FINAL REPORT(INsurance & Risk Management)

7/31/2019 FINAL REPORT(INsurance & Risk Management)

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JIBON BEMA Corporation Case Study Insurance & Risk Management

Prepared by NOVOCHARY1

Introduction of JIBON BEMA CORPORATION

The Jiban Bima Corporation (JBC) is the lone state-owned life Insurance company in

Bangladesh, which started its maiden journey on May 14,1973 with assets and liabilities

worth TK. 15.70 crore (157 million) of defunt 37 life Insurance companies. Since itsinception, JBC is working among the people of Bangladesh with two basic objectives:

Firstly, to cover the risks and raise savings habits among the people Secondly, create funds for the countrys economic development through innovative

life insurance schemes.

Meanwhile, the life fund of Jiban Bima Corporation has shot up to TK. 988.35 crore (9.9

billion), up to the year 2008, which was only TK. 21.83 crore (218.3 million) in 1973. JBC

has paid TK. 1580.9 crore (15.81 billion) against various claims, the highest such payments

in the countrys life Insurance business. The JBCs investment has reached TK. 909.1 crore

(9.10 billion) from only TK. 19.7 crore (197 million) in 1973. The JBC has the largest

network all over the country with 6 regional, 10 zonal, 64 sales and 365 branch offices.

Financial Information

Business performance

Income (Taka in Millions)

Claim Settlement Performance

Claim Payment Statement Performance (Since 2000-2009)

Year CLAIM(Taka in Million)

DEATH CLAIM MATURITY CLAIM TOTAL CLAIM

2000 128.3 522.1 650.4

2001 126.7 573.1 699.8

2002 124.4 685.5 809.92003 120.31 725.51 845.82

SerialNo.

Sectors Year

2004 2005 2006 2007 2008Provisional

1 First year Premium 552.8 618.9 535.2 539.9 754.3

2 Renewal Premium 1123.6 1284.4 1553.0 1964.6 2105.3

3 Group Insurance Premium 100.6 133.2 145.3 132.2 131.6

4 Income from Investment and

other sources

667.5 624.5 630.4 715.4 608.5

Total Income 2444.5 2661.0 2863.9 3352.1 3599.7


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2004 118.33 855.84 974.17

2005 117.35 986.35 1103.7

2006 119.0 1165.98 1334.88

2007 152.53 1218.61 1371.14

2008 173.3 1433.7 1607.0

2009 159.0 1476.6 1635.6

Total 2493.1 11655.4 14148.5

JBCS Investments (2005-2009)

Investments of Jiban Bima Corporation

(Taka in Million)

Serial

No.

Sector of Investment Year

2005 2006 2007 2008 20091 Govt. Security & Bond 2096.2 2286.7 2492.2 2690.2 2873.2

2 I.C.B. Unit etc. 7.6 7.6 7.6 7.6 7.6

3 Mortgage Loan 60.5 50.8 42.5 31.7 20.2

4 Companies Share 43.9 45.7 45.7 49.2 95.2

5 Debenture & Bridge

Finance

8.5 8.5 8.5 8.5 8.5

6 Bank Deposit 3330.8 3777.7 4279.5 4661.0 5221.5

7 Real Estate Investment 608.3 608.3 608.3 608.3 608.3

8 Policyholders Loan 688.2 778.7 882.4 1044.6 11953

Total Investment : 6847.4 7567.4 8370.1 9104.5 10029.8

JBCS Incomes (2005-2009)

Incomes of Jiban Bima Corporation

(Taka in Millions)

Serial

No.Sector of Income Year

2005 2006 2007 2008 2009

1 Interest on Deposit 396.2 448.7 542.2 624.8 688.8

2 Interest on Policy Loan 119.1 69.8 23.3 28.8 25.3

3 Dividends 6 5.8 2.4 9.04 16.0

4 Rents 87.6 89.1 95.1 96.9 106.8

Total Income = 608.9 613.4 663 759.54 836.9


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JBCs Life Fund (2005-2009)

