* In the following pages I have e8plained the
performing various tas1s that I have done during the period of internship period* #aor
<esponsi!ilities;
Internal audit for internal control
3inancial reporting
Preparation of Ban1 reconciliation and necessary adustment
Training to the newly recruited +r* e8ecutives
7ow- I would li1e to give a short overview of the responsi!ilities that I have performed and my
significant learning that I have learnt from my internship at the head office Peoples Insurance
Company Limited under the department of 3inance ) $ccounts*
*?Internal audit for internal control %
4uring the internship period- I too1 participation in internal audit which is a significant tool of
internal control and is one of the most important functions of the department of finance )
accounts*
Internal control%
Internal Control is the process designed to mitigate ris1s to the !usiness and ensure that the
!usiness operates efficiently and effectively* I($ and B($ N 0,D N <Understanding the =ntity
and its =nvironment and Assessing the >isk of Material Misstatement? defines the internal
control N
Internal Control is the process designed and implemented to address identified %usiness ris(s
that threaten the achievement of the entity's o%)ectives
#ateriality%
$s part of internal audit- I had to calculate materiality* #ateriality relates to the level of error
that affects the decisions of users of the financial statements* I$( and B($ N 0./ N defines N
*ateriality is the auditors' )udgment a%out the si+e of misstatements in the financial
statements
)o' the #ateriality is used in the course of audit engagement%
Calculation of #ateriality
#ateriality depends on the size of the errors in the conte8t if its omissions or misstatements* I
came to 1now that materiality assessment helps the auditors to decide N
How many and what items to e8amineO
@hether to use sampling techni"uesO
@hat level of error is li1ely to lead an auditor to stay the financial statements do not give a true
and fair viewO
There are different methods used !y different audit firms in calculating materiality* But among
them- the following are an e8ample used !y the Peoples Insurance Company Limited*
*ateriality for Planning Purposes ,
It is DG of profit !efore ta8 or *DG of total assets or total revenue*
Significant *isstatement &hreshold ,
It is EDG of #ateriality for Planning Purposes*
!udit -ifference Posting &hreshold ,
It is 0G N DG of (ignificant #isstatement Threshold*
>Cample
<evenue B4T* ,0-/9:-0:C Profit !efore ta8 B4T* ,-C/0-CCC Total assets B4T* C-0/D-D09
Based on this information- calculation is conducted using the a!ove given percentage for
calculating the #ateriality for Planning Purposes %#PP&- (ignificant #isstatement Threshold
%(#T& and $udit 4ifference Posting Threshold %$4PT&* In the a!ove cases- materiality can !e
individually or in aggregated in the class of transactions or account !alances in the financial
statements*
I have learnt that there are t$o approaches to calculate materiality ,
Income (tatements approachA and
Balance (heet approach*
&inancial reporting
I have audited the accompanying financial statements of Peoples Insurance Company Limited-
which comprise the statement of financial position as at 4ecem!er 0,- ./,/- and the statement of
comprehensive income- statement of changes in e"uity and statement of cash flows for the year
ended- and a summary of significant accounting policies and other e8planatory information*
#y Responsibility and Learning 'hile Reporting
#y responsi!ility was to e8press an opinion on these financial statements !ased on the financial
analysis ) internal audit* I conducted the audit in accordance with International (tandards on
$uditing %I($&* Those standards re"uire that we comply with ethical re"uirements and plan and
perform the audit to o!tain reasona!le assurance a!out whether the financial statements are free
from material misstatement* $n audit involves performing procedures to o!tain audit evidence
a!out the amounts and disclosures in the financial statements* The procedures selected depend on
