Marine & Cargo InsuranceINSURANCE BACKGROUND OF BANGLADESH

Insurance is not a new idea or proposition to the people of Bangladesh. About half a
century back, during the British regime in the then India, some insurance
companies started 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 operating under a free
competitive economy.
After the emergence of the Peoples Republic of Bangladesh in 1971, the
government, in order to make available the fruit of liberation to the general mass,
nationalized the insurance industry along with the banks in 1972 by Presidential
Order No. 95. By virtue of this order, save and accept postal life insurance and
foreign life insurance companies (other than the Pakistani companies), all
companies and organization transacting all types of insurance business in
Bangladesh came under this nationalization order. At the same time, five insurance
corporations were initially established by the Government, viz, Jatiya Bima
Corporation (National Insurance Corporation), Teesta Bima Corporation (Teesta
Insurance Corporation), Karnaphuli Bima Corporation (Karnaphuli Insurance
Corporation), Rupsa Jiban Bima Corporation (Rupsa Life Insurance Corporation),
Surma Jiban Bima Corporation (Surma Life Insurance Corporation).
On 14th May, 1973 the Insurance Corporation Act VI, 1973 was enacted under
which the previous five corporations were abolished and the following two
corporations emerged:
1) Sadharan Bima Corporation for General Insurance and,
2) Jiban Bima Corporation for Life Insurance in Bangladesh.
CURRENT INSURANCE MARKET ENVIRONMENT IN BANGLADESH
After the emergence of the Peoples Republic of Bangladesh in 1971, the
government nationalized the insurance industry along with the banks in 1972 by
Presidential Order No. 95. By virtue of this order, all companies and organization
transacting all types of insurance business in Bangladesh came under this
nationalization order. This was followed by creation of five insurance companies in
the life and non-life sector. Further changes were brought on 14th May, 1973.
Through the enactment of Insurance Corporation Act VI, 1973 which led to creation
of two corporations namely Sadharan Bima Corporation for general insurance and,
Jiban Bima Corporation for life insurance in Bangladesh. In other words Sadharan
Bima Corporation(SBC) emerged on 14th May, 1973 under the Insurance
Corporation Act (Act No. VI) of 1973 as the only state owned organization to deal

with all classes of general insurance & re-insurance business emanating in

Bangladesh.
Thereafter SBC was acting as the sole insurer of general Insurance till 1984.
Bangladesh Government allowed the private sector to conduct business in all areas
of insurance for the first time in 1984. The private sector availed the opportunity
promptly and came forward to establish private insurance companies through
promulgation of the Insurance Corporations (Amendment) Ordinance (LI of 1984)
1984.
The Insurance Market in Bangladesh now consists of two state-owned corporations,
forty three and seventeen private sector general & life insurance companies
respectively, a total of 62 insurance companies. Thus the insurance sector in
Bangladesh has grown up substantially and deepened remarkably with number of
companies in both life and general segments. With the expansion of size of the
insurance market, the volume of assets of the industry has also increased
substantially.
SBC is entitled to 50% of public sector business. Insurance Corporation
(Amendment) Act 1990 provides that fifty percent of all insurance business relating
to any public property or to any risk or liability appertaining to any public property
shall be placed with the SBC and the remaining fifty percent of such business may
be placed with this corporation or with any other insurers in Bangladesh. But for
practical reason and in agreement with the Insurance Association of Bangladesh
SBC underwrites all the public sector business and 50% of that business is
distributed among the existing 45 private general insurance companies equally
under National Co-insurance Scheme.
In respect of reinsurance, the same act provides that fifty percent of a companys
reinsurance business must be placed with the Sadharan Bima Corporation and
remaining fifty percent may be reinsured either with this Corporation or with any
insurer in Bangladesh or abroad. At present, nearly all the companies place 100% of
their reinsurance business with the SBC.
Marine Cargo Insurance
Marine Cargo Insurance: Cargo meaning the insurance or goods being conveyed.
This refers to goods or merchandise that one being carried from one place to
another or ore being imported or exported. Such goods or merchandise may be lost
damaged or destroyed by perils of the seas whilst in course of transit and therefore,
the owner of such goods can always insure against the possible losses.
For the purpose of Marine Insurance goods/cargo carried by the following three
ways:

(a) By ship or steamer or powered vessel

(b) By land conveyance (Truck/ Lorry / Rail)
(c) By Air.
GOODS CARRIED BY SHIP ONLY
Risk covered by ship or steamer or powered vessel against following three
categories :Institute Cargo Clause A ( ICC A)
The insurance covered all risks of loss of on damaged to the subject matter insured
except as willful misconduct, ordinary leakage, ordinary loss in weight wear and
tear, loss or damage caused by unsuitability of packing, inherent vice, delay, arising
from insolvency or financial default of the owners of the vessel.
Institute Cargo Clause B ( ICC B)
This insurance covered loss or damage caused by fire or explosion, stranded,
grounded, sunk or capsized, overturning or derailment of land conveyance, collision
or contact of vessel craft, discharge of cargo at a post of distress, earthquake,
volcanic iruption of lightning. This policy also covered general average sacrifice,
jettison or washing overbroad, entry of sealake or river water, total loss of any
package lost overbroad or dropped whilst loading on to or unloading from vessel.
This policy does not cover willful misconduct ordinary leakage ordinary loss is
weight wears and tear loss damage or expense caused arising from insolvency of
the owner of the vessel or unsuitability of packing, inherent vice, delay, un
seaworthiness and un fitness.
Additional risks covered on payment of additional premium
TP, ND, Hooks, Holing, bursting, Tearing, leakage loss, RFWD, Extraneous,
Substance, Heating, Breakage and Scratching, Splitting.
Institute Cargo Clause C( ICC C)
This insurance covered loss or damage caused by fire or explosion, stranded,
grounded, sunk or capsized, overturning or derailment of land conveyance, collision
or contact or vessel craft, discharge of cargo at a post of distress, earthquake,
volcanic irruption on lighting. This policy also covered general average sacrifice,
jettison.
This policy does not cover willful misconduct ordinary leakage ordinary loss is
weight wears and tear loss damage or expense caused by in sufficiency or
unsuitability of packing, inherent vice, delay, arising from insolvency or financial
default or the owners of the vessel.
Additional risks covered on payment of additional premium:
Theft and Pilferage (TP) Non-Delivery (ND).

GOODS CARRIED BY RAIL/LORRY/TRUCK

Goods or cargo covered by above transports may be covered as under
1. By Rail/Lorry/Truck Risk only
2. By Rail/Lorry/Truck All Risks.
GOODS CARRIED BY AIR
Goods or cargoes conveyed by above transport may be covered as under :
1. Air Risk Only
2. Air All Risks
Remarks:
Premium being determined on a rating subject to age and class of construction of
Hull.
Risks covered under following categories :c) ITC (All risk Policy)
d) TLO (Total Loss only)
According to the law the insured is required to pay the Stamp duty of this policy