INTERNSHIP PROJECT REPORT ON ROLE OF LIFE INSURANCE COMPANY IN THE ECONOMIC DEVELOPMENT OF BANGALDESH AND FINANCIAL CONTROL SYSTEM: A STUDY ON JIBAN BIMA COROPORATION. (This internship Project report is submitted for the partial fulfillment of the Degree of Master of Business Administration with a major in Finance) SUPERVISED BY MR. MD. SHAHIDUL ISLAM MBA Program Director School of Business, UITS. PREPARD BY A.K.M. NAZRUL CHOWDHURY Program : MBA ID No. : 08435034 Batch : 15 th Major : Finance & Accounting 1
Transcript
INTERNSHIP PROJECT REPORTON
ROLE OF LIFE INSURANCE COMPANY IN THE ECONOMIC DEVELOPMENT OF BANGALDESH AND FINANCIAL CONTROL SYSTEM: A STUDY ON JIBAN BIMA
COROPORATION.
(This internship Project report is submitted for the partial fulfillment of the Degree of Master of Business Administration with a major in Finance)
SUPERVISED BYMR. MD. SHAHIDUL ISLAM
MBA Program DirectorSchool of Business, UITS.
PREPARD BYA.K.M. NAZRUL CHOWDHURY
Program : MBAID No. : 08435034Batch : 15th
Major : Finance & Accounting
University of Information Technology & Sciences
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LETTER OF SUBMISSION
25 February, 2010
ToMr. Md. Shahidul IslamMBA Program DirectorSchool of Business,University of Information Technology and Science (UITS).
Subject: Submission of Internship Report Project.
Dear Sir,
I have the honor to inform you that I have completed my internship project report on “Role Of Life Insurance Company in the Economic Development of Bangladesh and Financial Control System: A study of Jiban Bima Corporation” for the purpose of partial fulfillment for the degree of Masters of Business Administration with a major in Finance and Accounting.
As your valuable suggestions and guidance, I have tried my best to prepare the report properly. I have tried my best to prepare the report properly. I sincerely believe that you will find this report very significant and informative.
I therefore, pray and hope that you would be kind enough to accept this report and oblige thereby extends your co-operation and advice.
Major : Finance & AccountingUniversity of Information Technology and Science, Chittagong.
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ACKNOWLEGEMENT
At the very beginning I would like to express my gratitude to my supervisor Mr. Md. Shahidul Islam, MBA Program Director, School of Business Faculty, University of Information Technology and Science, Chittagong for his proper guidance, inevitable help, counseling and special attention at difference phase of preparing this report.
In addition, I am most grateful to the management of Jiban Bima Corporation for their co-operation and friendly inspiration in completing the thesis report successfully.
Finally, I am deeply indebted my parents for their sacrifices and encouragement for completion of my MBA course and for preparing this report.
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PREFACE
Assignment is the inseparable part of university education. It is the combination of university education and practical knowledge. Realizing the above facts, faculty of business administration, University of Information Technology and Science, Chittagong has taken an initiative to include a comprehensive assignment programs for MBA students. I have prepared my assignment on the basis of experience and activities that I have observed and performed during my whole service life. I have tried my level best to submit this assignment and overcoming the limitation.
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EXECUTIVE SUMMARY
The economy of Bangladesh is in the process of a transition from a
predominantly agrarian to a quasi-industrial and service economy. Economy
and financial industry go together and are inseparable. So, it is a great
pleasure for me that I have been completed report on Jiban Bima Corporation.
My Internship report contains all the information about my work experience
with Jiban Bima Corporation(JBC), which was established in 1990. My learning
experience with JBC being with my joining form 21-12-1999. I Shall try to
discuss and include introduction, history, objective, status, mission and
financial analysis etc.
Jiban Bima Corporation has been playing an important role in the economic
development of the country. They generated employments four hundreds of
people in the projects and industries establish under their finance.
At the end, the following steps are recommended on overall basis for the
further advancement and enlistment of JBC.
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TABLE OF CONTENT
Page No.