the auditor=s udgment- including the assessment of the ris1s of material misstatement of the
financial statements- whether due to fraud or error* In ma1ing those ris1 assessments- the auditor
considers internal control relevant to the entity=s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances- !ut not
for the purpose of e8pressing an opinion on the effectiveness of the entity=s internal control* $n
audit also includes evaluating the appropriateness of accounting policies used and the
reasona!leness of accounting estimates made !y management- as well as evaluating the overall
presentation of the financial statements*
#aintaining Professional >thics
4uring auditing- I have learnt that professional ethics is as important as conducting a proper
audit in the purpose of ensuring proper internal control in (outh $sia Insurance Company
Limited* Professional ethics concerns the moral issues that arise !ecause of the specialist
1nowledge that professional attain and how the use of this 1nowledge should !e govern when
providing a service to the pu!lic can !e considered a moral issue and is termed professional
ethics* It agreed that Professionals are capa!le of ma1ing udgments- applying their s1illsA
reaching informed decisions in situations that general pu!lic cannot- !ecause they have not
received the relevant training* I have learned that as an auditor- I am re"uired to comply with the
following fundamental principles N Integrity- O!ectivity- Professional Competence and 4ue
Care- Confidentiality- and Professional Behavior*
Preparation of Ban( reconciliation
I have prepared a num!er of !an1 reconciliation of /. !ranches of Peoples Insurance Company
Limited as well as of the head office for the month of 7ovem!er24ecem!er- ./,. ) +anuary2
3e!ruary- ./,0* I have learned that mainly C things are considered for preparing !an1
reconciliation;
Che"ue issued !ut not yet presented in the !an1*
$mount 4eposited and shown in !an1 statement !ut not shown in !an1 !oo1*
Che"ue issued !ut not yet accounted for
$mount 4eposited and shown in !an1 !oo1 !ut not shown in !an1 statement*
The first two amounts along with !an1 interests are added with the closing !alance of the !an1
!oo1 1ept !y the organization- and the ne8t two are deducted from it along with the !an1
charges* Thus the !an1 reconciliation is prepared- the !alance of which is ust same as the
closing !alance of the certain !an1 statement* %Please see $ppendi8P6*D for the format of Ban1
<econciliation used !y PICL& *
Pro!ided training to the ne'ly recruited Dr? >Cecuti!e
Before leaving the organization- I had to train up the newly recruited +r* >8ecutives under the
department of finance ) accounts a!out what I had learnt so that they can perform their tas1s
effectively in my a!sence*
Other responsibilities%
The other tas1s that I have done in the internship period at PICL include the following;
Posting of transaction %#<&- underwriting- and money collection using accounting
software O<$CL> ./,.*
Preparing ) posting vouchers- and Feeping file ) 4ocumentation etc*
C"R 2cti!ities of PICL
Peoples Insurance Company Ltd* has !een participating in Corporate (ocial <esponsi!ility
%C(<& continuously since its inception in various ways* $s for instance- the company has
developed a uni"ue culture to help distressed peoples- environment- heritage- sports- education-
employment and much more* $ few of the corporate social responsi!ilities are as follows;
$fter the natural disasters- PICL participates in various types of the activities for the
reconstruction of the damaged infra2structures* #oreover- when the calamity is over- we
try to ta1e care of those who have lost their lives and their valued properties*
The company always in favor of protecting our tradition and heritage* 3or e8ample- our
company always sponsors not only the sports which are our own- for e8ample- Fa!adi-
Bali Fhela- Lathi Fhela etc* !ut also our non2traditional sports li1e foot!all and cric1et*
