Sadharan Bima Corporation

Sadharan Bima Corporation (SBC) the lone government-owned commercial general insurance institution was established on 14 May 1973 with an approved capital of Tk 50 million under the Insurance Act, 1973. SBC, being the only state-owned organisation did monopoly business in the field of insurance from its inception to 1984. As a part of the implementation process of the government's privatisation policy, a few private insurance companies emerged in 1984 following the promulgation of B-1 Ordinance which allowed private insurance business in Bangladesh for the first time. These companies ware allowed to engage in insurance business with only private enterprises but SBC had the right of 100% reinsurance. Later in 1990, the Insurance Corporation (Amendment) Act was enacted. It allowed private insurance companies to deal with insurance of public enterprises and the limit of their quota was fixed upto 50% of each concern. But the changed policy created more complication and ultimately the government decided to restore the authority of SBC for doing 100% insurance business of all public enterprises. However 50 percent of the premium earned from this sector was distributed equally among all private insurance companies. The Insurance Corporation (Amendment) Act, 1990 allowed the private insurance companies to make 50% reinsurance with private companies, both local and foreign. The remaining 50% reinsurance had to do with SBC. The privatisation policy of the government helped a lot to grow private insurance companies in the country. Since 1984, a total of 43 private general insurance companies have been doing business successfully competing with SBC. The Insurance Act, 2010 and the Insurance Development and Regulatory Authority Act, 2010, after being effective have made the insurance market more vibrant and time-befitting.

The authorised capital of SBC was increased to 200 million taka in 1986 under the Insurance Ordinance No 8. At present, it has an authorised capital of Tk 200 million and a paid up capital of Tk 100 million. The government gives the full amount of capital.

During the Pakistan era, 81 insurance companies were registered till 1968. Of which 40 companies were established by local entrepreneurs and the rest 41 were foreign companies. Out of the 40 local companies, 10 were launched in the then East Pakistan by local entrepreneurs and the rest owned by Pakistanis, were registered in the then West Pakistan. Out of the 41 foreign insurance companies operating in those days in Pakistan, 21 were UK-based, 8 owned by India, 5 were from USA, 3 from New Zealand, and one each from Australia, Canada, France and Hongkong. Out of 40 Pakistani companies, 20 were life insurance companies. On the other hand, most of the foreign companies were engaged in general and other insurances. Only two foreign companies were involved exclusively in life insurance and a company was engaged in both life and general insurance business.

A total of 75 insurance companies including ten companies registered locally were engaged in the then East Pakistan in the pre-liberation era. After the independence, the government nationalised the business of insurance sector through the Bangladesh Insurance (Nationalisation) Order, 1972. The government constituted five insurance corporations to run and control 75 nationalised insurance companies. The newly set-up organisations were Bangladesh National Insurance Corporation, Karnafuli Insurance Corporation, Teesta Insurance Corporation, Surma Life Insurance Corporation and Rupsa Life Insurance Corporation. In 1973, the government decided to streamline specialised insurance sectors and accordingly jiban bima corporation was formed merging two life insurance corporations Surma Life Insurance Corporation and Rupsa Life Insurance Corporation. The government also created Sadharan Bima Corporation (SBC) comprising Karnafuli Bima Corporation and Tista Bima Corporation. Later Bangladesh National Insurance Corporation was merged with SBC to strengthen its general insurance activities.

A 7 member Board of Directors headed by a part-time Chairman runs SBC. Of the members, 5 are honorary (part-time) and the rest one, the Managing Director, is a full timer and chief executive of SBC.

The headquarters of Shadharan Bima Corparation is located in Dhaka. It has 88 offices including 6 zonal, two regional offices, and many branch and unit offices throughout the country. According to the approved organogram these offices have 2,623 manpower including 955 regular staffs.

Sadharan Bima Corporation, under its insurance risk programme helps to protect national wealth by providing compensation. SBC's source of income is general insurance and reinsurance business, and interest and dividend from investment. SBC covers insurance risks of all sectors of general insurance except life. These are fire, cargo vessels, ships, aviation, engineering and motor vehicle. Moreover it deals with personal accidental insurance, insurance of persons who become victims of road accident under motor vehicle insurance, insurance of serious patients, medical treatment insurance of Bangladesh nationals abroad and export credit guarantee risk. SBC also extends some unconventional insurance scheme like crop insurance, cattle insurance, health insurance of garment workers and accident policy of individuals. Sadharan Bima Corporation has been playing the role of underwriter of insurance schemes of all government wealth and the role of national re-insurance organisation.

SBC earned 1659 million taka in 2010 from fire, shipping and other schemes. On the other hand, being the re-insurance authority it earned a premium of 4085 million taka giving 977 million taka as commission during the same year. It also earned 354 million taka as commission from abroad by paying 2563 million taka as re-insurance premium. SBC earned 635 million taka from investment and other heads during the same year. The income came from fixed deposits in different banks and transaction of shares and debentures of different companies.

The corporation usually disposes off insurance claims within shortest possible time. In 2010, it paid 147 million taka against its own business and 1927 million taka as re-insurance claim. On the other hand, it recovered 418 million taka from reinsurances. SBC paid back a net claim of 1513 million taka in 2010.

The pre-income tax net profit of Sadharan Bima Corporation is gradually increasing. It was 1255 million taka 2010. SBC paid 274 million taka as income tax and 200 million taka as profit to the government exchequer during the same period. [Muhammad Rezaul Karim]