Chapter 1 : Introduction 08
1.1 Background of the study
1.2 Objective of study
1.3 Methodology of the study
1.4 Scope of the study
1.5 Limitation of the study
1.6 Problem Statement
Chapter 2 : History of Insurance Industry 13
2.1 Introduction
2.2 History & Development of Insurance
2.3 Development of Insurance in Bangladesh
2.4 Implication of five forces model (By Michael E. Porter) in insurance industry of Bangladesh
Chapter 3 : Bangladesh Insurance Academy 21
Chapter 4 : Company overview & Financial Control System of Jiban Bima Corporation (JBC) 23
4.1 Company Overview
(a) Corporate Information
(b) Vision, Mission, Objective
(c) JBC’s products and Services Policies
4.2 Financial Control System
(a) Marketing & the Process of Create a Policy
(b) Risk Management
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(c) Settlement of Claim
(d) Customer Service
(e) Human Resource Development Process
(f) Information & Communication Technology in Operation
(g) Information Policy
(h) Research & Development and Training
(i) Corporate Social Responsibilities
(j) Cash flow Statement
(k) Statistics of Business Performance
(l) Credit Rating
(m)Five Years at a glance of JBC
Chapter 5 : Role of Life Insurance Company in the Economic Development of Bangladesh 39
5.1 Contribution of Economy5.2 Contribution in Society5.3 Development in Economy & Society5.4 Tax Payment System of JBC & Revenue to the Government 5.5 Customer Service & Satisfaction
Chapter 6 : SWOT Analysis of JBC 45
Chapter 7 : Findings & Recommendation 47
7.1 Findings7.2 Recommendation7.3 Conclusion
Reference 50
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CHAPTER 1 : Introduction
1.1 Background of the Study
1.2 Objective of Study
1.3 Methodology of the Study
1.4 Scope of the Study
1.5 Limitation of the Study
1.6 Problem Statement
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To provide the qualified executives a strong foundation in the concepts principles and techniques of modern business administration and to train, develop a new generation of managerial leaders capable of coping with every changing business University of Information Technology and Science, Chittagong has taken an initiative to include a comprehensive assignment programs of MBA students.
1.1 Background of the Report
This report has been prepared as a requirement of the insurance and risk
management course. The report was based upon the overall insurance
company’s problems and prospects in Bangladesh. I was duly approved by our
Course Supervisor Md. Shahidul Islam. This report will help us know about the
insurance business problems and prospects in Bangladesh.
Insurance is a system of spreading the risk of one to the shoulders of many. It
can be defined as a co-operative device to spread the loss caused by a
particular risk over a number of persons who are exposed to it and who agree
to ensure themselves against that risk. It is a 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. It can play an important role in a
country’s economy. It is an old form of financial practice of sharing risk, which
was introduced in this area in mid-18th century.
1.2 Objective of Study
The main objective is to know the overall position of this sector. Some objectives of this report are given below:
To know an overall idea about insurance industry in Bangladesh
To get proper information about the organization (JIBAN BIMA CORPORATION)
To find out the uses of insurance to society
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To know how to insurance companies involve in economic growth
1.3 Methodology of the Study
In order to complete this report, I made the following steps:
Selecting the goal
Collecting data from primary & secondary resource
Primary data have been collected from head to head interview some important employees of this organization.
Secondary data have been collected from internet, different books, various journals and annual report of this organization.
Data Processing & Analysis
Collected data were examined and analyzed by manipulation.
Recommendation & Conclusion.
1.4 Scope of Study
By using this study, any individual would be able to have an idea about the
principles & procedures of setting up a life insurance policy, the
performance of JBC and the impact of insurance business in our society.
1.5 Limitation of the Study
The study arranged for three months duration. As a service holder, it was difficult to manage time for study enough. So some limitations are common at the time of program. But I have tried my level best, to find out the opportunity of work, overcoming the limitation. The main limitations are as follows:
Time constraints for the study needed documents, data information are not easily available.
The official and respective persons are very busy with their assigned job.
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1.6 Problem Statement
In a developing country like Bangladesh, insurance companies are playing a very important role in the economy. Though insurance industry has very prospect in the economy but for some reasons it’s totally failed to achieve its goal. If we want to know the reasons behind this hen we should look forward the following according to Bangladesh General Insurance Company Ltd.
In this report the major problems in performing insurance business has been classified into some major criteria which are social, economic, political, legal and other reasons. The actual problems are discussed in detail within these criterions.
1.6.1 Social Problems
Less Public awareness
A vast majority of people especially in rural areas are left outside the insurance coverage. This mainly results from the unawareness among the people. Even a large portion of people don’t have the minimum idea of insurance. People are not aware of the benefits from the insurance policy and a great number of people believe that insurance business is nothing but cheating and assume that insurance policy is quite unnecessary. This negative attitude from the people is lessening the importance of absorbing insurance policy in a large extent.
1.6.2 Economic Problems
Poor economic conditions
Bangladesh is one of the poorest countries in the world and most of the people in this country live under extreme poverty level. All of these people fight hard to earn their livelihood and are marginal in relation to the expenditure with the income. It is quite impossible for them to save some money for future need. Therefore they are quite unable to give the amount to the insurer which is called as premium and regarded as safety or precautionary measures against any accident. The number of people who can bear the premium to the insurance company is very few in regard
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to those mentioned above. Therefore the overall poor economic condition is creating obstacle to flourish the insurance business in Bangladesh.
