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INSURANCE IN BANGLADESH
Prepared for
Lecturer
School of Business
Prepared By
August, 2013
Lecturer
Dhanmondi, Dhaka-1205.
Dear Madam,
This is a great pleasure for us to submit the report on Micro Health Insurance (MHI) in
Bangladesh which we have been assigned to work on. As a requirement of the course FRL -
305, we have tried our level best to show our skills and potentiality to prepare this report.
So, we therefore, hope that you find it in order. We beg your kind advice and suggestion for
any mistake.
Sincerely yours,
Nusrat Saragin
Mahmuda Yesmin
Sharmin Sultana
Najmul Hasan
ACKNOWLEDGEMENT
We would like to take this opportunity to convey our heartfelt appreciation to them whose
blessing and cooperation was important to complete this report. At first, we would like to pay
our gratitude to the Almighty Allah who gives us the power to prepare this assignment.
We are greatly indebted to Ms. Nazreen Tabassum Chowdhury, Lecturer, DBA, University of
Asia Pacific, for her whole-hearted cooperation and supervision towards us during the
practical orientation. Her suggestions and comments to make this report was really a great
Lastly, we would like to give many special thanks to all seniors and faculties, University of
Asia Pacific, for giving us good advice, suggestion and for inspiring us in some cases.
TITLE PAGE
1.0 Introduction .. 07
10.0 Recommendations........................................................................................................26
11.0 Conclusion....................................................................................................................27
References .. 28
For quite 3 decades microfinance has been one in all the key development interventions in
Bangladesh. These models of innovative monetary services like credit and savings in
conjunction with business parts like capability building are enjoying instrumental roles in
financial gain smoothing and consumption smoothing of the low-income folks. However,
health shocks square measure unpredictable and eventually will entice poor and close to poor
households indefinitely into vicious impoverishment cycles. This study is aimed to introduce
The health care system in Bangladesh is especially urban-based, elite-biased and curative
oriented. Although nearly seventy fifth of the population lives in rural areas, the general
public and personal health care development has targeted primarily in urban areas. The
quality and therefore the level of health care provided by the general public sector is
the lack of kit, facilities, and trained medical professionals. The strengthening of public sector
health care by ordered Bangladeshi governments has not improved the supply of health care
services for the agricultural poor and specifically for poor ladies in rural areas.
With around three, 100 persons per single bed and twenty three doctors per one hundred
people, solely the higher and middle categories and people with political influence have
access to the general public health care system. The poor square measure unable to penetrate
the paperwork and therefore the deliberately biased system. Thus, they need access to public
health care solely in theory. This study identifies a possible demand for insurance and scope
for providing such services through the prevailing wide network of microfinance
establishments.
Micro Insurance has been described as the The protection of low income people against
specific perils in exchange for regular premium payments proportionate to the likelihood and
cost of the risk involved (Churchill 2006). Microfinance trade has shown up as a good tool
in reducing vulnerability and financial condition in Asian country over the previous
few decades (Khondokar 2005). With the scope provided to borrow and
is answerable for making money and social capital that are tried quite winning in reaching the
low income segment; to defend them with a social safety-net that may enhance their
living normal. However, it limits the financial condition alleviation mechanism inside the
formation of economic and social capital solely however cannot directly address the
others indicators of financial condition like health, education; that if not taken care of
then the end result of the financial condition reduction efforts won't be adequately be
possible, together with MF that may defend the low-income households from
the vulnerability of health shocks. Thus, small Health insurance (MHI) is what has
appeared as a possible strategy of such safety-net program. Health reasons area unit
accounted for by lower financial gain households was sixty nine for all-time low eightieth of
based imputed financial gain. Even, the commercial insurance market has not been able
offered by Microfinance establishments (MFIs) in Asian country, for the low financial gain
So much study is needed to collect information about health insurance because health
insurance concept is not so much familiar in our country where its a well known concept in
our neighbour country India. They continuously advertise about their many insurance
schemes but in our country it is not absent. So we visited some insurance companies directly
