Crop Insurance as a Risk Management Strategy in Bangladesh

development of insurance business in Bangladesh. Prominent among them are the
Bangladesh Insurance Association and Bangladesh Insurance Academy. Bangladesh
Insurance Association was formed on 25 May 1988 under the Companies Act 1913. It is
registered with the Registrar of Joint Stock Companies and has 30 members. It aims at
promoting, supporting and protecting the interests and welfare of the member companies.
It may therefore be seen that by law, the state-owned general insurance corporation has been
given a substantial protection in terms of market share. It is arguable that this has prevented
the insurance market from achieving depth. For many years, discussions have been ongoing
on the policy front to open up the insurance market to direct foreign investment and internal
competition, but in the absence of an effective regulatory framework, this has not taken place
and is not likely to take place in the near future.
One thing worth noticing is that the above insurance provisions do not have anything specific
about microinsurance. The provisions also do not include anything about coverage of rural
poor by the insurance industry. It may be mentioned that the Government of India has
introduced provisions for the private insurance companies that they have to have certain
percentage of their business devoted to covering the rural poor. These companies in their
coverage of this market segment are subsidized by profits earned in other segments of the
insurance market.
4.2 Micro-insurance in Bangladesh
The section describes the experience of Microinsurance in general and Crop insurance in
particular in Bangladesh and their related products. A number of prospective stakeholders
and organizations are contacted to gather information regarding their experiences.
Specifically, the experience of introducing Crop Insurance in Bangladesh was of great
importance – i.e. the causes of failure, structural arrangements, institutional requirements, and
financial viability, etc. In near future, in the changing climate with increased disaster
possibility whether crop insurance can be introduced again and in what form - are the
questions here to discuss with.
Microinsurance in Bangladesh is introduced very recently. However, it sounds a prospective
field and flourishing at a very fast rate. Among the NGOs, the following are found to be
involved in micro insurance: BRAC, Grameen Bank, ASA, Grameen Fisheries Foundation,
Grameen Kalyan, Earth Foundation, Gono Sasthya, Padakhep and Ghasful. All these
organizations have branches at regional and local levels. Among the commercial insurers,
the following are found to be involved in micro insurance: Delta life, National Life and
Homeland Life. Earth Foundation, an NGO, has introduced crop insurance, though in just
beginning stage. Only Sadharan Bima Corporation (SBC), a government insurer, was
involved with crop insurance since 1981. Though earlier initiatives failed, SBC has taken
another initiative to introduce crop insurance, this time with involvement of partners from the
private sector. The reaction from the latter is not known yet. Besides, the Department of
Insurance, GoB is an important stakeholder, with whom contact has been established. The
public sector Krishi Bank is another organization involved in credit disbursement to rural
people for agriculture. Besides, the ministries of Commerce, Agriculture, LGRD and
Department of Agri Extension, etc. are important stakeholders of crop insurance. Together,
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