A Comparative Study On Insurance Act 1938 And Insurance Act 2010



1.1 Introduction

An Insurance is a contract where by one party undertakes in return of consideration called premium to pay to the other party a certain sum of money  on the happening of a certain event or to indemnify the other party against a loss arising from the risk insured[1]. The party wishes to pay or indemnify is called Insurer and the party to whom the protection is given is called insured. The Insured must have a insurable interest on the subject matter of the Insurance and there shall be a risk i.e chance to be damaged the property. Insurance is also defined in section 2(28) of the Insurance Act, 2010,

“Insurance means a contract between parties whereby first party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay compensation on happening of a certain event”.

The purpose of the Insurance is to provide financial protection against a loss arising out of happening of an uncertain event. A person can avail this protection by paying premium to an Insurance company. The insurance companies operating in the country need to be regulated under comprehensive law and guidelines and supervised by a strong authority named ‘’Insurance Development and Regulatory Authority’’ (IDRA) established under the Insurance Development and Regulatory Authority Act, 2010. At present in Bangladesh there are 45 non life, 30 life and 2 public insurance companies. This authority is the parental authority off insurance sector in Bangladesh. This authority examines the validity of the activities of various Insurance companies of our country and the Regulatory Authority looks to the interest of the common –insured.

In the Judgement of Janata Insurance Co. Ltd. Appellant (In all the cases) vs Islam Steel Mills Limited and Another[2]

The Court observed that “the English laws on insurance have developed over last 300 years. Many of the old precedents have been undated through modern legislation in various branches of the insurance laws. Unless the English laws are in pari-material with ours and the question in squarely the same as facing us, say, with regard to the peculiar description of the insured in the policies, any attempt to fit blindly the old English precedents of years before 1938 in our facts may be counterproductive.”

Mobile Insurance in Bangladesh is the new insertion in the insurance arena. For the filling up the demand, three leading mobile operators, working in Bangladesh, have invoked mobile insurance systems for it`s subscribers who use more than 250tk per month. Such type of Subscriber will get the facility of Life insurance. The three companies are Robi, Grameenphone and Banlalink. Mobile insurance has been firstly introduced by Robi in the name of Bima mobile insurance. Till now they have settled 504 claim of insurance in association with Prime Life Insurance Company.

From July 2013, Grameenphone has introduced insurance facility for it’s subscriber in the name of “Nirvoy”. Banglalink has started this service from June 2014. However, most of the experts are in the opinion that it is a positive sign for our economy.

For making suitable to the growing Insurance sector Insurance Act 2010 was passed by replacing Act 1938 under section 160(1). [3]

1.2 Statement of the problem

Though the new Insurance Act, 2010 is in operation, it is necessary to find-out that whether the new law is appropriate to face the modern challenges of the insurance sector or not. The proposed study tries to find out the loopholes existed in the new law and tries to compare the Insurance Act 2010 with the Insurance Act of 1938.

1.3 Objectives

This research study has some objectives which are described below-

  1. To examine the new Insurance Act of 2010;
  2. To compare between the Insurance Act 1938 and the Insurance Act 2010;
  3. To investigate whether the prevailing laws relating to insurance in Bangladesh are adequate or not.

1.4 Scope

In this study the researcher has seen cases related to insurance disputes from 52 DLR to 66 DLR. Cases cited in 12 MLR to 18 MLR and 29 BLD to 34 BLD are also seen.

1.5 Literature Review

 A lot of work has been done on the Insurance sector in Bangladesh especially by the researchers belongs to the Business Faculty. Bangladesh Insurance Academy Journal consists several research works.

Muha. M. Murshedul Abedin, Md Abu Bokar Siddique and Taposh Kumar Neogy published a research work on ‘Measurement and analysis of Disclosure Score of selected Insurance Companies Enlisted in Dhaka Stock Exchange in Bangladesh’[4].In this research they tried to disclose the Annual Reports of sample insurance companies to a certain the disclosure  scores on net  worth  items, liquidity  the trends of the business. In their study they took reference from Insurance Companies Act, 2008, Securities Exchange Ordinance 1987 and Company Act, 1994. The focus of this study is to enforce the insurance company to follow the disclosure requirements outlined in the BAS and Insurance Act 2008.