(Taka in Millions)

Year 2005 2006 2007 2008 2009 Provisional

Life Fund 7563.7 7996 8889.6 9883.5

Re-Insurance of JBC

Jiban Bima Corporation (JBC) reinsures the surplus of the retention limit of Insurance

amount. The recent retention limit is TK. 1.5 million. To cover the excess insurance risk the

Corporation has alliance with the following foreign reinsurance company:-

Hannover Life Re-Insurance Company, GermanyJBC is also the re-insurer of the following private Life Insurance Company of Bangladesh:-

Progressive Life Insurance Co. Ltd.Business Performance (2005-2009)

Income (Taka in Millions)

SerialNo.

Sectors Year

2005 2006 2007 2008 2009

1 First year Premium 618.9 535.2 539.9 768.2 703.3

2 Renewal Premium 1284.4 1553.0 1964.6 2126.8 2511.8

3 Group Insurance Premium 133.2 145.3 132.2 148.1 131.6

4 Income from Investment and

other sources

624.5 630.4 715.4 736.7 801.6

Total Income 2661.0 2863.9 3352.1 3779.8 4148.4


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Existing Schemes

Serial No Schemes

1 Anticipated Endowment Insurance With Profit Plan-052 Anticipated Endowment Insurance Without Profit Plan-25

3 Child Endowment Insurance Without Profit Plan-47

4 Child Protection Policy With Profits Plan-09

5 Double Protection Insurance With Profit Plan-10

6 Endowment Assurance With Profit Plan-03

7 Endowment Assurance Without Profit Plan-23

8 Grameen Jiban Bima With Profit Plan-91

9 Granted Bonus Endowment Insurance Plan-48

10 Group Endowment Assurance

11 Group Term Insurance12 Joint Life Endowment Insurance With Profit Plan-08

13 Marriage Endowment Policy Plan-07

14 Money Back Term Insurance Policy Plan-50 (Without Profit)

15 Multiple Payment Policy With Profit Plan-06

16 Pension Policy Plan-12

17 Progressive Premium Policy With ProfitPlan-04

18 Single Premium with Profit Plan-17

19 Swanirber Bima (Single Premium Policy) Plan-52

20 Term Insurance Without Profit Plan-51

21 Whole Life Assurance With Profits Plan-0122 Whole Life Assurance Without Profits Plan-21

23 Overseas Assurance Plan With Profit

24 Mortgrage Protection Policy Without Profit

25 Monthly Saving Scheme With Profit

26 Monthly Saving Scheme Without Profit

27 Triple Protection Policy

New Schemes

JBC has made an extensive study and reviewed the existing 22 schemes for the greater

interest of its policyholders. With the changing circumstances of global economy, existing

schemes need adjustment, modification, up-gradation to make their schemes compatible in

the market it observed. JBC, therefore, plans to introduce 8 new schemes in the year 2010,

which in addition of accelerating our business would greatly help poverty reduction and

support economic development of the country.


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Opening New Schemes

Premium CalculatorChime name :

Sex :

Age :

Term :

Sun Assumed (TK) :

Payment Type :

Method of Calculation:

Premium Calculator is a special type of calculator that is used for calculation premium of a

scheme/ policy of Jiban Bima Corporation. Premium Calculation of a scheme/ policy depends

on Age, Term, Sum Assured and Payment Type. If anyone wants to calculate premium of a

policy, he has to fill up Age, Term, Sum Assured and Payment Type in the mentioned box.

After filling up all the information he has to click on Calculate button and then he will get

the result.

JBCs ServicesOnline Service

Jiban Bima Corporation (JBC) is giving the policy information to the Policy Holders through

online. Under this service, the Policy Holders will get the policy information, bonus

information, paid-up information and payment history. The Policy Holder will be able to

change their mailing address under this service. Only the registered Policy Holders will get

Online Service.