The company created a significant num!er of employment opportunities for the
unemployment human resources since its inception* The effort for o! creation will
continue in future too*
The company has a plan to provide scholarships for the needy !rilliant students who want
to ma1e a career in the fields of technology and digital sciences*
PICL has a plan to help the sic12aged people so that they do not consider themselves as a
!urden of our society*
3inally- the company focuses on the welfare of the employees so that they can have the
necessary s1ills and opportunities to face the challenges*
Business $ "tatistical Information since /77/
%3igures in #illion Ta1a&
@hile o!serving the financial performance of the Peoples Insurance Company Limited- it has
!een found that the company has faced different situation over years and that is why the financial
performance has some nota!le changes over the time period since .//.2./,,,*
:ross Premium $ Net Premium of PICL
@ear /7** /7*7 /77+ /775 /77- /77= /77< /77, /770 /77/
:ross Premium ,77?*7 05=?/ 005?<5 0/*?/* /<-?*5 /05?=5 /<+?== /=*?0- /<=?,0 /*/?<<
Net Premium /0<?0/ //+?0, /*-?7, /7<?+- *=0?0 *0-?=/ ***?=/ *,<?+0 *<7?=* *0+?=
In .//.- PICL had a gross premium of .,.*DD million B4T which has !een increased
progressively over years and !ecame C//*,/ million B4T in ./,,* $t the same time- net
premium of the company also has !een increased from .//. to ./,,- !ut in .//D ) .//6- the
organization made relatively lower net premium compared to the other years*
The annual reports %.//9- .//:- ./,/)./,,& of Peoples Insurance Company show that the
amounts of gross and net claim of the company since the year of .//. to ./,/ were fluctuated
nota!ly over the years*
:ross Claim $ Net Claim of PICL
@ear /7** /7*7 /77+ /775 /77- /77= /77< /77, /770 /77/
:ross Claim -0?<7 -/?,- -+?, <7?7= 05?*5 ,/0?/, <<?00 *7,?/+ ,+?5 /0?=/
Net Claim ,+?=/ //?0/ ,,?=* 07?0- /0?0< */7?05 /,?< 0-?,+ /+?,+ //?**
The company faced different gross ) net claims in different years due to the different situation
%disastersBaccidentsBris1s& of the policyholders* In .//6- !oth the amount of gross claim ) net
claim was significantly higher the previous and later years due to the greater num!er of
policyholder=s claim in that year* The graphical presentation of the finding is shown !elow;
Under'riting Profit 1Loss4 $ In!estment $ Other Income
$ccording to the annual reports %.//9- .//:- ./,/ ) ./,,& of Peoples Insurance Company- the
amounts of underwriting profitB %loss& and the investment ) other income since the year of .//.
to ./,, were as follows;
Qear ./,, ./,/ .//: .//9 .//E .//6 .//D .//C .//0 .//.
'nderwriting
Profit B%Loss&
,D*6. ,0*:C CD*0: ,0*ED /*0. 2,.E*DC 0,*.. 0,*99 00*/E 0.*:D
Investment ) ,,,*0C ,/:*:: 0:*DD C,*: .,E*0: .,*9: ,D*,, ,6*96 ,.*C9 ,.*0D
Other Income
4ue to the greater amount of gross and net claim PICL had faced significantly higher amount of
underwriting loss in .//6 and for the same reasons the amount of investment and other income
of the company is comparatively lower than the later years*
Net ProfitE 1loss4 both before $ after TaC
Qear ./,, ./,/ .//: .//9 .//E .//6 .//D .//C .//0 .//.
7et profit B
%Loss& !efore
Ta8
:D*:9 ,/,*/D 66*0C 0,*06 ,:0 2,CC*90 0*.E CE*/D CC*. C0*:.
7et profit B
%Loss& after
Ta8
6:*6D E6*D: 66*0C 0,*06 ,EE*:E 2,C,*C: 0*.E 0.*CC 0,*6. 0/*/.
One of the most important financial performances of any company is found in the company=s net
profit* Peoples Insurance Company=s net profit !oth !efore ta8 ) after ta8 since .//. were as
follows;
@hile o!serving the net profitB% loss& !oth !efore and after ta8 it has !een found that the
company faced greater amount of loss in .//6 !ecause of the greater amount of gross and net
claim PICL compared to the other years*
>arnings per "hare of PICL
Peoples Insurance Company=s >arnings per (hare over the years since .//. were "uite
satisfactory according to the sta1eholders* The company=s earnings per share since .//. up to
./,, are shown !elow;
3inancial $nalysis
Qear ./,, ./,/ .//: .//9 .//E .//6 .//D .//C .//0 .//.