In a research work done by Md.Abu Bokar Siddique and Md.Rabiul Islam tilted “Mandatory and Voluntary Annual Disclosure Practices in the Reports; A Study of Insurance Companies in Bangladesh”.[5]  This research have shown comparative analysis on the extent of mandatory and voluntary disclosures level in the financial statement of selected companies; to find out the compliance  of Insurance Act 2010 and IASS; and to examine the trend of mandatory and voluntary disclosure in the annual report of some items selected companies.

 This study have shown that yearly average disclosure of voluntary items were 78.51%, 79.63%, 81.48%, 82.22%, 83.33%, 83.70% and 83.70% for the year 2006 to 2012 respectively and also indicates that mandatory and voluntary disclosure practices of sample company were very consistent.

“The Compliance Status of The Insurance Companies with Shariah Governance Standards of AAOIFI “a study done by Dr. Mahmood Ahmed and Maksuda Khatun.[6] This study analyses the present status of compliance of Islamic Insurance Companies in Bangladesh with Shariah  Governance standards of AAOIFI .The result shows that corporate governance compliances status of Islamic insurances Bangladesh as per AAOFI standard was not satisfactory in 2011. This research suggest to introduce shariah governance guideline for Islamic insurance companies in Bangladesh .

In a study titled with ‘Need for Appropriate Human Capital Development a study of Bangladesh Insurance Sector ‘was published by K.M Mortuza Ali. [7] This study has identified some problems what exists in insurance sector. They are unfavorable environment, lack of knowledge of technology, unproductive and unskilled manpower, lack of training facilities, salary problem, agency problem etc. It also suggests some techniques to increase business, to reduce expenses, to improve moral, to identify talents and develop them and also to create right environment in the organization.

A study on “An Analysis of Risk Management with Special Reference to Insurance” [8] by Dr. Simmi Agarwal and Dr. Muhammad Mahboob Ali. This study emphasize on risk factor and its implication in insurance sector. It has been shown in this study that value maximization encompasses-

  • Aligning risk appetite and strategy
  • Enhancing risk response decision
  • Reducing operational surprises and losses
  • Improving deployment of capital

It also indicates the worse scenario of premium in Bangladesh comparison with developing countries .The conclusion of this study is that by controlling risk, positive impact can be generated in economy.

Another study about Islamic Law and Insurance was published by K.M Mortuza Ali [9] At this study the basic concept of Islamic Law and its application in applying insurance sector was discussed. According to Islamic Law ,the benefits over a policy shall form part of the estate of the policy owner and therefore ,the nominee in a policy shall be regarded as a mere executor .This study refers that Islamic Insurance is not prohibited due to its Islamic practices.

Nurul Islam in his Article titled “Prospects and Problems of Life Insurance in Bangladesh: Challenges Ahead.”

There are many research studies exists regarding insurance sector but very few are related with laws. Furthermore no such a comparison between the prevailing laws has been found yet. So, the present study is justified to consider about the comparative analysis between Insurance Act 1938 and Insurance Act 2010.

1.6 Sources of Data

1.6.1 Primary Sources

  • Journal of Insurance Academy
  • Business Faculty Journals
  • Different relevant books on insurance, news paper articles, relevant internet web-pages.

1.6.2 Secondary Sources

  • Insurance Act 2010
  • Insurance Act, 1938
  • National Insurance Policy
  • Related DLR, MLR, BLD Cases

1.7 Methodology

The research based on documentary analysis. The research follows comparative study to make comparison between the two Acts (Insurance Act 1938 and Insurance Act 2010).

1.8 Chapter Outline 

Chapter 1: Introduction

Chapter 2: Insurance Laws in Bangladesh

Chapter 3: Features of Insurance Act, 2010

Chapter 4: Comparison between the Insurance Act 1938 and the Insurance Act 2010

Chapter 5: Findings, Suggestion & Conclusion




[1] M.c Kuchal, Mercantile law,7th edition ,519

[2] 52 DLR (2000) HD 642,   63 DLR (2011) AD also see in 15 MLR (2010) AD 478-485

[3] In this section, it is stated that The Insurance Act, 1938 to be treated as of repealed Act.

[4]  Journal of  Business Studies Vol 3, 2012, Business Faculty, University of Rajshahi.

[5] Journal of Business Studies, vol. 8 ,2011

[6] Journal of Business Studies, vol. 2014

[7] Insurance Journal of Bangladesh Insurance Academy (vol 60/61, April, 2015)

[8]  Insurance Journal of Bangladesh Insurance Academy (vol. 57 July, 2006 )

[9]  Insurance Journal July ,2005 .


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