Poor financial position of the insurance companies
Most of the insurance companies of our country are facing financial problems. Recently government is trying to take initiative to close some of the insurance companies because they are not maintaining the minimum standards. They are investing their money in poor securities and business which is vulnerable regarding getting back the money with profit. As a result most of the insurance companies are suffering from loss years after years and for poor financial condition the insurance companies are also unable to expand their branch which is a barrier for the growth of insurance business in Bangladesh.
1.6.3 Political problems
Political instability
Political instability is a major problem in Bangladesh. For the instability in politics, many disruptive situations are often created which are bad for any businesses. The people who operate various businesses in our country often experience various types of inconvenience in running their business. Insurance business is not an exception 0of this. Political instability and inconsistency of political courses are a serious problem for the insurance business.
1.6.4 Other problems
Lack of qualified officials
Insurance companies perform their activities by recruiting marketing agent and they try to convince the people to take a policy. Most of the cases the agents are not properly trained and they don’t know the right process to catch potential people to make their policy holders. Therefore these field level agents are unable to fulfill their target and act as a constraint in the insurance business.
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CHAPTER 2: HISTORY OF INSURANCE INDUSTRY
2.1 Introduction
2.2 History & Development of Insurance
2.3 Development of Insurance in Bangladesh
2.4 Implication of five forces model (By Michael E. Porter) in insurance industry of Bangladesh.
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2.1 Introduction
Insurance is a system of spreading the risk of one onto the shoulders of many. Whilst it becomes somewhat impossible for a man to bear of himself 100% loss to his own property or interest arising out of an unforeseen contingency, insurance is a method or process which distributes the burden of the loss on a number of persons within the group formed for this particular purpose.
2.2 History & Development of Insurance
The origin of insurance is lost in antiquity. However, there is no evidence that insurance in its present form was practiced prior to the twelfth century. A brief chronological historical development of the various branches of insurance is given below:
Marine Insurance:
Marine is the oldest form of insurance and came first in the list. This type of insurance probably began in northern Italy sometime during the 12th & 13th
century and gradually the concept was rather transferred to or taken over by the United Kingdom. During the 13th / 14th century the Italian merchants went to UK and along with the merchandise carried with them the trading customs including the concept of marine insurance. Marine insurance as such was not being practiced as a separate specialized entity during that time since it were the merchants who used to transact marine insurance business side by side with their general trading activities.
Fire Insurance:
After marine insurance fire insurance developed in present form. It had been observed in Anglo-section Guild form for the first time where the victims of the fire hazards were given personal assistance by providing necessaries of life. It had been originated in Germany in the beginning of sixteenth century. The fire insurance got momentum in England after the great fire in 1666 when the fire losses were tremendous.
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Life Insurance
The third in the list of development is the life insurance business. The earliest policy of which there is a record dates back to 1583. During this period only short term polices were used be issued meaning that only at the death of the life assured during the term period the money was to be paid. On survival nothing was payable.
In 1693 Halley introduced the mortality table giving a definite value to risk of death. In 1974, the life Assurance Act was passed in the British parliament requiring the presence of insurable interest before one could effect a life policy on the life of another. All these gradually gave life assurance a sound, systematic and scientific basis as we see in the present day.
2.3 Development of Insurance in Bangladesh
Insurance is not a new idea or proposition to the people of Bangladesh. About half a century back, during the British rule in the then India, some insurance companies started transacting insurance business, particularly life in this part of the world. Since 1947 until 1971 insurance business gained momentum in this part of what was then known as East Pakistan. There were about 49 companies transacting both life and general insurance business. These companies were of various origins, Viz, British, Australian, Indian, West Pakistani and East Pakistani. Except a few companies these were mostly limited liability companies acting under a free competitive economy.
With the emergence of the People’s Republic of Bangladesh, the government in order to make available the fruit of liberation to the general mass, nationalized the insurance industry in 1972 by presidential order no 95 more specially known as the Bangladesh insurance (Nationalization) order 1972.
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By virtue of the order, save and except postal life insurance and foreign life insurance companies (other than the Pakistani companies), all companies and organizations transacting all types of insurance business in this country came under this nationalization. Five insurance corporations were basically established, Viz.
i) Jatiya Bima Corporation
ii) Teesta Bima Corporation
iii) Karnaphuli Bima Corporation
iv) Rupsa Jibon Bima Corporation
v) Surma Jiban Bima Corporation
The Jatiya Bima Corporation was not an underwriting corporation, actually,
it was a central corporation to supervise and control the activities of the
remaining four subsidiary corporations. As per this order Teesta and
Karnaphuli were made responsible for general insurance business and Rupsa
and Surma were made responsible for life insurance business. All the
existing 49 companies were merged with this 4 corporation whilst life
companies or the life portion of a composite company joined the Rupsa and
Surma, the general companies or the general portion of a composite
company joined the Teesta and Karnaphuli.