>arnings per share %>P(& .*/D .*,, 00*,E ./*:, ,,9*6C 2:6*DD C*06 DC*/E D.*E D/*/0
>ven though the company had negative >P( in .//. due to the net loss causing !y a greater
claim settlement for the +amuna 5roup- it !ecame a!le to overcome that ust in the ne8t year in
.//E !y ta1ing wise decisions and pragmatic steps*
#ar(et condition
In the ta!le !elow- it is found that Peoples Insurance Company Limited was a!le to dividend in
all the years since .//. e8cept .//6- as it has already !een discussed a!out the reason of such
occurrence*
HighestBLowest #ar1et
Qear ./,, ./,/ .//: .//9 .//E .//6 .//D .//C .//0 .//.
4ividend in
Percentage
7o
4ivided
DG Cash
) DG
(toc1
./G
%(toc1&
0;, B
%(toc1&
,/G 7o
4ividend
,//G
%stoc1&
.DG
%stoc1&
.DG
%cash&
.EG
%cash&
Price of
(hare
,/./B,90 ,.,/E
DE/
,,9DE
99/
,D6CE
D/.
DC9E
,9/
6E0E .E/ 9//E
6E0
,9D/E
9//
,9D/E
9//
6:/E
DC/
.otes/ #ost of the analysis in this chapter is !ased on data from the annual report of Peoples
Insurance Company Limited for the year of .//9- .//:- ./,/ ) ./,,* $s the company has not
pu!lished the annual report for the year of ./,.- it was not possi!le to include and analyze the
information of ./,. due to confidentiality*
Business Performance of PICL since /77/ 1&igures in #illion Ta(a4
Qear ./,, ./,/ .//: .//9 .//E .//6 .//D .//C .//0 .//.
3inancial Performance
5ross
Premium
C//*,/ 096*. 009*D9 0.,*., .DE*,9 .09*69 .D:*66 .6,*0E .D6*C0 .,.*DD
7et Premium .0D*0. ..:*0C .,E*/C ./D*:E ,60*0 ,0E*6. ,,,*6. ,CD*:0 ,D/*6, ,0:*6/
5ross Claim E0*D/ E.*CE E:*C D/*/6 09*,9 C.0*.C DD*00 ,/C*.: C:*9/ .0*6.
7et Claim C:*6. ..*0. CC*6, 0/*0E .0*0D ,./*09 .C*D 0E*C: .:*CC ..*,,
'nderwriting
Profit B %Loss&
,D*6. ,0*:C CD*0: ,0*ED /*0. %,.E*DC& 0,*.. 0,*99 00*/E 0.*:D
Investment )
Other Income
,,,*0C ,/:*:: 0:*DD C,*: .,E*0: .,*9: ,D*,, ,6*96 ,.*C9 ,.*0D
7et profit B
%Loss& !efore
Ta8
:D*:9 ,/,*/D 66*0C 0,*06 ,:0 %,CC*90& 0*.E CE*/D CC*./ C0*:.
7et profit B
%Loss& after
Ta8
6:*6D E6*D: 66*0C 0,*06 ,EE*:E %,C,*C:& 0*.E 0.*CC 0,*6. 0/*/.
