JBC: an entity that earns less, spends more

It is a sorry tale of the state-owned life insurer -- the Jiban Bima Corporation (JBC). The Corporation that once enjoyed monopoly in the country's insurance business has reportedly become extravagant, of late, when its revenue earning has shrunk substantially.
The JBC that was formed with 37 nationalised insurance companies in 1973 is yet to come out of the aura of the post-liberation days. Once inside its head office or any branch, anyone would have that feeling, in terms of the use of technology and the quality of management.
And the effects of the shortcomings are very much reflected in its financials and businesses growth of the JBC. Despite having the largest operational network -- 7 regional, 9 zonal, 68 sales offices and 354 branches across the country -- its premium earnings have been on the decline in recent years. Its share in the total life fund, held by both state and private insurance companies, would not be more than 10 per cent.
With the entry of more and more private sector insurers, the JBC saw a continuous erosion in its business due to aggressive approach on the part of the former to grab business and lack of initiatives from the JBC top notches who are usually selected from amongst the senior government servants. The top managers do not have sufficient knowledge in insurance business. By the time they manage to have some elementary knowledge about the industry, they are transferred to some other places.
The poor quality of manpower and faulty management and business techniques are two major obstacles to the growth of the JBC. The Corporation does not have any shortage of manpower. But its officials at the mid-management level who play an important role in decision-making process do not have the required competence to design modern business plans to counter the aggressive approach on the part of the private sector rivals.
With an extensive operational network, the JBC was supposed to be the top player in the life insurance industry. But it is placed at the lower rung of the ladder.
But the Life Insurance Corporation (LIC) of neighbouring India is an example how a state-owned organisation can outsmart its private sector rivals. With the right kind of management at the helm, the LIC is controlling 80 per cent of life businesses in that country.
In contrast, the JBC has been constantly losing its grounds to the private contenders and it is now rather considered a minnow in the industry. Why should people take policies from it if it fails to pay bonus to the policyholders at rates as attractive as other players in the business offer? The JBC has a past record of not paying bonus to policyholders for many years in a row.  
The JBC also has been disappointing as far as its investment is concerned. Among all the life insurers, it has the largest investment worth Tk. 14.11 billion. But most part of its funds is invested in low-yielding term-deposits with the state-owned banks. It can get higher return from making investment in long-term government bonds and securities that offer attractive rates of return.
Being in the midst of such a state of affair, the propensity to spend extravagantly by the JBC would surely frustrate its policyholders, numbering about 1.0 million.
The Corporation reportedly incurred management expenditure worth Tk.2.31 billion beyond the allowable limit during last six years. The extent of extra expenditure was between 40 per cent and 50 per cent during all these years, ending in December 2014. The expenditures beyond the limit deprived the policyholders of their due bonus.
Like other state-owned entities, it is the least accountable for its actions or inactions. The controlling ministry, in its case, the ministry of finance, does not bother much about what is happening inside the JBC. The situation was the same when the Corporation was under the ministry of commerce.
The Insurance Development and Regulatory Authority (IDRA), it seems, cannot take any tough policy-stance on the failures of the JBC for understandable reasons. But the objective situation should not be like that, for as a regulator it has to protect the interests of the policyholders first.
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