Insurance business in Bangladesh: its past and present
Saturday, 6 December 2008
Kazi Md. Mortuza Ali
It is said that the history of insurance is as old as the history of mankind. The principles of insurance have been familiar to man since the earliest days. The basic principle of insurance is to take measures against risks. When Hazrat Adam (A) & Bibi Hawa (A) were sent to this world from the Heaven, they found the world full of uncertainties. Therefore, they had to deal with risks involved at every step, at every moment. Mankind in the twenty-first century is no exception. We are to live with risks and we need to handle risks, arising out of natural and manmade hazards.
The Quran as well as the Bible has described how prophet Yousuf (A) used one of the principles of insurance of spreading the risk. The prophet advised the then king to reserve a portion of the crop of each prosperous year for use in the years of famine. He used the wisdom as a preparation to tackle the impending catastrophe. In fact, even in the modern age, the basic feature of insurance is the regular saving and accumulation of fund to protect and help some of the unfortunate, who suffer as result of unpredictable losses in the coming days. It is basically a measure of self as well as mutual help. It is a means of mutual protection and has been used by human beings in every part of the world throughout the known and unknown history of insurance.
During the 18th century, the Indians were generally unaware of the advantages of life or non-life insurance. The Hindus were not keen about life insurance, perhaps because they had the advantage of living in a joint family, where the "Karta" used to take care of the financial needs of each and every member of the family. Moreover, there was a widespread superstition that to insure one's life was to make registration for death. The Muslims of India kept themselves aloof from insurance, perhaps because they thought that it was against their belief of "Reliance on Allah". Therefore, the practice of insurance was initiated in India by the Europeans and the Christian Missionaries.
Insurance as we know it today originated from property insurance (marine insurance). But, in the Indian subcontinent, life insurance started before the non-life insurance. Both life and non-life insurance in India began only in the nineteenth century. There were many ups and downs in the historical development of insurance in the subcontinent. During the British Rule in India, life insurance was introduced by a few British Insurance Companies as a consequence of death of hundreds of British soldiers by the fellow Gurkha soldiers in the mutiny.
One hundred and ninety years back in 1818, the Oriental Life Insurance Society appears to have been started on the Indian soil. This company was essentially a British Company and used to cover the lives of white people only. One gentleman of Calcutta Babu Muttylal Sheel endeavoured a lot and advocated that insurance companies of the British India should consider at least the select Indians like Roy Bahadur, Khan Bahadur etc for insurance. Among the Indians, Bangalee Jaminder Prince Dwarakanth Tagore along with Ramatanu Lahiri and Rustamjee Cowasjee of Bombay were associated with the Oriental Life Insurance Society.
In 1821 Raja Ram Mohan Roy a great reformist and a crusader for Hindu regeneration appealed to the native Indians to institute life Insurance Organisations for supporting the children of the deceased and for the maintenance of poor widows. However, it was the Christian Missionaries, who established several Pension Funds and Widows Funds. After fifty years, the first Widows Fund to admit Hindus was the Hindu Family Annuity Fund which was established in 1872. Bombay Windows & Pension Fund also started functioning in 1876.
On May 1823 several enterprising people of Bombay started the Bombay Life Assurance Company. Unfortunately, this company went into liquidation within a short span of time, because its business was to offer protection for short period. In the year 1829, Madras Equitable was founded and it used to issue whole life policies. The policy amounts were payable on death and premiums were payable throughout life. However, they also used to insure the lives of the British Officers only. This Company survived for almost a century and ceased to function in 1921.
The Christian missionaries played an important role in introducing insurance in the Indian subcontinent when they came here on a large scale. Initially, they started Mutual Aid Assessment Societies and several Mutual Funds were established during the middle of 19th century.
Madras Widows and Orphans Fund was started in 1834, the Christian Mutual of Meerut was started in 1847 and the Bengal Christian Family Pension Fund was started in 1852.