and tried to collect information as much as they served. But we depend largely on internet
where vast information is available. So we classified internet surfing as our primary sources
While we were preparing this report we face some limitations. These are mentioned below:
Health insurance information are really not so much popular in the perspective of
As we are preparing the report on this sector for the first time, some mistakes or lack of
information may found in our report. But we tried to provide exact information as much
2006). The idea of Micro-insurance emerges as a scope for low financial gain
people, notably in rural individuals to get some variety of insurance theme which will would
like them to pay a daily yearly premiums and reciprocally at later period can guarantee them
to receive a pay-out in an incident of a disaster, crop related failure or health issues, death
or different sorts of shocks. The importance of the idea of micro-insurance has emerged a lot
of recently thanks to its relevance for the low-earning teams as against the
conventional insurance schemes on the market to the final community as a full. Since
poor are a lot of prone to occurrences of events like that of death, illness, injury and accident
due to their vulnerable economic circumstances, the expected price of feat a general
insurance theme would be high enough to encourage them to urge enrolled into
(2008) discusses that a risk indisposed households can voluntarily purchase insurance if it are
often offered to them at a premium whose excess over expected expenses is smaller than the
risk premium they might be willing to pay. Thus, it are often taken that micro-insurance
A rough estimate of this annual worldwide health care expenditure (public and
private) amounts to US$2,000 billion. On average, developed countries pay US$1,500 per
person on health care, compared to US$287 in developing countries. the amount of health
care spending in Asian nation at three.5% of its total GDP6 or US$58 per person
Family Welfare study over that solely thirty fourth of health expenditure
was supported by the govt., sixty fourth by the general public and a couple of by NGOs.7
Despite such a high share of expenditure by non-public people, the supply of health care
necessity for different finance, including the supply of a lot of comprehensive health care
insurance. The present state of health care in Asian nation incorporates a colonial bequest.
introduced throughout British era and perpetuated throughout Pakistani rule. The system
nation Government continued with a similar system. Even though nearly seventy fifth of
mainly urban. Bangladesh is split into six Divisions, sixty four Districts, 460 Upazilas,
and 4403 Unions. Each Union has on a mean three Wards; and four to
thousands folks and is that the lowest body tier of the Government.
The structure of the health service follows this body structure. The Ministry of
macro level. Below this area unit 2 major implementation wings: the board General of
Health Services and also the board of planning. The Director General of Health
Services is to blame for implementation of all health programs of the govt., and
technical help to the Ministry. Government health care services area unit provided
through a five-tier system. The amount and sophistication of the health service facilities
go up with the increase within the level of body hierarchy, as shown in Table 1.
Following independence in 1972, the Asian nation Government nationalised all insurance
companies within the country. The freshly created Jiban Bima (Life Insurance)
Sadharan Bima (General Insurance) Corporation did a similar for the non-life
are sixty Insurance firms and firms in Asian nation divided into 2 classes, Life and
General (Non-life).
nation at 57% is additionally among the lowest within the region. Per capita insurance
premiums in 2003 were US$2.1, compared to US$2.9 for Islamic Republic of Pakistan,
US$14.5 for state and US$16.4 for India. The Insurance Act in Asian
nation permits solely life assurance firms and composite insurance firms to
supply insurance, and thus the non-life insurance companies that area
unit providing insurance area unit in breach of the law. K M Mortuza Ali conducted a survey
assurance suppliers and twenty non-life insurance suppliers responded. Out of those, 3 life
assurance company was curious about introducing health insurance, whereas six
Seven of the twenty non-life insurance firms had introduced restricted insurance
products as of Gregorian calendar month 2002. Of the rest, 2 explicit they might not have an
interest in health care infrastructure. The remaining eleven cited an absence of demand for
such product for his or her decision, backing up the unremarkably command opinion that the
of insurance in Asian nation. All twenty insurance companies believed the govt. ought
assurance in health care service provision. One can conclude from Alis results that a lot
insurance firms are ready to enter this market on an oversized scale. The non-
stimulate growth within the insurance sector. Theres additionally a general belief that within
the coming years, the method of economic process can bring foreign insurers to the country.