Formation of two corporations
Although the basic idea behind creating 2 corporations in each main branch
was to encourage competition even under a nationalized system, it was
observed soon that the unnecessary administration expenses for
maintaining these two corporations in each front and arr apex institution.
Therefore, on 14th May, 1973 the structural arrangement under
nationalization was changed vide act VI 1973.
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The previous 5 corporation were abolished and instead 2 corporations were established, Viz.
i) Sadharan Bima Corporation
For transacting general insurance business only. The two general insurance corporations were merged under it.
ii) Jibon Bima Corporation
For transacting life insurance business only. The two life insurance corporations were merged under it. In the sector, postal life insurance business and corporation of life business by foreign companies (other than Pakistan) are still permitted as before.
This is the present structure under which the insurance business in transacted in this country.
Insurance is not altogether a new idea in this country, but some how it could not flourish much. Now however, there is enough provision for tapping the untapped resource and potentialities. During the Pakistan or Pre-Pakistan period this market was basically a production market dealing only in limited conventional types of insurance business both in life and general. Consideration used to be missing as to what type of policy would suit best the requirement of the people. Hence, even though there was tremendous growth prospect, it never gained momentum in the past. Lake of proper technical know-how of the insurance personnel and the general ignorance of the public as to the importance of insurance business were also partly responsible for extremely slow growth of insurance activities in the past.
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It should be remembered by the students that the insurance industry had to pass through a number of difficult during the initial stages after nationalization. However, the handicaps were kept under constant review by the government on the management of the industry and remedies are gradually being implements to accelerate the growth and progress.
Year Establishment/Act Authority
1 March, 1972
P.O. 19/1972 Adoption of Insurance Act in Bangladesh
Ministry of Commerce, Bangladesh
8 March, 1972
P.O. 95/1972 Bangladesh Insurance (nationalization) order 1972
26 March, 1972
P.O. 30/1972 Bangladesh Insurance (Emergency provision) order 1972
After 2008 Govt. Life Insurance in one & private life insurance company is 19.
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2.4 Implication of five forces model (By Michael E. porter) in insurance industry of Bangladesh.
Michael E. Porter of the Harvard School of Business Administration developed a five forces model which helps the business managers analyze the forces of the environment within a specific industry context. In this respect, I like to make discussion below in respect of insurance industry its importance and implication in Bangladesh.
i) Risk of entry by potential competitors
The change of entry by potential competitors depends on the barriers to entry. The higher the barriers are, the lower is the chance to entry by the potential competitors. In this respect, Bangladesh government has not given permission to establish any insurance company except ALICO. As such, the insurance companies of Bangladesh are enjoying better facilities and benefits, but to allow the foreign insurance companies are dependable on the wishes of Bangladesh government. So our own insurance companies are always remaining anxious if Bangladesh government permits insurance companies of foreign countries, then they will be in the face of hard competition.
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Risk of entry by potential competitor
Bargaining power of suppliers
Rivalry among establish firms
Bargaining power of buyers
Threat of substitute products
ii) Rivalry among establish companies
The extent of rivalry depends on the function of three factors, such as, a) competitive structure, b) Demand conditions and c) Exit barriers.
Competitive structure refers to the number and size of companies in an industry. Structures vary from fragmented to consolidate. Growing demand is good for existing companies because it gives opportunities to the existing companies to expand operation. Exit barriers could be economic, strategic and even emotional. In the light of above discussion the insurance companies of Bangladesh are better in their competitive structure, demand condition, but the spoken in the last exit least number of barrier.
iii) Bargaining power of Buyer
Buyers can be viewed as a competitive threat when they force down prices or demand higher quality products and better services. Alternatively weak buyers give a company the opportunity to raise prices and earn greater profits. The bargaining power of the policy holders of insurance companies of Bangladesh are mostly limited. As such they are enjoying better facilities.
iv) Bargaining power of supplier
Suppliers are most powerful in the following circumstances-
When the product that suppliers sell has few substitutes and is important to the company.
When the company’s industry is not and important customer to the suppliers. Above stated factors are not a matter of thread for the insurance companies of Bangladesh.
v) The threat of substitute products
When there are close substitutes, they pose strong competitive threat. It results in reduction in price by limiting profitability. In this regard the insurance companies of Bangladesh are mostly in safe condition, As insurance is the substitute of its own itself.