All these efforts were by the British and the Europeans and none of them used to cover Indian lives. Even in 1906 there were advertisements in the newspaper stating clearly that they would not insure the lives of Indians. (The Mail, dated 27-02-1906). Even when selected Indian lives were granted insurance occasionally, a heavy extra premium was charged. It is interesting to note that majority of early attempts to form insurance offices in India were in the province of Bengal. This was due to its political and economic importance at that time.
In 1861, Sree Dinnath Sen, a renowned Headmaster of Dhaka Normal School and some of his friends felt disposed to insure their lives but found none of the British Companies operating in India to take them in. In 1868 they could insure their lives with Albert, an European Insurance Company, but within a short period of time, Albert collapsed. Mr. D.N. Sen then submitted a memorandum to the then Government of India to take an initiative to establish Insurance Company for insuring Indian lives. The Government of India was quite apathetic to starting State Insurance until 1883 when Postal Life Insurance was started through the Department of Post & Telegraph.
By 1870, there were fifteen British and European Companies working in India but insurance remain the subject matter of white people only. Seven eminent men of Bombay in 1871 founded the first Indian Insurance Company known as the Bombay Mutual Life Assurance Society, which was open to the public irrespective of colour and creed. The year 1871 thus stands out as a milestone in the history of Indian Insurance. It insured Indian Lives at par with European lives. Seven gentlemen who took initiative to form Bombay Mutual were in fact the victims of the failure of the Albert and the European- two British Companies.
In June 1872, Pandit Iswar Chandra Vidyasagar a noted social reformer and educationist founded the Hindu Family Annuity Fund to provide financial help to Hindu widows and orphans through annuities. In May 1874, the Oriental Government Security Life Assurance Company Ltd. was founded with an appealing slogan "An Indian Company for Indians".
The first chairman of the second Oriental was the first Indian Muslim Attorney Sir Cumroodeen Tyabjee. This Company was, however the target of criticism because they offered equal terms to both the European and the Indian lives.
An interesting development in Indian history of insurance was the introduction of Government-sponsored life insurance for the employers of Postal Department in 1883 on an experimental basis. It was a pioneering step in the field of life insurance. In 1888, Telegraphs employees were also covered by the scheme. Gradually, employees of Local Funds, Municipalities and temporary and permanent Government employees were also made eligible for the scheme. The first valuation of Postal Life was conducted in 1907. In those days, Postal Life had always declared good bonus thereafter.
In 1906, the famous National Insurance Company was founded as an offshoot of Swadeshi Movement of Bengal. The founder of this company was Mr. Pannalal Banarjea (well known as P. Banarjea). Other eminent people who lent a hand in piloting this institution included Lord Sinha, Sir Abdullah Suhrwardy (father of late Hossen Sahid Suhrwardy) etc. In the same year, National Indian Insurance company was also founded in Calcutta by Sir Rajendra Nath Mukherjee. The other eminent persons who were associated with the formation of National Insurance were Sir Pradyoot Coomer Tagore, Dr Shyama Prasad Mukherjee etc.
In 1907, Hindustan Cooperative Insurance Society was established in Calcutta in a room of "Maharsee Bhavan", where the great poet Rabindranath Tagore used to live. The aim of Hindustan cooperative was to offer an insurance service that would be owned, controlled and managed by the Indians, and set itself to the task of popularising insurance among the common people more widely. The pioneer in this task was Mr. Surendra Nath Tagore, son of Shri Satyandra Nath Tagore who was the first Indian to find a place in the Indian Civil Service. Mr. Surendranath Tagore was revered as the "Seer of Indian Insurance".
Mr. Nalini Ranjan Sarkar of Meymensingh, who joined in the Hindustan cooperative as a clerk, one day became its President. Mr. Sarker was also the finance minister of undivided Bengal in the cabinet of Sher-e-Bangla A.K. Fazlul Haque. Later on, he became the Chief Minister of West Bengal. Desh Bandhu Chitta Ranjan Das was elected as President of Hindustan Cooperative subsequently. C.R. Das was also one of the founders of the Unique Insurance Company which was established in 1907. In the same year, one General (Non-life) Insurance Company was formed in the name of "The Indian Mercantile". This was the first non-life insurance company on the Indian soil.
