In Business, Insurance, and Risk Management are taught to the student to find out how they can manage the risk of an organization & insures the business against it. Insurance and Risk Management both depend on each other as to minimize the risks, the company has to insure it under an insurance company. Different types of risk factors are present in business and different types of insurance policies are taken for that. Insurance and Risk Management helps a business person to identify the different types of risks & minimize it for the greater good.
Concept of Insurance
Insurance is a Contract; more specifically a special type of contract which protects the person from financial loss. Insurance can also be defined as a cooperative device to spread the losses caused by a particular risk over a number of persons who are exposed to it and who agree to insure themselves against the risk.
According to INVESTOPEDIA “Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.”
In BUSINESS DICTIONARY “It is defined as a Risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by the event(s) beyond the control of the insured party.”
Contractual definition: Insurance may be defined as consisting of one party (insurer) agrees to pay to the other party (insured) or his beneficiary, a certain sum upon a given contingency (The Risk) against which insurance is sought.
Origin of Insurance
Marine is the oldest form of insurance and comes first in the list of its History. This type of insurance probably began in northern Italy sometime during the 12th and 13th century and gradually the concept was taken over by the United Kingdom.
After marine, fire insurance developed gradually in its present form. It had been originated in Germany in the year 1865. And following this in 1896 Hand -in -Hand was established in Britain (United Kingdom). Later it also affected the Indian subcontinent. The government & its people starting to practice it in their region. In the year of 1928, the Indian Insurance Company Act was established which was revised in 1938. In 1957 India nationalized their insurance companies but in Pakistan, the insurance companies were run by the Act of 1938.
After independence, the Bangladesh government nationalized the insurance industry along with the banks on 26 March 1972 by presidential order. In the year 1972, August 8 insurance companies were diversified into five companies.
- Bangladesh National Insurance Corporation
- Cornophuli Insurance Corporation
- Tista Insurance Corporation
- Surma Life Insurance Corporation
- Rupsha Life Insurance Corporation
Because of this diversification, complications increased in the fields of insurance companies. To remove the complication in 1973 14th may two corporations namely General Life Insurance (Bangladesh National Insurance Corporation, Cornophuli Insurance Corporation, Tista Insurance corporation) and Life Insurance ( Surma Life Insurance Corporation, Rupsha Life Insurance Corporation) were created. Bangladesh Government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. And now in Bangladesh, there are 32 ( public 1, private 31) life insurance and 46 ( public 1, private 45) General life insurance companies operating their business.
The insurance companies of Bangladesh are regulated by the Insurance Act 2010 and the Insurance Development and Regulatory Authority of Bangladesh.
Contributor: Noor Jannat
From Mawlana Bhashani Science & Technology University