EM 530: Insurance & Risk Management

Presentation on:
Reconstruction and Re-innovation of Insurance Company
in Bangladesh
for Converting it into a Profitable Industry
Problems of Insurance Business in Bangladesh

Kazi Md. Yasin Ullah

(ID: 3-15-31-031)

Department of Management
Faculty of Business Studies
Summer 2018
 Problems of Insurance Business
in Bangladesh

1. Lack of Public Faith: 3. Poor Economic

Unqualified & Inexperienced
Agents are responsible for poor
public image & public confidence.
4. Centralization Policy:
Most of the insurance companies
are located in urban areas. They
think that they have better
opportunities for their business in
cities ignoring the large number of
our population in rural areas.
2. Lack of Public Awareness: Conditions:
Mass Illiteracy & Lack of Knowledge on
A major part of the people in
the Benefits of Insurance hinders the this country live under extreme
growth of the insurance sector. poverty. It is quite impossible
for them to save money for
future need.
5. Excessive Management Expense:
Most of the second and third generation insurance
companies are facing the problem of excessive
management due to having 10 or more tiers in the
field level for competition. This is unsustainable in
the long-run.
 Problems of Insurance Business
in Bangladesh

7. Poor Risk Management: 8. Tax Constraints:

6. Lack of Marketing Most of the sample insurance companies The high corporate tax
Policy: have used traditional methods in evaluating restricts the growth of the
Management is not taking comprehensive risk. The shortage of skilled insurance sector. Now the
initiative to increase their and experienced professionals making the insurance companies pay a
marketing expansion. They insurance companies unable to underwrite corporate tax rate of 42.5
spend very less in and manage their risks on a scientific basis. percent which is higher
advertisement, which is not than in other countries.
sufficient for increasing
business development. 9. Political Instability:
Political instability is a serious problem
for the insurance business.
 Problems of Insurance Business
in Bangladesh (Continued)
10. Lack of Supervision
from the Government: 11. Reinsurance:
Lack of surveillance from controlling At present the insurance law requires
agency of government encourages that all general insurance companies
many insurance companies to follow must compulsorily place 50% of their
some unethical practices like delay in reinsurance with SBC
claim settlement, harassment to
policy holders and showing fake 12. Lack of Training for the
financial statement.
Employees:
Spread of insurance business in Bangladesh
13. Lack of Qualified Officials: failed for lack of proper training of the
Most of the agents are not properly employees, especially the field employees of
trained and they do not know the right insurance companies.
process to catch potential policy holders.
 Problems of Insurance Business
in Bangladesh (Continued)
14. Absence of Business 15. Lack of Motivational Program
Ethics: towards Public:
• Some insurance companies create
The people of the country fail to understand or
harassment to the policy holders
believe that insurance policy makes their life risk
when they want back their money
free. So there remains lack of motivation.
after death or maturity.
• Besides this, some field officials
also often try to give false
information to the people for 16. Lack of Information:
buying a policy. • Lack of information about the
insurance policies and benefits.
17. Insufficient Service: • Lack of adequate arrangement to
Insurance people failed to provide make the people understand about
better services to the mass people of different policies, opportunities,
the country. That’s why the people benefits etc.
who want to take the insurance
policy they lose their interest from
insurance.