It is said that the history of insurance is as old as the history of mankind. The principles of insurance have been familiar to man since the earliest days. The basic principle of insurance is to take measures against risks. When Hazrat Adam (A) & Bibi Hawa (A) were sent to this world from the Heaven, they found the world full of uncertainties. Therefore, they had to deal with risks involved at every step, at every moment. Mankind in the twenty-first century is no exception. We are to live with risks and we need to handle risks, arising out of natural and manmade hazards.
The Quran as well as the Bible has described how prophet Yousuf (A) used one of the principles of insurance of spreading the risk. The prophet advised the then king to reserve a portion of the crop of each prosperous year for use in the years of famine. He used the wisdom as a preparation to tackle the impending catastrophe. In fact, even in the modern age, the basic feature of insurance is the regular saving and accumulation of fund to protect and help some of the unfortunate, who suffer as result of unpredictable losses in the coming days. It is basically a measure of self as well as mutual help. It is a means of mutual protection and has been used by human beings in every part of the world throughout the known and unknown history of insurance.
During the 18th century, the Indians were generally unaware of the advantages of life or non-life insurance. The Hindus were not keen about life insurance, perhaps because they had the advantage of living in a joint family, where the "Karta" used to take care of the financial needs of each and every member of the family. Moreover, there was a widespread superstition that to insure one's life was to make registration for death. The Muslims of India kept themselves aloof from insurance, perhaps because they thought that it was against their belief of "Reliance on Allah". Therefore, the practice of insurance was initiated in India by the Europeans and the Christian Missionaries.
Insurance as we know it today originated from property insurance (marine insurance). But, in the Indian subcontinent, life insurance started before the non-life insurance. Both life and non-life insurance in India began only in the nineteenth century. There were many ups and downs in the historical development of insurance in the subcontinent. During the British Rule in India, life insurance was introduced by a few British Insurance Companies as a consequence of death of hundreds of British soldiers by the fellow Gurkha soldiers in the mutiny.
One hundred and ninety years back in 1818, the Oriental Life Insurance Society appears to have been started on the Indian soil. This company was essentially a British Company and used to cover the lives of white people only. One gentleman of Calcutta Babu Muttylal Sheel endeavoured a lot and advocated that insurance companies of the British India should consider at least the select Indians like Roy Bahadur, Khan Bahadur etc for insurance. Among the Indians, Bangalee Jaminder Prince Dwarakanth Tagore along with Ramatanu Lahiri and Rustamjee Cowasjee of Bombay were associated with the Oriental Life Insurance Society.
In 1821 Raja Ram Mohan Roy a great reformist and a crusader for Hindu regeneration appealed to the native Indians to institute life Insurance Organisations for supporting the children of the deceased and for the maintenance of poor widows. However, it was the Christian Missionaries, who established several Pension Funds and Widows Funds. After fifty years, the first Widows Fund to admit Hindus was the Hindu Family Annuity Fund which was established in 1872. Bombay Windows & Pension Fund also started functioning in 1876.
On May 1823 several enterprising people of Bombay started the Bombay Life Assurance Company. Unfortunately, this company went into liquidation within a short span of time, because its business was to offer protection for short period. In the year 1829, Madras Equitable was founded and it used to issue whole life policies. The policy amounts were payable on death and premiums were payable throughout life. However, they also used to insure the lives of the British Officers only. This Company survived for almost a century and ceased to function in 1921.
The Christian missionaries played an important role in introducing insurance in the Indian subcontinent when they came here on a large scale. Initially, they started Mutual Aid Assessment Societies and several Mutual Funds were established during the middle of 19th century.
Madras Widows and Orphans Fund was started in 1834, the Christian Mutual of Meerut was started in 1847 and the Bengal Christian Family Pension Fund was started in 1852.