(hare Capital ) <eserve
Paid up
Capital
C6/ CC/ .// ,D/ ,D/ ,D/ ED*// 6/*// 6/*// 6/*//
(hareholde 996*06 9ED*0C .C.*E9 .E:*D9 .:D*:, .E:*D9 ./C*D6 ..9*C. .,0*9. ,:9*E6
rs= >"uity
<eserve 0C:*C9 0C9*., ,C9*., ,.:*D9 ,CD*:, ,.:*D9 ,.:*D6 ,69*C. ,D0*9. ,09*E6
$ssets
Investment
in (hares )
(ecurities
.6D*:6 .CD*/9 C9*E0 .9*E: .E*6. .D*.D .D*E0 ,E*90 ,9*,/ ,E*C,
Cash- 34<
) Ban1
Balance
0CD*0E 0.6*.E ,.D*69 ,D:*DE ,.9*90 ,//*.9 ,.,*C. ,E:*.C ,E9*D0 ,60*:6
Land )
Building
CD:*:C CD.*6C C6,*.E CE6*. C:/*/6 6.:*:: 6C0*C: C:6*:/ 0C0*DC .09*90
Other
$ssets
..6*9E ./6*EE ,6,*E0 ,C:*C, ,C9*6: ,/0*9C :C*E. ,09*./ ,.E*C, ,D.*C/
Total $sset ,.:9*,C ,.0/*E6 E:E*C, 9,0*:E E:D*. 9D:*06 99D*06 90.*,E 66E*,E DE.*DE
3inancial $nalysis
4ividend in
Percentage
7o
4ividend
DGCash
)
DG(toc1
./G
%(toc1&
0;, B
%(toc1&
,/G 7o
4ividend
,//G
%stoc1&
.DG
%stoc1&
.DG
%cash&
.EG
%cash&
>arning per
share %>P(&
.*/D .*,, 00*,E ./*:, ,,9*6C %:6*DD& C*06 DC*/E D.*E/ D/*/0
HighestBLowest #ar1et
Price of
(hare
,/./B,90 ,.,/B
DE/
,,9DB
99/
,D6CB
D/.
DC9B ,9/ 6E0B .E/ 9//B 6E0 ,9D/B
9//
,9D/B
9//
6:/B
DC/
&ormat of Ban( Reconciliation of PICL
REC No% FF?? Branch% FFFFFFF
Peoples Insurance Company Limited
Ban( reconciliation of FFFFFF Ban(
FFFFFFFFFF?? Branch
&or the month of FFFFFFF8 /7*FF
2mount 1BDT4
Balance as per Ban( Boo(FddEmmEyy
1closing balance4
CCCCCC
Less% 2mount deposited $ sho'n in
Ban( Boo( but not sho'n in
Ban( "tatement
1CCC4
4ate #*<B4*( 7o*
Less% Che;ue issued but not yet
accounted for
1CCC4
4ate Che"ue 7um!er
2dd% 2mount deposited $ sho'n in
Ban( "tatement but not
sho'n in Ban( Boo(
CCC
4ate
2dd% Che;ue issued but not yet presented into the
ban(
4ate Particular Che"ue 7um!er CCC
Less% Ban( Charges C
2dd% Ban( Interests C
Balance as per Ban( "tatement ddEmmEyyyy
1closing balance4
CCCCCC
#aor &indings
To analyze an organizationHs performance it is needed to apply the (@OT analysis* (@OT
analysis is a strategic planning method used to evaluate the (trengths -@ea1nessBLimitation
opportunities and Threats involved in a proect or in !usiness venture *It specifying the o!ective
of the !usiness venture and identifying the internal and e8ternal factors that are favora!le and
unfavora!le to achieve that o!ective*
(@OT analysis consist of four components2
( (trength
@ @ea1ness
O Opportunity
T Threat
Corporate identity of the Peoples Insurance company is the most positive and renowned
Insurance company in Bangladesh*
Peoples Insurance company Limited is second Private Insurance company which giving
their service since ,:9D*
3rom this report we found the companyHsH overview- its service -vision- mission )future
plans*
@e get Insurance laws and regulatory system- and regulatory conflicts in the insurance
industry in Bangladesh along with the emergence of esta!lishing and passing the new
insurance act*
In .//.- PICL had a gross premium of .,.*DD million B4T which has !een increased
progressively over years and !ecame C//*,/ million B4T in ./,,*
* $t the same time- net premium of the company also has !een increased from .//. to
./,,- !ut in .//D ) .//6- the organization made relatively lower net premium compared
to the other years*
The company faced different gross ) net claims in different years due to the different
situation %disastersBaccidentsBris1s& of the policyholders*
In .//6- !oth the amount of gross claim ) net claim was significantly higher the previous
and later years due to the greater num!er of policyholder=s claim in that year*
4ue to the greater amount of gross and net claim PICL had faced significantly higher
amount of underwriting loss in .//6 and for the same reasons the amount of investment
and other income of the company is comparatively lower than the later years*
Peoples Insurance Company=s >arnings per (hare over the years since .//. were "uite
satisfactory according to the sta1eholders*
>ven though the company had negative >P( in .//. due to the net loss causing !y a
greater claim settlement for the +amuna 5roup*
Bhile 'or(ing on the internship report8 the follo'ing findings also ha!e been identified%
"trong regulatory system
Through passing the new Insurance $ct ./,, and Insurance 4evelopment and <egulatory
$uthority $ct ./,, to !etter regulate the insurance industry and protect customersH interests- a