Calculate Cancel


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Online Premium Payment

Jiban Bima Corporation (JBC) has planned to give Online Premium Payment Service to thePolicy Holders using cell phone and credit card. JBC is signed Contact Agreement with cell

phone operator to give this service using cell phone.

Bonuses Information

Bonuses per TK. 1000 sum assured

Year Term Whole

life

Anticipated Endowment Group

2001-

2002

Whole life & Whole life

Limited Pay Policies

Term up to 10 years

Term over 11 years and up

to 15 years

Term over 15 years

60.00

20.00

30.00

50.00

20.00

30.00

50.00

20.00

20.00

35.00

2003-

2004


Limited Pay PoliciesTerm up to 10 years

Term over 11 years and up

to 15 years

Term over 15 years

60.00

20.0030.00

50.00

20.0030.00

50.00

20.0020.00

35.00

2005-

2006

Interim Bonus 60.00

20.00

30.00

50.00

20.00

30.00

50.00

20.00

20.00

35.00

2007-

2008


Limited Pay Policies

Term up to 10 yearsTerm over 11 years and up

to 15 years

Term over 15 years

60.00

20.00

30.0050.00

20.00

30.0050.00

20.00

20.0035.00

Tax Benefits/RebateRate of Income Tax:

The ceiling of minimum tax has been kept TK.1200 and exempted ceiling of income is TK.


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Group Premium Income:From 1973 to 2002, the Group Premium growth rate was 12.7%. JBC plans to increase such income

from TK. 91.0 million to TK. 209.71 million by the year 2010. In 2002, JBCs Group Premium

Income was TK. 91.0 Million.

Life Fund:From 1973 to 2002, the Life Fund growth rate was 12%. JBC plans to increase this fund from TK.

5773.5 million to TK. 13245.3 million by the year 2010. In 2002, JBCs Life Fund was TK. 5773.5

million.

New investment

Jiban Bima Bank Limited:

JBC has reviewed its existing investment policy following the changing situation in banking

and investment arena. The Insurance Act of 1938, which binds us to invest 30% of investable

fund in government security, and the rest 70% in approved investment portfolios like fixed

deposits, ICB unit certificate, real estates, shares and loans to policyholder etc. Recently, the

Ministry of Finance and Bangladesh Bank have issued instructions to the commercial banks

and financial institutions to lower their interest rate in line with regional and global situation.

In view of this, nationalized banks have already cut their interest rate on deposits, which is

now 6.25% and the private banks also lowered the rates from double digit to a single digit.

Since JBC has no other alternative for investment right now, it has become absolutely

impossible to sustain its management & administrative cost and ensure interests ofpolicyholders with such a lower returns.

In addition to performing all commercial business, the proposed bank will ensure collection

of premium from the policyholders, bring financial discipline inside the organization, secure

higher returns of our investment, create employment opportunity and help revamp economic

development of the country. The proposal of Jiban Bima Bank Limited has been submitted to

the government for consideration and approval.

Jiban Bima Housing Finance & Investment Limited

The state-owned JBC has also planned to establish a subsidiary company named as Jiban

Bima Housing Finance & Investment Limited, which will also be in joint collaboration with

Public-Private-Foreign Participation-JBC 45%, FDI 25% and Public Shares 30%. Emerging

demands in the real-estate, housing & construction and land development financing will be

the top agenda of our development. A project proposal has been submitted to the Government

for its consideration & approval. It may be mentioned here that Insurance Corporation Act

1973, section-17 allowed us to invest our funds in any business like it as per the boards

decision. The proposed JBHFL will help JBC to obtain higher returns from its investments,

we believe.

Jiban Bima Foundation:


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JBC has planned to setup a welfare foundation to ensure welfare of its 20,000 members of

staff and their dependents and ensure their participation in different development programs of

the government.

Initial fund of the proposed Jiban Bima Foundation will be TK. 10 million.

JBC Overseas Business

A large number of Bangladeshis (6.5 million) are presently working in abroad particularly in

the countries of South East Asia, middle East, Europe and the USA

Vision 2020

Having the largest network all over the country, and having a high operational cost, the JBC

is facing a stiff competition in the insurance market from the private sector companies.

