The Insurance Act 2010 for non-life insurance; problems & prospects of peoples insurance company limited

Abstract

The report on “The Insurance Act 2010 (for non-life insurance business) and the problems & prospects of Peoples Insurance Company Limited” has been prepared based on qualitative research as required for completion of BBA degree from BRAC University. In a developing country like Bangladesh, different insurance companies are playing a very crucial role in the economic growth. Though insurance industry has significant prospects in the economy but for some reasons it has failed to achieve its goal to some extent. There are 62 insurance companies in Bangladesh. Among them, Peoples Insurance Company Limited is the second private insurance company and it has been doing insurance business in the country over 27 years since 1985. The company was established and had been operated under the Insurance Act 1938 since its inception until 2010. However, as the need of time, the parliament of Bangladesh passed a new Insurance Act 2010 in March, 2010 in order to reform & modernize the insurance sector in Bangladesh. Since just after passing a new act to replace the old one, the previous Insurance Act 1938 became inactive due to pass Insurance Act 2010. The insurance industry faced a shock suddenly. In this report, the Insurance Act 2010 has been summarized focusing on the additions and changes brought by the new act which are different from the former Insurance Act 1938. A qualitative research has been conducted to gather required information where I have taken interviews of four top level employees of Peoples Insurance Company Limited. The entire report has been categorized into six chapters. In chapter one, the introduction, scope, objective, methodology, and limitations of the report have been described. Then chapter two of the report focuses on the Peoples Insurance Company Limited—the company overview, its services, vision, mission, and future plans. Here, I also have conducted a financial analysis on the company‘s performance since 2002 until 2010 where short descriptions of the performance have been given along with necessary graphical presentations. In chapter three, I have described the internship program under the Department of Finance & Accounts at the corporate office of PICL specifying the departmental responsibilities along with my own responsibilities that I performed as an intern. Here, I have tried to discuss about my work procedures while performing different responsibilities and also my learning from the work experiences. In the report, chapter four and chapter five bear more weight. Chapter four basically works on the topic of this report where a brief description on insurance, Insurance laws and regulatory system, and regulatory conflicts in the insurance industry in Bangladesh along with the emergence of establishing and passing the new insurance act. Hence, the Insurance Act 2010 has been taken into focused in this chapter specially for the non-life insurance sector—why the new act has been passed, how the new regulatory authority is working for the reformation and modernization of the insurance sector in Bangladesh, what are the problems that the non-life insurance companies (specially the Peoples Insurance Company Limited) are facing while trying to follow the new rules and regulations to implement the new act in doing their business. Besides, the huge prospects of the insurance companies while the new act will be fully functional also has been identified and described. Continuously, in chapter five, the findings have been presented along with developing necessary recommendations addressing both the regulatory authorities and the Peoples Insurance Company Limited in order to overcome the conflicting situations as well as to make the prospects come true. Then conclusion has been drawn by expressing hope and expectation on the modernization of the insurance sector in Bangladesh competing with its neighbors. Lastly, in chapter six, appendix of the report has been given which encloses the supporting information & documents of the report & references that might be helpful to understand the whole report more clearly.