Insurance Industry of Bangladesh has a long history of evolution. About a century back, couple of Insurance companies started both general and life insurance business during the British regime in India. However, insurance business got the momentum during the East Pakistan regime, In the pre-liberation period, there were as may as 49 privately owned insurance companies underwriting general insurance business along with one central Govt. run-organization, namely, Pakistan Insurance Corporation. After liberation, the insurance industry was nationalized vide presidential Order No. 95 of 1972.
By virtue of nationalization order, 5 Corporations were set up to manage the insurance industry of which four were subsidiary corporation, two each for life and General and an apex body, viz., Jatiya Bima corporation as a controlling corporation.
At a later stage, the above five corporations were replaced by two state owned corporations namely, Sadharan Bima Corporation for general business and Jiban Bima Corporation for life business under a restructuring plan made in 1973 in order to curtail excessive administrative expenses of the aforementioned corporations.
Again, in the process of denationalization, the Insurance Corporations Act was amended in 1984 to allow insurance companies to operate in the private sector subject to certain restrictions regarding business operating and reinsurance.
Subsequent to that, the Act was further amended for the relaxation of the existing regulation to promote the private sector insurance companies. Presently, 62 insurance companies are operating in the country, of which 44 are in general business and the remaining 18 are in life business, even though the two state-owned corporations, along with couple of private sector companies, are domination the market.
The insurance industry is now at the final stage of transition. It has been decided to replace the age old insurance laws with Insurance Regulatory Authority (IRA) Ordinance 2008 and Insurance Ordinance (IO) 2008. The Department of Insurance will be abolished by the five member Insurance Regulatory Authority headed by the Chairman not below the rank of Government Secretary. For further enhancing the solvency position, the paid up capital for general and life insurance companies have been raised to Tk. 400 million and Tk. 300 million respectively.
There are 11 directors in the company including two independent directors. The Managing Director is a member of the Board as ex-officio. The new law also introduced mandatory solvency margin for the insurance companies, besides, the insurance companies will be required to ensure international accounting standard, separate Islamic insurance companies well be required to make the valuation of liabilities on yearly basis to reveal the real strength of the company. The law also allowed foreign investment in general insurance sector. With the promulgation of the ordinances, the insurance industry will be under the ministry of Finance From the Ministry of Commerce.