Options for fresh investment in the money and capital market is facing a setback mainly due

to interest rate cut in recent days. Many private sector insurance companies are also offering

newer and competitive products in the market. To face this competition, the JBC has drawn a

six-year business plan (from 2004 to 2010) with a view to completely revamping the business

strategy of the corporation as well as to expand the corporation's clientele base in both the

domestic and overseas market. In line with this business plan, the JBC would soon launch

Jiban Bima Bank Ltd., Jiban Bima Housing Finance and Investment Limitedas well as

Jiban Bima Foundation with equity share from the public, private sector participation and

Foreign Direct Investment (FDI). The corporation will also explore newer avenues for

investment in the insurance products of JBC by the approximately 6.5 million Bangladeshis

living abroad. To this end, the Corporation is going to offer a number of newer products andservices that will be more attractive to this potential clientele group.

SWOT Analysis of JBC

The overall evaluation of a companys strengths, weaknesses, opportunities and threats is

called SWOT analysis. It involves monitoring the external and internal environment.

External Environment (opportunity and threat)analysisA business unit has to monitor key macro environment forces (demographic

economic, natural, technological, political-legal, and social- cultural) and

significant micro environment actors (customers, competitors, suppliers, distribution,

dealers) that affect its ability to earn profits. In this respect, the position of th e J BC i s

not so sound. As because, if our government permits and establish open world

market for the industry, then they will be in the face of downfall.

I n t e r n a l E n v i r o n m e n t ( S t r e n g t h s / W e a k n e s s ) analysisIt is one thing to find attractive opportunities and another to be a b l e t o t a k e

a d v a n t a ge o f t h e m . E a c h b u s i n es s n e e d s t o evaluate its internal strengths andweakness. In the light of the above facts, the position of this company is very sound.


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Like other local & national companies, they are also establishing them in the focusing

position like new attractive commodities& products and they have captured the market.

In this above c ircumstances , this company at the end of the year,

20 07acquired Tk. 256.13 core in the life fund and Tk.296.47 core i n A s s e t

re spec t ive ly . Bu t in the cus tomer s e rv ice s , the advancemen t & the

position of the other companies are better than that of JBC.

JBCs Contributions

Contribution in Economy

Insurance performs multi various economic functions. It helps e c o n o m i c p r o g r e s s .

C l a s s - w i s e s p e c i f i c c o n t r i b u t i o n i n economy is discussed below:

Marine Insurance:Marine Insurance primarily provides financial protection to the ship owners, cargo ownersor the freight owners in respect of any loss or damage to their interests caused by

maritime perils insured against. Marine insurance is a positive aid to various

b u s i n e s s e n t e r p r i s e s , i m p o r t e r s , e x p o r t e r s a n d p e r s o n s engaged in

international trade and commerce.

Fire Insurance:Like marine, the main contribution of fire insurance is to provide financial

protection to the insured in respect to loss or damage sustained by him to his

p r op er l y caused b y f i r e . Business efficiency is increased with fire insurance.

Life Insurance:L i f e i n s u r a n c e p r o v i d e s a n i n c o m e o r c a p i t a l s u m t o t h e dependants of

the deceased. Life insurance encourage saving. I t p r o v i d e s p r o f i t a b l e

investment. When the owner of a business is free from botheration of

losses, he will certainly devote much time to the business. The carefree owner

can work better for the maximization of the profit. Thus, the life insurance meets all

the requirements of the economic growth of a country. National development

d e p e n d s l a r g e l y o n borrowed capital and insurance companies by means of huge

investment provides and facilities supply of this huge capital.

Contribution in Society

Insurance provides security and safety. The security wish is the prime motivating factor.