All these efforts were by the British and the Europeans and none of them used to cover Indian lives. Even in 1906 there were advertisements in the newspaper stating clearly that they would not insure the lives of Indians. (The Mail, dated 27-02-1906). Even when selected Indian lives were granted insurance occasionally, a heavy extra premium was charged. It is interesting to note that majority of early attempts to form insurance offices in India were in the province of Bengal. This was due to its political and economic importance at that time.
In 1861, Sree Dinnath Sen, a renowned Headmaster of Dhaka Normal School and some of his friends felt disposed to insure their lives but found none of the British Companies operating in India to take them in. In 1868 they could insure their lives with Albert, an European Insurance Company, but within a short period of time, Albert collapsed. Mr. D.N. Sen then submitted a memorandum to the then Government of India to take an initiative to establish Insurance Company for insuring Indian lives. The Government of India was quite apathetic to starting State Insurance until 1883 when Postal Life Insurance was started through the Department of Post & Telegraph.
By 1870, there were fifteen British and European Companies working in India but insurance remain the subject matter of white people only. Seven eminent men of Bombay in 1871 founded the first Indian Insurance Company known as the Bombay Mutual Life Assurance Society, which was open to the public irrespective of colour and creed. The year 1871 thus stands out as a milestone in the history of Indian Insurance. It insured Indian Lives at par with European lives. Seven gentlemen who took initiative to form Bombay Mutual were in fact the victims of the failure of the Albert and the European- two British Companies.
In June 1872, Pandit Iswar Chandra Vidyasagar a noted social reformer and educationist founded the Hindu Family Annuity Fund to provide financial help to Hindu widows and orphans through annuities. In May 1874, the Oriental Government Security Life Assurance Company Ltd. was founded with an appealing slogan "An Indian Company for Indians".
The first chairman of the second Oriental was the first Indian Muslim Attorney Sir Cumroodeen Tyabjee. This Company was, however the target of criticism because they offered equal terms to both the European and the Indian lives.
An interesting development in Indian history of insurance was the introduction of Government-sponsored life insurance for the employers of Postal Department in 1883 on an experimental basis. It was a pioneering step in the field of life insurance. In 1888, Telegraphs employees were also covered by the scheme. Gradually, employees of Local Funds, Municipalities and temporary and permanent Government employees were also made eligible for the scheme. The first valuation of Postal Life was conducted in 1907. In those days, Postal Life had always declared good bonus thereafter.
In 1906, the famous National Insurance Company was founded as an offshoot of Swadeshi Movement of Bengal. The founder of this company was Mr. Pannalal Banarjea (well known as P. Banarjea). Other eminent people who lent a hand in piloting this institution included Lord Sinha, Sir Abdullah Suhrwardy (father of late Hossen Sahid Suhrwardy) etc. In the same year, National Indian Insurance company was also founded in Calcutta by Sir Rajendra Nath Mukherjee. The other eminent persons who were associated with the formation of National Insurance were Sir Pradyoot Coomer Tagore, Dr Shyama Prasad Mukherjee etc.
In 1907, Hindustan Cooperative Insurance Society was established in Calcutta in a room of "Maharsee Bhavan", where the great poet Rabindranath Tagore used to live. The aim of Hindustan cooperative was to offer an insurance service that would be owned, controlled and managed by the Indians, and set itself to the task of popularising insurance among the common people more widely. The pioneer in this task was Mr. Surendra Nath Tagore, son of Shri Satyandra Nath Tagore who was the first Indian to find a place in the Indian Civil Service. Mr. Surendranath Tagore was revered as the "Seer of Indian Insurance".
Mr. Nalini Ranjan Sarkar of Meymensingh, who joined in the Hindustan cooperative as a clerk, one day became its President. Mr. Sarker was also the finance minister of undivided Bengal in the cabinet of Sher-e-Bangla A.K. Fazlul Haque. Later on, he became the Chief Minister of West Bengal. Desh Bandhu Chitta Ranjan Das was elected as President of Hindustan Cooperative subsequently. C.R. Das was also one of the founders of the Unique Insurance Company which was established in 1907. In the same year, one General (Non-life) Insurance Company was formed in the name of "The Indian Mercantile". This was the first non-life insurance company on the Indian soil.