Before this can happen though, the regulative surroundings bearing on the
insurance business should be drastically improved. There area unit variety of innovative
foremost notable of those area unit Gonoshashtho Kendra, Sajida Foundation, Shakti,
Gonoshashtho Kendra (GSK) was the primary organization to introduce HMI in Asian
nation. GSK operates a health microinsurance theme supported the insureds ability to pay.
Liberation War against Islamic Republic of Pakistan, Dr. Zafarullah and a couple of young
Bangladeshi doctors United Nations agency were learning within the United Kingdom of
Great Britain and Northern Ireland managed to lift funds from Bangladeshi
doctors everywhere the globe to help the liberty fighters. They enraptured to the
conflict space and started a 480-bed military hospital for the wounded on the Indian
border. Once the war, in 1972, the hospital was transferred to given land at
Savar, AN Upazila of Dhaka, with six tents And an outpatients clinic beneath a jackfruit.
GSKs original aim was to supply health care applicable to the wants of the agricultural poor.
Over the years, it's widened its work to embrace programs that embody education, nutrition,
agent analysis, flavourer healthful plant analysis, financial gain generation and occupation
training. GSK additionally seeks to satisfy the various development desires of the poor
and landless.
Since its origin, it's trained over four,000 paramedics, of whom a hundred and sixty area
unit at the moment used at the GSK centre in Savar and ten sub-centres established round
the country to supply health care to 180,000 low-income folks. Sixty percent of the
paramedics area unit ladies. Theyre trained in curative and primary health care programs
and practice of medicine of all types. In 1981, GSK started Gono prescription {drugs,
prescribed drugs} to provide affordable drugs. It been a good success and now provides five-
hitter of all medicine consumed in Asian nation. Its costs area unit regarding hr below those
of multinationals, that in some cases has crystal rectifier to lower costs as a results
unit earmarked for GSKs social comes. GSK currently additionally operates a 100-bed
hospital in Dhanmondi space (and higher social class area) of the capital, Dhaka. the
most beneficiaries area unit slum dwellers and domestic employees within the town. Many
middle-class town dwellers additionally use its services. The hospital has all the
fashionable diagnostic and treatment facilities, and a awfully trendy internal organ unit
capable of performing arts internal organ by-pass operations is within the coming up
with stages.
GSK is controlled by a public trust, of that Dr. Zafarullah is one in every of the four trustees.
The Trust employs someone, 500 regular employees, with a further one, thousand part-
important principle is that GSK ne'er provides away its product and services freed
The law regulation the insurance business in Asian nation is that the Insurance Act of 1938.
Introduced beneath British people era, it's additional or less remained identical,
with solely some amendments revamped the following decades. The sole reference within
the Act to health insurance could be a definition. The regulatory agency in Asian nation is
staffed by bureaucrats who have restricted information or expertise in insurance. Its presence
has very little impact within the insurance sector or on the standard of insurance merchandise.
Bangladeshi microfinance NGOs came into the health micro insurance scene within
the late Nineties and early 2000s. Throughout the Nineties, the flagship organizations like
Grameen Bank and BRAC were pre-occupied in their diversification programsIT, mobile
no resources were applied to the health micro insurance apart from some studies
and many pilot schemes. vital players in health micro insurance are Gonoshashtho Kendra,
Kalyan, Nari Uddug Kendra, Dushtha Shasthya Kendra, Integrated Development Foundation
and Society for Social Development. Most decision themselves health card systems and
use risk pooling to hide an outsized range of individuals. 2 giant microfinance NGOs, ASA
and Proshika, haven't entered health micro insurance; they state that they are doing not have
the resources to supply the service. Although HMI has not been incorporated into the govt of
Bangladeshs National Health Policy, the Ministry of Health and Family Welfare has
shown nice interest within the concept and is considering the inclusion of HMI programs as a
technique of extending existing government health service reach. Within the non-government
sector, the provident societies, and mutual and cooperative organizations supply a
vital choice for micro insurance. There is additionally a sense among alternative non-NGO
the growth of organisation provided health care services and introduce standardised
operational procedures and maintain quality assurance. the categories of service offered by
prevention and ante partum care; and first care, e.g., medical exams, consultation with
certified doctor, and prescription for medicines. Lab tests, like x-rays, and major medical
BRAC (Bangladesh Rural Advancement Committee) was got wind of in 1972 as a non-profit
extreme poverty, illiteracy and sickness. Since its beginning, BRAC has adult to become one
in all the largest NGOs within the world, operating in sixty five,000 villages all told sixty
four districts of Bangladesh, employing over thirty five,000 regular workers and sixty
one,750 full-time and part-time lecturers BRAC features a vary of health and development
services out there to thirty one million individuals within the country through thirty
seven health centres. it's supported by thirty three,000 volunteers and treated five.7 million
The BRAC Health Program focuses in the main on the community, with a selected specialize
in women and kids, although a man arent specifically excluded, and is enforced through
three tiers.