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CHAPTER 3
BANGLADESH INSURANCE ACADEMY
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Bangladesh Insurance Academy
In 1972 the govt. of the people’s republic of Bangladesh nationalized all the insurance companies of the country. The idea behind nationalization of insurance industry stemmed from a broader sense of social service and safeguarding the public interest. In the pre-liberation years much of insurance business were done by the companies of former west Pakistan origin, but little attention was given to the insurance education or training facilities. As a result the insurance industry in Bangladesh faced with and acute shortage of trained and professionally educated personnel. In order to meet the changing and growing demands for such personnel and to make insurance industry a better service institution, the govt. of People’s Republic of Bangladesh established the Bangladesh Insurance Academy in November, 1973 with the following objectives:
i) To promote, organize & import professional education in insurance leading to degrees/Diplomas/certificates.
ii) To organize, conduct & promote research on problems of insurance industry.
iii) To organize & conduct in service training for the officers and employees of JBC and SBC and also employees of the organizations are dealing in insurance.
iv) To facilitate, promote, encourage & poster publication of research work and literature on matters of insurance interest.
v) To establish and maintain close contact with experts and similar institutions at home and abroad.
vi) To provide coaching facilities for the standard examination like ACII, CLU etc.
vii) To award prized and rewards to persons who have contributed to the cause of insurance education and industry.
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Chapter 4: Company overview and Financial Control System of Jiban Bima Corporation (JBC).
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4.1 Company overview
a) Corporate information
b) Vision, Mission, Objective
c) JBC’s products & services policies
4.2 Financial Control System
a) Marketing and the process of create a policy
b) Risk Management
c) Settlement of Claim
d) Customer Service
e) Human Resource Development Process
f) Information and communication Technology in Operation
f) Information Policy
h) Research and Development and training
i) Corporation Social Responsibilities
j) Cash flow Statement
k) Statistic of Business performance
l) Credit Rating
j) Five years at a glance of JBC
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A. JBC’s
Vision:
To establish ourselves as the unique service provider to the policy holder at a large.
Mission:
1. To provide socio-economic security through insurance mechanism among the target group.
2. Follow ethical standards in business.
OBJECTIVE:-
Knowledge:
To perfectly combine global expertise blended with local knowledge to remain as pioneer Life insurer.
Care:
To provide a world class customer service, which is responsive, personalized human and empathetic.
Honesty:
To ensure honesty and trust in every cornerstone through integrity.
Excellence:
Aimed to be focused on the value of continuous improvement of human resources and the organization by striving for the highest standards of quality in every aspect of its modus operandi.
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B. JBC’s products and services policies:
The company was incorporated on 1973 and is mainly engaged in ordinary life, group term insurance business. It also operates in non traditional Micro life insurance business under the name of Endowment, pension, child protection, Marriage endowment policy etc.
JBC provides several type of policy to its customer. Generally they divided their policy in two categories.
1. Individual
2. Groups
Individual policy
There is several type of life policy that JBC serves its individual Customer. It depend on the basis of
a) Duration of policy
b) Method of premium payment
JBC’s most of the individual customers are service holder who has a steady income. Company also prefer foreign employee, businessman, Housewife if they have the ability to give premium continuously.
Group Policy
JBC provides group policy mainly to the company’s worker or Employee. Company provides service to its employee by giving the service of Life Insurance.
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Benefits given by company to its policyholder.
There is a several type of policy that company served to its policy holder like extra care. These are:
a) Disability of protection Rider
b) Accident Indemnity Certificate
c) Accident Death Benefit
4.2 Financial Control System
a. Marketing & The process of create a policy
JBC serves policy by its agents. In this process agents first find out a people who have a probability to take policy and then try to convince him. If the person is satisfied then agent gives him a policy form to make the policy.
Process of Formation of Life Insurance contract.
Offer of Proposal
Insurance company gives offer to a person with all information that’s he need to know. If anybody wants to create a policy collect a form of application as his wish and give a proposal to the company to create a policy by this form.
Consideration of proposal
After this company consider this proposal. For this reason they collect some information to justify the probability of risk of the proposal.
Collection of Medical Report
In this step company collects all kinds of information about the fitness of the person and collect medical certificate and test report from him.
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Collection of Agents Report
In this step company collects information from their company agent.
Collection of Extra Information
In this step the company collects more information if they need. They collect information from the closer person of propose, from the personal doctor of propose and from other trustable source.
Prof of Age
To consider the proposal company need to justify the age of the person. For this reason they collect the birth certificate and other related documents of propose.
Selection of proposal
In this step company select the proposal by justifying all information like medical certificate, birth certificate, agents reports etc.
Acceptance of offer
In this step company accept the offer and announce the amount of premium to propose.
Insurance of policy
In this step company collect money from the person and give him the policy and the cover note.
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b. Risk Management
Their risk management is a process of identifying, measuring, analyzing, monitoring and controlling risks. In life insurance business the factors which may affect the risk are usually those factors which are affecting the mortality; they are also called factors affecting longevity of a person.