strong regulatory system for the insurance industry has !een developed* Therefore- the insurance
industry is supposed to !e modernized under the new and strong regulatory system and
authorities*
Introduction of 2gency "ystem
The $gency system for the !usiness development of the insurance !usiness is a new addition
under the Insurance $ct ./,,* (o- the implementation is not that easy* #aintaining the I$gent
$ccount is a new and complicated tas1 for the PICL as well as the other insurance companies
in Bangladesh which has caused increased pressure of wor1 load* To some e8tent- it is causing
higher e8penses also* However- the loss due to corruption has !een decreased due to the proper
$gency (ystem* 7ow- it=s up to the company to conduct the cost2!enefit analysis*
Percentage of 2gency Commission >Cpenses Decreased
'nder the new Insurance $ct ./,.- no non2life insurance company is allowed to e8pend more
than ,DG sales commission to the agents or !ro1ers* 4ue to this- the agents are !ecoming de
motivated- and as a result the PICL is losing their mar1eting as well as !usiness* (ometimes-
they could offer more commission in order to complete strongly with their !usiness competitors
as well as to spread !usiness in some certain areas in Bangladesh where insurance !usiness is not
popular at all and seen negatively*
"ome notable Restrictions
$ccording to the section EC%,).&- no person who is the agent or appoints agent- !ro1erage house
or directly involved in it- and surveyor or auditor can !e the director of any life or non2life
insurance company* If such happens to anyone then hisBher license or certificate as agent- !ro1er-
or auditor will !e void as per section EC%0& and that person will !e wor1ing only as the director
of the certain company*
Lac( of guidelines $ difference in legal opinion due to time gap
@hen a new law is passed to replace the old one- the system of the old law is automatically
cancelled* In this condition- when the new insurance act of ./,/ was passed to replace the
previous one- the previous act of ,:09 was automatically cancelled ) inactive* The insurance
$ct ./,, only says what to !e done !y the insurance industry- !ut it doesn=t set the information
a!out how to do and in what amountBpercentage* $ctually- these things are properly given in the
various <ules ) <egulations supporting the Insurance $ct* $t this point- many supporting rules
and regulations have not yet !een set and esta!lished* Therefore- the whole insurance industry is
suffering from lac1 of guidelines ) different legal opinion*
Delayed Circulars
#any necessary circulars separately for the life and non2life insurance companies has not yet
!een developed and pu!lished !y the Insurance 4evelopment and <egulatory $uthority which is
causing specific trou!les to the concerned insurance companies*
Lac( of some necessary changes
$ccording to section 0 %,& %ii& of the insurance amendment ./,.- the given percentage of the
management e8penses in different stages of the total gross premium is ust same as the
percentage in ,:09* Throughout the last E0 years since ,:09 to ./,.- it is very natural the
management e8pense has !een increased- !ut the ma8imum percentage limit is constant which is
not practical*
Pro!ision for Re.Insurance
(BC has long !een the sole reinsures in Bangladesh and the private insurance companies of the
country were statutorily compelled to place ,//G of their reinsurance !usiness with (BC* In
,::/ the government amended the relevant provisions of the insurance $ct allowing D/G of all
reinsurance of general insurance !usiness to !e placed forci!ly with (BC and the rest to private
reinsurance companies *$!out E/G of premium income from general insurance !usiness in
Bangladesh is retained locally and the rest 0/G goes to reinsures a!road*
Recommendations
I want to remind !oth the insurance regulatory authorities and the insurance !usiness authorities
concerned a!out the poor state of the entire insurance sector in Bangladesh- which is to !e
a!olished following the enactment of the Insurance 4evelopment and <egulatory $uthority $ct
./,/* @hile wor1ing on the report I have developed some recommendations and suggestions
!oth for the insurance authorities and for the insurance companies in Bangladesh specifying the
Peoples Insurance Company Limited*
Recommendations to the Regulatory 2uthority%