The primary tier may be a cadre of part-time community medical experts, known
as Shashtho Shebikas (SS), largely ladies and therefore the front-line staff of BRACs
on essential health matters, offer treatment for basic ailments, essential health
The second tier may be a cadre of health paramedics, all women, known as Shashtho
Kormis (SK). a comparatively new innovation of the BRAC Health Program, these
paramedics oversee the work of the SS, offer pregnancy-related care, and hold health
education forums where the communitys health issues area unit addressed .
The Shushasthos offer technical and clinical backup to the SS and SK, United Nations
agency refer patients that they can't treat to those centres. The Shushasthos
outpatient facilities, and in-patient services, all supported of qualified nurses and
the country.
In a shot to seek out ways that of higher finance its clinics, in Gregorian calendar
month 2001, BRAC initiated pilot project on health micro insurance in Madhabdi Upazila of
month 2001, once BRAC signed a 3-year agreement with the ILO. With this support, the
project was scaled up within the initial pilot space and extended to
another space, Phulbari Upazila in Dinajpur District. The project is intended to attain 3
existing health care initiatives for poor ladies and their families; and 3) increase awareness
of preventative health care together with HIV/AIDS and sexually transmitted diseases
(STDs).
Grameen Kalyan (GK) could be a member of the Grameen Samogri (Family) the Grameen
Bank group (see Box 2). Over the years, evaluations of Grameen Banks micro-credit
program revealed that health problem and also the value of health care act as major obstacles
to borrowers breaking out of the poorness cycle. A study undertaken by Dr. David Gibbons
and Helen of Troy Todd in 1992 found that when ten years of Grameen borrowing, fifty
borrowers WHO didn't improve their socio-economic condition, hour had told a
serious health problem at intervals the family that drained family resources
Once GK was established in 1996, the pre-paid health card system evolved into this
GK insurance theme and also the card still remains as a part of the new theme. this
scheme is double-geared towards GB borrowers and their families, yet on eligible villagers.
Eligible villages area unit those who area unit set at intervals associate eight kilometre radius
roughly identical operational space. Insurance fits in with the philosophy of the organization.
Health micro insurance plays a important role in GK activities. It serves the twin purpose of
ensuring the participation of the target cluster yet as acting as a supply of revenue for the
program. The theme employs a wage scale fee structure, as shown in Table eight. Non-GB
villagers pay slightly higher premiums and copayments than GB members. However, no
distinction is created in terms of service and edges once they're listed within the health set up.
The health set up conjointly provides free preventive care, birth prevention and health
families with quite six members, an associational fee of US$0.34 is charged for
every further member. Non-cardholders pay US$0.85 for a medical consultation and
full worth for drugs and pathology tests. GK attempts to cross-subsidize its members by
having higher valuation structure for non-GB cardholders and non-cardholders. Receipts area
district. Its registered below the Department of welfare and additionally with
the NGO Affairs Bureau. The health program is a part of independent agency NGO. SSS
was based by a bunch of development staff out to promoting the socioeconomic condition of
the poor through need-based provisions of microcredit, health, and education facilities.
The independent agency Health Program began in earnest in January 1996, and at intervals a
year, a 20-bed hospital was established during a rented two-story house within the city of
technical and monetary help provided by the charity Terre des Hommes (TdH),
Netherlands. At present, the health program operates one urban hospital and sixteen rural
clinics, serving 531 villages of eighty three Unions set in vi Upazilas (sub-districts) of
Tangail.