These factors are-
a) Age
b) Physical condition
c) Personal History- 1) Health record, 2) Past habit, 3) Previous occupation, 4) Insurance history.
d) Family History
e) Occupation
f) Residence
g) Present habits
h) Morals
i) Race and Nationality
j) Sex
k) Economic Status
l) Defense Service etc.
For this, they collect of above risks from various sources because it is not possible to get all information from one source and this are:
a) The proposal form
b) Medical Examiner’s Report
c) Agent’s Report
d) The Inspection Report
e) Private Friends Reports
f) Attending physicians
g) Medical Information Bureau
h) Neighbors and Business Associates
i) Commercial Credit investigation Bureau etc.
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After collect the risks the company confirm to the following principles in their risk management practices and then accept the offer of proposal and announce the amount of premium to propose.
a) To define risk profile on the basis of their risk tolerance.
b) To determine risks and analyze them from the beginning with the help of their risk strategy.
c) To comply with regulatory requirement and guidelines for risk management.
C. Settlement of Claim
Image and goodwill of the corporation largely depend on early settlement of claims. JBC fulfill the claim in this situation.
1. Payment of claim after certain period. That means corporation fulfills the claim if the policy is matured. It may be 10, 15, or 20 years.
2. Payment of claim after the death of insured: Company pay insured money after the death of the policy holder according to the contract of the policy here need—
a. Proof of age of the insured.
b. Proof of Death of the insured.
c. Succession certificate
d. Payment of Claim
3. Payment of Group claim of policy
Here corporation pay insured money if the policy is matured other any accident will be occurred inability of death according to the contract of the policy.
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d. Customer Service
The reputation and progress off the corporation largely depends on prompt and efficient services rendered to the policyholders. Keeping this in view they have further strengthened their servicing and computer departments for rendering quick services to policyholders and marketing personnel’s. In order to give easy access to their products and to give best possible services to the customers, the company offers personalized services by recruiting highly experienced and customer focused professionals.
e. Human Resource Development process:
Sound and effective planning of human resources is the key of success in the implementation of development projects in any sector. This is why the issue of human resource development is taken up at national level. The dedication, skills and professionalism of the employees are factors that contribute to the success of a company. But this company has no better human resource development process. So in human resource management, the company should focus on the following areas:
1. Continuous training and acquiring of new skills.
2. Empowering people and creating a congenial work environment.
3. Staff briefing.
4. Competitive compensation package.
5. High end-service benefits which include Gratuity, contributory provident fund, Benevolent fund etc.
6. Liberal bonus policy.
7. Encouraging innovation
8. Quality employees.
9. Equal opportunity.
Bonded by common goals, each of the employees will truly proud to be a member of JBC.
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f. Information and communication Technology in operation
Information technology explores the roles of information system, which defines systems analysis and design and outlines the responsibilities of system analysis. It introduces system concept and outlines categories of business information system. It appears a system development, which provides the Information communication Technology (ICT) for the purpose of global networks, Network Technology platform of Jiban Bima Corporation has the following key features:
Lightweight computer system
Web site
Contact Center
Data warehouse and
Simplified accounting system. Presently they are providing with information based service on the following items:
System control/Development
Software control
Web Customer Service
g. Information policy
Jiban Bima corporation informs regulatory authorities, and the public in an open, transparent and timely manner relating to its operational performance and progress made towards achievement of corporate goals. Equal treatment to all shareholders is the guiding principle behind their partnership-oriented approach. They practice and nurture an open dialogue with their shareholders based on mutual respect and trust. The most important tools for the outflow of information from the company are annual reports, statements, media release, disclosures to regulatory authorities, annual general meetings, extra ordinary general meetings etc. Besides, companies website: www.jbc.gov.bd is rich with corporate information. This promotes an understanding of their objectives and ensures a high degree of awareness about their company.
In order to consolidate the existing position and cope with the ever-increasing growth potentials, the company focuses on making continuous investment in Research and Development and Training to optimize operational efficiency. The company’s human resources policy is to build up quality work force with skills and professional expertise. The objectives of designing all training programs are to bridge the gap between present level of competence and desired level of competence of human resources. The company is continually pursuing training program of its employees by the high level executives. Training programs both centrally and regionally through the company’s training Department are being conducted regularly for desk and development personnel.
In addition to this, executives are sent to various training institutions Like Bangladesh Insurance Academy, Bangladesh Insurance Association and other training institutions at home and abroad.
The company is convinced that investments made by their in recruiting executives and training of new and existing employees will create the basis for the company to enhance its national leadership role and to deal professionally with increasing complexities in life insurance business that are being faced in the present as well as those that are likely to come up in the future.
