Vous êtes sur la page 1sur 6

Brief History of Insurance Company

in Bangladesh
Insurance is a system of spreading the risk of one to the shoulders of many and which is a
legal contract whereby the insurers, on receipt of a consideration known as premium, agree
to indemnify the insured against losses arising out of certain specified unforeseen
contingencies or perils insured against. Insurance is not a new business in the Bangladesh it
almost a century back, during British rule in India, some insurance companies started
transacting business operation , both life and general, in Bengal. Insurance business
enlarged momentum in East Pakistan during 1947-1971, when there are 49 insurance
companies transacted their business operation both life and general insurance schemes and
these companies were of various beginnings with British, Australian, Indian, West Pakistani
and local. Then ten (10) insurance companies had their head offices in the East Pakistan, 27
in West Pakistan, and the rest elsewhere in the world. These were mostly limited liability
companies and some of these companies were specialized in dealing in a particular class of
business, while others were composite companies that dealt in more than one class of
business. The Government of Bangladesh (BD) nationalized the insurance industry in 1972
by the Bangladesh Insurance (Nationalization) Order 1972. By virtue of this order, save and
except postal life insurance and foreign life insurance companies, all 49 insurance
companies and organizations transacting insurance business in the country

Porters five forces analysis for insurance industry


Michael E. Porter in his book Competitive Strategy: techniques for
analyzing industries and competitors discussed five forces that shapes
an industry or market. Now we will look at how these forces influence the
insurance environment.
Threat of
new entrants

Burgaining
power of
suppliers

compettitive
rivalry within
the industry

Threat of
substitutes

burgaining
power of
buyers

The threat of new entrants:


According to porter, the threat of new entrants means how easily one can enter a particular
industry. So from the insurance industrys point of view it means to what extent the insurance
industry is accessible for those who want to business there.
Some factors (known as barrier to entry) work to impede the entrepreneurs to start a
business. We can explain the threat of new entrant of the insurance industry by analyzing the
following factors.
I. Existing loyalty to major insurance brands: There are quite a few already wellestablished insurance companies in Bangladesh which are conducting their business and they are
quite popular among the mass population. For example-American life insurance company, Delta life
insurance company, popular life insurance company to name a few. So it will be difficult but not
impossible for some new emerging entrepreneurs to engage themselves in the insurance industry.

II. Scarcity of resources: This is another factor influencing the threat of new entrants.
Poor economic condition is considered to be the main reason for poor life insurance penetration
in Bangladesh. Most of the policyholders cannot continue their policies because shortage of fund
which causes Scarcity of resources to the insurer.
III. Government restrictions or legislation: The government of Bangladesh has reformed the
financial sector in the 1990s. In order to promote the insurance industry of Bangladesh the
government has undertaken some reforms program in the insurance sector. The government
passed the Insurance Development and Regulatory Authority Act, 2010 in the Jatiya Sangshad
for establishing the Insurance Development and Regulatory Authority (IDRA), this act includes
some favorable aspects which facilitate the efforts of new entrepreneurs who are trying to enter
the insurance industry.

Power of Suppliers: Power of suppliers means how much pressure suppliers


can place on a business. If the suppliers has a potential impact to influence an insurance
companys productivity or continuity then it has substantial power. Here suppliers are those
parties who provide capital assistance to the insurance companies. Suppliers also facilitate the
purchase of insurance and they provide services to the insurance company as well as the
consumer that facilitate the whole insurance purchase and selling process. One threat of
suppliers is that they sometimes lure away human capital.

Power of Buyers: This means to what extent the clients or customers of the
insurance company are influencing the business of the company. One individual client doesnt
affect the activities or profitability of the insurance company compared to large clients. Large
corporate clients have a lot bargaining power with the insurance company. For example large
clients such as airlines and pharmaceutical companies pay millions of dollars a year in premiums
to the insurance company. The insurance company tries to hold onto these valued customers by
offering them insurance policies and contract favoring their (clients) interests.

Availability of Substitutes: There are plenty of substitutes in the


insurance industry. Most large insurance companies offer similar types of services. Most of the
insurance companies provide auto, home, commercial, health or life insurance. In some areas of
insurance, the availability of substitutes is few and far between. So in order to penetrate the
insurance industry and capture attention of the customers a new insurance company can
concentrate on providing services that are different from the others.