The independent agency uses a health care card system that functions similar to associate
degree HMI theme in its technique of operation. The health care card carries the name
be created to receive treatment at the clinics. Health cards are purchased at any independent
the year. All payments are in money and receipts are issued for all money received by the
clinic.
Enrolment is obligatory for all independent agency borrowers living within the four sub-
districts of Tangail in which the hospital and sixteen clinics are set. Theyre referred to
as Samity members. Samity members ar needed to pay US$0.34 annually for a health
card, just like a premium below HMI programs, and also are needed to pay a registration fee
degree independent agency employee can even be a part of the program by buying a health
care card at a price of US$0.17 annually and paying the US$0.51 registration fee
There are variety of challenges that considerably hinders the provision of formal insurance
theme to the low financial gain households. So far commercial insurance suppliers haven't
done abundant to achieve bent on sectors outside the formal economy. It appears that ancient
formal insurance merchandise have been designed with the centre and high financial gain
category in mind. On the opposite hand, despite their nice would like for a few style of social
protection, the poor lack the capability to access formal insurance. Even the massive and
made MFI in Bangladesh like BRAC, Grameen, ASA square measure still back in terms of
providing formal insurance schemes for his or her shoppers at a major scale. Matin et al.
(2005) attracts attention on the demand for such insurance merchandise for low-income
inadequacy in health infrastructures and poor provision of health services (including doctors
insurance theme with assured quality of care in an exceedingly giant scale. Lack of adequate
health infrastructure and quality of services can result in consumer discontentedness and
A typical insurance theme should influence the matter of knowledge asymmetry within the
styles of Adverse Selection and Moral Hazard which will be even more difficult once the
target cluster is low financial gain communities associated with the informal sector. It's
seemingly that the insurance underwriters could realize themselves at a grip of losing an
oversized quantity of cash than that's expected owing to the prevalence of adverse choice and
financial loss . In context of marketplace for MHI when it comes regarding facing the claims
from the insured shoppers, adverse choice may end in the shape of many deceitful cases
rising out of a various claims resulting in creation of ethical Hazard within the long-term.
Aside from these striking challenges things like Flexibility in premium collection, Low
Renewal rate and high group action price and unfavourable revenue-cost ratio imposes
insurer.
a) The Provider-driven Model: It's once the care supplier themselves square measure
the micro-insurers and thence burdens all the responsibilities concerning operation,
b) The Full-service Model: It's conjointly just like the primary one with the exception that the
small insurance supplier is accountable of the look and delivery of products to the members,
c) The Community-based Model: This can be seen among rare prevalence, where the
policyholders or members square measure accountable, managing the operations and owning
the method, and dealing with external care suppliers to supply services to them
d) The Partner-Agent Model: during this model, a partnership is created between the micro
non depository financial institution and an agent (an organization, Microfinance Institute) and
in some cases a third-party care supplier. The agent is accountable for the delivery and selling
In a developing country like East Pakistan, health service provision for the poor has
continually been a challenge, since still thirty per cent of population lives below the
needed in mass creativeness therefore on reach the target of the MDG by 2015, though there
have been enhancements within the health indicators over the amount of few years such as
AN analysis report4 of UNDP on health indicators associated with MDG reveals that despite
positive changes in achieving the goals however challenges remain in terms of up overall
health standing of the poor. The report place forwards the very fact that East Pakistan still
lacks adequate biological process standing of girls and kids, conjointly maternal health
improvement and combating against bound chronic diseases like protozoal infection, TB,
AIDS still needs progress. Thus, though positive changes square measure noticeable,
however accelerated growth in terms of achieving MDG goals is what's demanded at current
times once solely four years are ahead to succeed in the dateline of 2015 for meeting the
Pakistan estimated at eighty seven % of the population by United Nations agency (ILO
2008) that results in extremely low health indicators of the population, notably deplorable
poor or rich) square measure flown away on medical expenses in recent times once getting
medical facilities or check-ups square measure extremely dearly-won and on the far side
Health expenditure comes into four distinct levels: Primary, Secondary, Tertiary and ruinous
events, every serving health associated hazards at different levels and totally different for
various diseases.