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i. Corporate Social Responsibility
In recent years, there has been growing recognition and acceptance that the behavior of business houses is an important factor in influence a wide range of social, environmental, community and ethical issues. Their customers want to be treated fairly. Their regulators want to be confident that they operate within the logical and ethical standard with fairness, transparency and honesty. Their staff members want to be paid competitively and treated with respect. Their shareholder want to be assured that they consider the risks and opportunities while taking business decision and pay good dividend every year.
The social spectrum under which they operate desires that they carry on their business responsibility and positively contribute to the society and the environment. They should commit to responsible business practices and to a policy of continuous improvement in applying sound environment and social standards in their dealings with all their stakeholders.
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j.JIBAN BIMA CORPORATION
CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2008
Particular NotesTaka
2007 2008CASH FLOW FROM OPERATING ACTIVITIESCollection form Premium 1,708,024,240 1,349,542,043Miscellaneous Income received 721,617 138,549Payment for Claim (216,828,167) (156,104,527)Payment for Re-Insurance, Management expense and others
(727,116,671) (703,148,721)
Income Tax paid/deducted (22,017,663) (10,639,243)Net Cash from operating activities 742,783,356 479,788,101
CASH FLOW FROM INVESTING ACTIVITIES (32,542,655) (10,178,821)Investment made in share 50,713,051 2,858,519Proceeds from sales of Investment in share (81,500,000) (123,00,000)Purchase of National Investment Bond (279,725,158) --Purchase of BD. Govt. Treasury Bond (16,573,544) (129,636,291)Acquisition of fixed Assets -- 96,778Sale of Fixed Assets 70,000 (38,617,964)Loan against Policies paid (7,962,256) 1,192,198Loan against Policies realized 704,857 75,393,133Interest, dividend & rents received 132,605,921 ----Net cash used in investing activities (237,209,784) (221,892,448)
CASH FLOW FROM FINANCIAL ACTIVITIES: 51,073 (25,631)Dividend not claimed/(paid) 51073 (25,631)Net cash used in financing activitiesNet increase in cash & cash equivalents 505,624,645 257,870,022Cash and cash equivalents at the beginningof the year 1,009,730,300 751,860,278Cash and cash equivalents at the end of 1,515,354,945 1,009,70,300the year
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k. Statistics of Business Performance.
Premium with Life Fund
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(Taka in Crore)
Premium & Claim(Taka in Crore)
l. Five Years at a glance of JBC
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CHAPTER 5
ROLE OF LIFE INSURANCE COMPANY IN THE ECONOMIC DEVELOPMENT OF BANGLADESH
5.1 Contribution in Economy
5.2 Contribution of Society
5.3 Development in Economy & Society
5.4 Tax payment system of JBC & Revenue to the government
5.5 Customer Service & Satisfaction.
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5.1 Contribution in Economy
Insurance performs multi various economic functions. It helps economic progress. Class-wise specific contribution in economy is discussed below:
Marine Insurance:
Marine Insurance primarily provides financial protection to the ship owners, cargo owners or 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 business enterprises, importers, exporters and persons 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 properly caused by fire. Business efficiency is increased with fire insurance.
Life Insurance:
Life insurance provides an income or capital sum to the dependants of the
deceased. Life insurance encourage saving. It provides profitable 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
depends largely on borrowed capital and insurance companies by means of
huge investment provides and facilities supply of this huge capital.
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5.2 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 over by the lender of money and the family will be
deprived of the uses of the property. The insurance will provide adequate
amount to the dependents at the early death of the property-owner to pay off
the unpaid loans. Life insurance can be effectively utilized for providing
children’s marriage and educational expenses. So, Life insurance provides loss
of human wealth. Through prevention of economic losses, insurance protects
the society against degradation. Insurance eliminates dependency. At the
death of the husband or father, the destruction of family needs no
elaboration. Similarly, at destruction of property and 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 husband and
father, in absence of protection against such dependency. The insurance is
here to assist them and provides adequate amount at the time of sufferings.
5.3 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 phases.
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1. Wealth of the society is protected
Life insurance protects loss of human wealth. The human material, if it is strong, educated and care-free, will generate more income. Each and every member will have financial security against old age, death, damage, destruction and disappearance of his wealth including the life wealth. Through prevention of economic losses, insurance protects the society against degradation. The happiness and prosperity are observed everywhere with the help of insurance.
2. Economic Growth of the country
For the economic growth of the country, life insurance provides strong hand and mind, protection against loss of life and adequate capital to produce more wealth. Life Insurance encourage saving. The saving with insurance has certain extra advantages-
a) Systematic saving is possible because regular premiums are required to be compulsorily paid.
b) In insurance the deposited premium cannot be withdrawn easily before the expiry of the term of the policy, thus the insurance meets all the requirements of the economic growth of a county.