$fter analyzing the findings of my report I would li1e to place the following recommendations to
the insurance authority of Bangladesh2
The new Insurance $ct ./,/ introduced many essential features that were missing in the
previous Insurance $ct of ,:09 !ut the implementation process were too slow- the
independent Insurance <egulatory Body %I<$& is not yet fully functional* It was not yet
properly esta!lished and many of features are yet to !e implemented* (o- the 3inance
#inistry should focus on the pro!lems regarding it and should ta1e pragmatic steps to
solve those pro!lems as soon as possi!le- !ecause this is already too late and we don=t
want to !e more lagged !ehind*
To !ring a real change and in the Insurance Business (ector in Bangladesh- the proposed
changes !rought !y the Insurance $ct ./,/ should !e implemented prudently and as soon
as possi!le* In this purpose- the concerned authorities need to !e stronger and more active
as well as accounta!le enough*
$ll the insurance companies in the insurance industry need to !e responsive e"ually and
very actively* (o- the concerned insurance authority should focus on spreading necessary
awareness among the insurance companies as well* To ma1e it possi!le- regular seminars-
meetings with the !usiness authorities and proper auditing may !e conducted*
The percentage of management e8penses should !e at least dou!le to cope up with the
current price hi1e* In order to ensure maintaining proper e8penditure accounts !y the
insurance companies- the regulatory authority should ta1en this issue into consideration
with due importance*
The total power that has !een given to the regulatory authority to deal with the different
opinions over insurance claims should !e reconsidered*
Transparency and accounta!ility should !e ensured in each and every step to ensure the
full implementation of the new Insurance $ct ./,/ in the insurance sector in Bangladesh*
3or this- every single person associated with the implementation have to !e honest and
conscious* In this regard- everyone should come forward to ma1e the associated
procedure smoother*
$s one of the !asic re"uirements for the insurance industry to have sustained growth is to
enhance training facilities- BangladeshInsurance$cademy is providing training facilities
and professional education to those engaged in insurance !usiness in the country* The
sylla!us- curriculum and training programs of the academy %BI$& should !e modified and
updated to meet the modern needs of the insurance industry and to ensure the proper
implementation of the Insurance $ct ./,/*
To esta!lish the act relia!le to the sta1eholders and to ma1e its implementation process
!endy- the regulatory authority should 1eep the Insurance $ct ./,/ as fle8i!le as
possi!le- so that any essential amendment can !e made and imposed in order to adust
with the rapid growing and changing situation when necessary*
Recommendations to Peoples Insurance Company Limited
@hen there is an emergence to cope up with the time- o!viously something need to !e changed*
@ith the changes and additions !rought !y the Insurance $ct ./,,- there a lot more changes and
modifications have to !e !rought in the individual insurance companies* (o- even it is true that
there are some pro!lems created due to the implementation of the new act at Peoples Insurance
Company Limited- the company should focus more on the prospects and the pragmatic solutions
of the pro!lems* Therefore- I also have come out with some recommendations to the company
which is as follows;
PICL should provide e8tensive training to its employees especially to the !usiness
development ) mar1eting e8ecutives in order to ma1e them a!le to cope up with the
changes !rought !y the Insurance $ct ./,,* Through proper training to the employees
and agents the company should practice and ensure mar1eting through the use of
promotional tools such as advertising- sales promotion- pu!lic relation and pu!licity-
personal selling and direct mar1eting*
The company should raise awareness among all the employees and staffs a!out the
implementation of the new law to ma1e the implementation process much smoother* In
order to do so- regular wee1lyBmonthly meetings and seminars can !e arranged after the
office hours*
$s one of the most important tas1s- client awareness needs to !e increased in the