So, insurance affords peace of mind insurance protects mortgaged property. At

the death of the owner of the mortgaged property, the property is taken overbuy the

lender of money and the family will be deprived of the us es of t he pr op er t y. Th e

insurance will provide adequate amount to the dependents at the early death of the

p r o p e r t y - o w n e r t o p a y o f f t h e u n p a i d l o a n s . L i f e i n s u r a n c e c a n b e

e f fec t ive ly u t i l i zed fo r p ro v id in g ch i ld ren s mar r i ag e and educa t iona l

e x p e ns e s . S o , Li f e i n s u ra n c e p r o v i de s l o ss o f h u m a n w e a l t h . T h r o u g h

prevention of economic losses, insurance protects the society against

degradation. Insurance eliminates dependency. At the death of the husband or father, thedestruction of family needs no elaboration. Similarly, at destruction of property and


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goods, the family would suffer a lot. The economic independence of the family is

reduced or, sometimes, lost totally. What can be more pitiable condition than this

that the wife and children are looking others more benevolent than the

h u s b a n d a n d f a t h e r , i n a b s e n c e o f protection against such dependency? The

insurance is here to assist them and provides adequate amount at the time

of sufferings.

Development in Economic & Society

The Economy of Bangladesh is in the process of a transition from a predominantly

agrarian to a quasi-industrial and service economy. Economy and Insurance industry go

together and are inseparable . Insurance company has been playing an

Important role in the economic development of the company. They have generated

employments for hundreds of people in the project and industries established under their

finance. The role and importance of insurance for development in economy and society, here,

has been discussed in three phase

Wealth of the society is protected Economic Growth of the country Reduction in Inflation

Finding, Recommendation and Conclusion

Findings

Insurance is as old as the civilization. It was present in the form of mutual

hel p. Insurance is a co -opera tive device of distributing losses, falling on an

individual or his family over a large number of persons, each bearing a nominal expenditure

and feeling secure against heavy of loss. Insurance provide certainty of payment at

the uncertainty of loss, if provide capital, protection & prevention of loss. It

helps Economic progress. Besides, We get more experience about Jiban Bima

Corporation.

R e c o m m e n d a t i o n

T h e r e i s n o s o c i a l r e c o g n i t i o n o f i n s u r a n c e s e c t o r i n

Bangladesh, due to lack of proper management in quality of customer service.

So they should be f i rmly be l ieve the i r p rof i tab i l i ty , g rowth and marke t

share of business depend on their quality of customer service. In their customer service, they

should focus on the following:

Achievement of core competencies in all their business processes. Improvement of service standard. Addressing complaints/suggestions for improvement of service. Enrichment of products. Speedy Service. Service accuracy. Fair treatment.


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C o n c l u s i o n

Insurance business is only commercial but it has become professional now.Knowledge of insurance is as much essential as trading business for the society.

Privatization of Insurance business has added more significations for the

peopl e. Th e prospects of insurance in the first years of the next millennium d e c i d e t h e

d i r e c t i o n o f i n s u r a n c e m a n a g e m e n t . S a f e t y , s e c u r i t y a n d i n v e s t m e n t

have become need of the present society people, now, demand insurance as

compared to the previous attitude of selling insurance to people. They have

become selective and practical. Insurance industry has to meet the expectations of people

REFERENCE

1.www.google.com (Search Engine)

2.www.jbc.gov.bd

3.www.fareastislamilife.com

4.www.popularlifebd.com

5.www.nlicbd.com

6.www.primeislamilife.com

7.www.sandhanilife.com

8.Element of Insurance- Azizul Huq Chaudhury

9.Insurance- M.N. Mishra
http://www.fareastislamilife.com/http://www.fareastislamilife.com/http://www.fareastislamilife.com/http://www.popularlifebd.com/http://www.popularlifebd.com/http://www.popularlifebd.com/http://www.nlicbd.com/http://www.nlicbd.com/http://www.sandhanilife.com/http://www.sandhanilife.com/http://www.sandhanilife.com/http://www.nlicbd.com/http://www.popularlifebd.com/http://www.fareastislamilife.com/

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FINAL REPORT(INsurance & Risk Management)