In Bangladesh, most primary care is free at public hospitals and there is solely a nominal
registration charge for patient and patient care in secondary facilities. The study of EQUITAP
(2005) conjointly depicts that the share of total owed (OOP6) payments is seventieth or a lot
of in Bangladesh that goes on medicines solely. This is often according to the larger
prevalence of self-medication in poorer and notably rural societies within which access to
health services is constrained by financial gain and distance. The priority is growing relating
to these which have still not captured the main focus of each government initiators and NGOs
eventually worsening things for the poor as outsized portion forms out-of pocket expenditure
(OOP). It looks individuals don't seem to be however managed to search out possible ways in
which of facing ruinous events. It should flow from to unconsciousness of such circumstance
is vulnerable of loss of a property support. within the absence of insurance cowl, households
with severe and immediate medical desires is forced to expend an outsized fraction of the
social unit budget on health care. Such spending should be accommodated by decreasing on
10.0 Recommendations:
The analysis of the study illustrates that despite having gradual growth of GDP, the
individuals health expenditure has adult chop-chop at a major rate. The analysis additionally
projected that individuals health expenditure can have a massive increase by 2022 which can
be above the rise of the whole household expenditure. Thus, it's evitable that there's a
families/households to bring the population of the country at intervals the coverage of basic
health care at accessible medical expenditure. However, once it comes regarding formal
insurance providers, less than fourteen insurance corporations square measure concerned in
providing health insurance of that cluster health set up for workplace or works worker is most
common and therefore the annual coverage reaches up to Tk.150, 000 for many generous
remains minimal and therefore there's would like for various to depend on for provision of
Thus, if all the MFIs might be with success labelled with Associate in Nursing agent non
depository financial institution then there's a possibility of a brand new dimension of health
11. Conclusions:
Health issues square measure unpredictable and still rife at wide rates. Thus, in Associate in
Nursing economy wherever an oversized population still suffers from situation and vastly
conditional informal sector, a more robust health for everybody can lead to formation a
development. This paper tried to introduce the thought of Micro Health Insurance as a vital
tool to alleviate impoverishment. As per the analysis, there's increasing demand and want for
small insurance (health) products to be introduced. Thus, despite several NGOs square
measure operating during this field, government should step up to support small insurance
business in its true essence by establishing correct insurance laws initiating public-private
partnerships with commitments for subsidizing early initiatives. Additionally what's needed is
would like of higher health infrastructure and correct service delivery mechanisms that will
serve to push a more robust atmosphere for Micro insurance business to flourish in
Bangladesh. Thus, scope square measure there during this field what's needed square measure
awareness of the policy manufacturers and development practitioners concerning the growing
health concern of the poor and powerful urge to shed impoverishment for countrys sake. The
original purpose of enrolling the poor in micro health insurance schemes is to use it as a
cushion against risk factors and to minimise their healthcare costs. The proper execution and
optimistic results of this micro insurance scheme is expected to open up a new dimension of
healthcare for the poor and also to provide an alternative scope for its financing the sector.
Ali, Mortuza K M, Requirements for Providing Sustainable Health Care and Health
http://www.inm.org.bd >.
<http://www.microfinancegateway.org/p/site/m/template.rc/1.11.4824/
Ali, M M, The Insurance Act, 1938 and Rules 1958, Seraj Book Syndicate, Dhaka:
October 2001.
WEEH (a), Grameen Kalyan and BRAC: Assessment of Micro Health Insurance
Microinsurance, World Bank. 2005. pp. 161. (Good and bad practices case study no.
13).
WEEH (c), Micro Health Insurance Scheme of BRAC: A Case Study, Dhaka, April
2004
Khandker, S.R. (2005), Microfinance and Poverty: Evidence using panel data from
Bangladesh, The World Bank Economic Review, 19(2), retrieved from <
http://www.ruralfinance.org/fileadmin/templates/rflc/documents/1127736
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Mohakhali.
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