insurance sector in Bangladesh* In this purpose- PICL should ta1e the necessary steps
through its large sales and !usiness development force to ensure a level of awareness
among their clients throughout the country*
>ven though it is "uite difficult- the company should try its !est to reduce the
management e8penses as well as commission e8penses to cope up with the rules
regarding these issues under the new Insurance $ct ./,,* In this regard- each ) every
employee should wor1 as cost saver* $t the end it will certainly !e !eneficial for them*
The company should consider the rules and regulations for the non2life insurance
companies in Bangladesh under the Insurance $ct ./,, !efore and during setting any
future plan regarding operation and e8pansion of its !usiness- so that there doesn=t arise
any conflicting situation* It will ma1e their way of !usiness operations much smoother as
well as easier and less pro!lematic*
Transparency and accounta!ility should !e ensured in each and every step in the
implementation of the new Insurance $ct ./,, in the entire departments of PICL* To
ensure a transparent environment in the company- the employees along with the
management and authorities should come forward with their !est fle8i!ility*
The company should plan to ta1e the opportunity of micro insurance !usiness and Islamic
Insurance !usiness as their service diversification tool !y providing responsive services
and esta!lish efficient departments to perform such tas1* This will allow them to e8pand
their !usiness among a large num!er of populations of Bangladesh- which will also help
them to distinguish themselves from their competitors* 3or !usiness e8pansion- PICL can
introduce Islamic Insurance where they can capture a large portion of the population
since the maority people of the country are #uslim*
Concluding Remar(s
To conclude- I would li1e to mention that the whole internship period was a significantly
1nowledgea!le ourney for me which allowed me to learn and improve my s1ills and I hope the
significant e8perience will allow and help me to !uild a !etter career in future* I thin1 Insurance
Industry is playing a significant role in the economic improvement of Bangladesh through its ris1
sharing operations which motivate investment in many important !usinesses* The government
has now em!ar1ed on a reform program me in the insurance sector to promote a vi!rant
insurance sector in our country* $s a first step towards achieving the o!ective- the Insurance
$ct- ./,, in replacement of the previous Insurance $ct- ,:09- and the Insurance 4evelopment
and <egulatory $uthority $ct- ./,, also has !een passed for esta!lishing a stronger insurance
sector in Bangladesh* I am up!eat that the new laws will help the entire insurance industry of
Bangladesh to face the challenges of the time and thus !ring dynamism in this sector* @hile I am
genuinely oyous- I also would li1e to say that the proper implementation of the new act is
e8tremely important* $s the Insurance $ct ./,, is for the insurance industry- the concerned
authority should consider the interests of the insurance companies of Bangladesh as well as the
sta1eholders =interests* (trict transparency and discipline need to !e there where around 0*/
million people are involved* In this regard I support the stand of the Bangladesh Insurance
$ssociation that has stressed the need for formation of the Insurance 4evelopment and
<egulatory $uthority and formulate necessary rules and regulations to ma1e the new laws
effective and purposeful*
In the era of glo!alization- domestic mar1et should !e well organized while the legal framewor1
should !e effective to address the changed circumstances in the !usiness and socio2economic
entities* In order to meet the challenges caused !y changes- the Insurance Ordinance ./,, should
!e 1ept as fle8i!le as practica!le so that any change in the operational procedure- accounting-
actuarial standard that would !e needed in future inline without change in the international and
domestic environment could !e made without further amendment to the Ordinance* The new
Insurance $ct ./,, promised to !ring the positive changes and I am loo1ing forward for the
!eginning of a 5lo!ally Competitive #odern Insurance (ector in Bangladesh*