Competitive Rivalry: The Bangladeshi insurance industry is a highly


competitive industry. There prevails a fierce competition in the non-life segment of the insurance
industry, the shares of the private insurance company is on the rise. Insurance has become
similar to product or commodity. Bangladeshi insurance Companies are rivaling each other over
the services they provide. 2.3 Driving Forces of the Industry In the context of Bangladesh
insurance industry, there are several major driving forces which can lead to growth or hinder the
potentiality of the insurance industry.

History of The Company: Green Delta


Insurance Company Limited
Green Delta Insurance Company Limited (GDIC) is one of the leading private non-life insurance companies in
Bangladesh. GDIC was incorporated in December 14, 1985 as a public limited company, under the Companies
Act 1913. Actual operations started on 1st January 1986, with a paid up capital of BDT 30.00 million. Now, Green
Delta Insurance Company Ltd. is amassed about BDT 637.875 million with a credit rating of AA1 and ST1. GDIC
holds the proud distinction of being the first ever company to raise its paid up capital to such a level. This is also
the 1st Insurance Company in Bangladesh to have equity partnership with IFC. With a presence in the
strategically important parts of the country, which includes 38 branches, Green Delta Insurance Company Ltd.
has established its prominent presence with equity participation in Delta Brac Housing Ltd., Progressive Life
Insurance Co Ltd, United Hospital Ltd. Fin Excel Ltd. and BD Venture Ltd. Green Delta Capital Ltd. and Green
Delta Securities Ltd. are two of the direct subsidiaries. GDIC provides stock brokerage services through Green
Delta Securities Ltd. (GDSL) and investment supports through Green Delta Capital Ltd. (GDCL).

Balance Sheet of Green Delta Insurance Company Limited

Assets and properties:


Particulars

Amount

Proportionate
Investment (%)

nvestment

2,576,351,967

35.48%

Outstanding Premium

130,668,575

1.80%

Amount due from other persons or bodies carrying


on insurance business
405,482,881

5.58%

undry debtors (including advances and deposits)

Cash and cash equivalent

550,784,831

7.59%

1,542,658,763

21.25%

and property and office space with building project 800,000,000

11.02%

ixed assets (at cost less depreciation)

1,251,593,480

17.24%

ntangible assets

1,473,050

0.02%

tock of printing, stationery and stamps

2,258,719

0.03%

Total assets and properties

7,261,272,266

Associate
Risk
Credit

Liabilities and Shareholders Equity:

Particulars

Amount

ssued, subscribed and paid-up capital

637,875,000

hare premium

364,150,080

Proportional
to
Total Liabilities (%)

Reserve or contingency account

3,901,534,253

53.73%

Reserve for exceptional losses

868,512,659

22.26%(of Reserve)

oreign currency fluctuation

2,914,724

0.07%(of Reserve)

nvestment fluctuation fund

687,088,167

17.61%(of Reserve)

General reserve

170,000,000

4.36%(of Reserve)

Dividend equalization fund

120,000,000

3.08%(of Reserve)

Revaluation reserve

2,053,018,703

52.62%(of Reserve)

Profit & loss appropriation account

273,086,344

Non-controlling interest

344

otal shareholders' equity

5,176,646,021

Associate
Risk

Particulars

Amount

Proportional
to
Total Liabilities (%)

Balance of fund accounts

658,163,955

9.06%

ire insurance business

281,874,870

42.83%(of BoF)

Marine insurance business

265,351,755

40.32%(of BoF)

Motor insurance business

76,171,042

11.57%(of BoF)

Miscellaneous insurance business

34,766,288

5.28%(of BoF)

Premium deposit

35,960,887

0.50%

1,390,501,403

19.15%

iabilities and provisions

Associate
Risk

Estimated liability in respect of outstanding claims


whether due or intimated
226,197,377

Amount due to other persons or bodies carrying on


nsurance business
376,691,619

undry creditors (Including outstanding expenses,


axes & provisions )
715,358,919

Bank overdraft

72,253,488

Total liabilities

2,084,626,245

Total liabilities & shareholders' equity

7,261,272,266

Credit Ris