3. Reduction in Inflation
The insurance reduces the inflationary pressure in two ways. First, by extracting money in supply to the amount of premium collected and secondly, by providing sufficient funds for production narrow down the inflationary gap. So increased money in supply and decreased production are properly controlled by insurance business.
5.4 Tax Payment system of JBC Current Tax:
The company is engaged in life insurance business and its taxation is based on taxable income determined under the fourth schedule of income Tax ordinance 1984. Provision for income tax has been made during the year as prevailing rate of Income Tax Ordinance.
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Differed Tax
Since there is no difference between carrying amounts of assets and liabilities and corresponding tax base assets and liabilities as the profits and gains of the insurance business from all sources are computed in accordance with the provision in the fourth schedule of the Income Tax Ordinance 1984. Thus provision for Deferred Tax Liability or Deferred Tax Assets has not been made in the financial statement as required by Bangladesh Accounting Standard (BAS-12).
VAT
VAT is exempted on life insurance business according to section 4 of second schedule of VAT Act, 1991. VAT deduct at source for various service in accordance with relevant section of above VAT Act deducted and deposited to Bangladesh Bank through treasury chalan.
Source Tax
Tax deduct at source for various services in accordance with relevant section of Income Tax Ordinance has been deducted and deposited to Bangladesh Bank through Treasury Chalan.
Revenue to the Government
Tax provision is based on taxable income determined under the fourth schedule of the Income Tax ordinance, 1984.
Provision for income Tax: Tk. 23,698,960
(Balance as on 31st December-2007)
The breakup of the above is being below:
Balance as on 1st January 2007: Tk. 15,893,423
During the year: Tk. 7,805,537
(For the year ended 31st December, 2007)
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5.5 Customer Service & Satisfaction
For instance, now a day, the functions and activities of the insurance are
well known to far and wide of the modern human society and its
necessary is admitted by all. During the tenure of the insurance policy, it is
agreed system that the respective insurance company is fully liable to
make all compensations for any sorts of accident of the policy holder.
Now a day’s establishment of insurance business is one of the most
profitable businesses. With this end in view and in the hope/expected
profits, so many insurance companies have been established both in
government and in private sectors. But, for whom & by whom this
companies are running with their flourishing business, they never think
for a single moment for the betterment of policy holders, The companies
obviously true or fact that the most of the insurance companies are
harassing their respective clients while they put up their legal claim after
completion of the tenure period or of happening any unwanted accident.
In most of the cases, it is observed that in the case of death, the
respective companies create so many hindrances for which the window
wife or the fatherless minor Childs are to suffer most. Most of the
insurance companies continue their that type of misdeed and unlawful
activities. As such all the policy holders cherish and pray to the noble
government that the government must look after this matter and will give
necessary instruction to the concerned govt. department to look after this
policy holders.
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CHAPTER 6
SWOT ANANLYSIS OF JBC
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SWOT Analysis of JBC
The overall evaluation of a company’s strengths, weaknesses, opportunities
and threats is called SWOT analysis. It involves monitoring the external and
internal environment.
External Environment (opportunity and threat) analysis
A business unit has to monitor key macro environment forces (demographic –
economic, natural, technological, political- legal, and social- cultural) and
It is one thing to find attractive opportunities and another to be able to take
advantage of them. Each business needs to evaluate its internal strengths and
weakness. In the light of the above facts, the position of this company is very
sound. 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 circumstances, this company at the
end of the year, 2007 acquired Tk. 256.13 crore in the life fund and Tk. 296.47
crore in Asset respectively. But in the customer services, the advancement &
the position of the other companies are better than that of JBC.
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CHAPTER 7
FINDINGS & RECOMMENDATION
7.1 Findings
7.2 Recommendation
7.3 Conclusion
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7.1 Findings
Insurance is as old as the civilization. It was present in the form of mutual help. Insurance is a co-operative 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 provides certainty of payment at the uncertainty of loss, if provides capital, protection & prevention of loss. It helps Economic progress. Besides, I get more experience about Jiban Bima Corporation.
7.2 Recommendation
There is no social recognition of insurance sector in Bangladesh, due to lack of proper management in quality of customer service. So they should be firmly believe their profitability, growth and market share of business depend on their quality of customer service.
In their customer service, they should focus on the following:
1. Achievement of core competencies in all their business processes.
2. Improvement of service standard.
3. Addressing complaints/suggestions for improvement of service.
4. Enrichment of products.
5. Speedy Service.
6. Service accuracy.
7. Fair treatment.
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7.3 Conclusion
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 people. The prospects of insurance in the first years of the next millennium decide the direction of insurance management. Safety, security and investment 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.
