Human Resource in Insurance Industry of Bangladesh

Main purpose of this report is to analysis Human Resource in Insurance Industry of Bangladesh, here focus on Nitol Insurance Company Limited. Other objectives are describe the Planning Employee Needs, Conducting Job Analysis, Recruiting and Selecting Job Candidate, Orienting and Training New Employees, Managing Wages and Salaries, Providing Incentives and Benefits, Appraising Performance, Communicating and Training and Developing and Building Employee Commitment.

Objectives of this report

The report is presented in three sections. The first section contains an overview of Nitol Insurance Company Ltd., its objectives, its functions, and its organizational structure. The second section started with the “HR in the Insurance Industry of Bangladesh” where will described the Planning Employee Needs, Conducting Job Analysis, Recruiting and Selecting Job Candidate, Orienting and Training New Employees, Managing Wages and Salaries, Providing Incentives and Benefits, Appraising Performance, Communicating (Interviewing, Counseling, and Disciplining) and Training and Developing and Building Employee Commitment. The third section “Case Study of Nitol Insurace Ltd,”  where will described in detail the Motor Insurance Contract- Common Feature, Categories of Motor Vehicles. Finally, the fourth section contains recommendations and conclusion.



Collection of information

Primary source

Company data were collected through physical visit and conversation with official staff.

Secondary data

In preparing this report, I was highly dependent on the information published in different journal and prospectus of company.

The interpretations and the findings are based predominantly on the uses of secondary data type from different sources including the publications of Central Tariff Committee and Bangladesh Insurance Academy.

The presentation of different data on Human Resource Management is collected from Internet and different kinds of Books.



Historical Background of Nitol Insurance Company

The Nitol Insurance Company Limited is a sister concern of Nitol Group. The Nitol Insurance Company Limited was incorporated in Bangladesh on October 04, 1999 as a public Limited Company under The Companies Act, 1994. The company has been given registration by the Department of Insurance, Government of the People’s Republic of Bangladesh to carry on insurance business in Bangladesh in respect of Motor, Marine, Fire, and Miscellaneous with effect from November 18, 1999.          

Capital Base of Nitol Insurance Company Ltd

Authorized share capital of the company is Taka 50, 00, 00,000/- (Fifty cores) only which is divided into 50, 00,000/- (Fifty lack) ordinary shares of Taka 100 (One hundred) each. And Paid up capital of the company is Taka 15, 00, 00,000 (Fifteen cores) only which is divided into 15, 00,000 (Fifteen lack) ordinary shares of Taka 100 (One hundred) each. Out of them 40 percent i.e. 6, 00, 00,000/- (Six cores) belongs to the entrepreneurs and the remaining 60 percent i.e. 9, 00, 00,000.00 belongs to the public. Company possess the right for increasing or decreasing the authorized capital and to divide the original or increased capital into different kinds of shares and to affix with them preferential, deferred or any other special right, condition or restriction, however, amount of authorized capital shall not be below the amount of paid up capital determined by the Insurance Act of 1938 and Insurance rules of 1958. Increase or decrease of authorized or Paid up capital shall not be done without the prior permission of the Chief Controller of Insurance.



Branches and Departments of Nitol Insurance Company Ltd

At present only Head office is in operation. The company already got permission to open  six more branches. The branches of Nitol Insurance Company Ltd will be located at Bangshal, Bijoy Nagar, Khulna, Chittagong, Dinajpur & Jessore. Nitol Insurance Co. Ltd. has five (5) departments in its Head Office in Dhaka. These are Administration, Accounts, Underwriting, Claims and Re-insurance.

Address:    Head Office 71, Mohakhali

C/A, Dhaka-1212


The Nitol Insurance Company Limited is an Enterprise of Nitol Group and the Parent Company is Nitol Motors Ltd. Nitol Motors being the sole distributor of TATA range of vehicles in Bangladesh, used to sell large number of vehicles each year. Mr. Abdul Matlub Ahmad, Chairman of Nitol Group was aware that the owner of TATA vehicles were buying insurance from different insurance companies in Bangladesh. He also knew that in the event of accident/claims, the owner of the vehicles were subject to a host of harassment and ultimately many times end up with no claims payments or inadequate claim payments, often with unusual delays. As a result, buyers of the vehicles were put into financial stains and their capacity to pay installment to Nitol Motors was badly affected. With this scenario , our Group Chairman came up with his idea to have insurance company to provide better and hassle free full scale insurance service to their own clients as well as other clients (who are willing to buy insurance from us) by ensuring amongst others, prompt settlement of claims. This was indeed a great decision/mission to operate an insurance company to provide ONE STOP service to the clients i.e selling vehicles, arranging insurance and paying /setting claims in the shortest possible time to Nitol Motor’s clients in one hand. One other hand, same service offered to the outside clients as well.



To service the insuring community in a most efficient, humble and professional way, they have emerged as a new insurance company in the General Insurance Sector of the country. Service, particularly, in maters of professional underwriting of risks efficiently and speedy settlement of claims is this motor/vision. We are here not to be flowed by others and not to flow others.


Objectives of Nitol Insurance

Objects for which the company has been established are as follows:

  • All kinds of insurances, guarantee, indemnity insurance business, accident insurance, liability of the appointer, trustees, insurances against the compensations to the laborers, insurance’s related to the industries and insurance’s against personal accidents which shall be carried out by the branches of the company that are existent or shall be established within Bangladesh and in the foreign countries and to carry on all kinds of business of general insurances and re-insurances which are recognized by law.
  • To take up the liabilities of all kinds of insurances of the motorcars, trucks, buses, scooters, vans. Tractors, and all other kinds of motor vehicles and side by side with them to take up the special risks of the road accidents, fire, theft, hijacking, hooliganism, rock stone, earth quake, flood and any other kind of sudden accident. To give guarantee for giving the compensations for the death or physical injury or loss of any organ, as the case may be, of the owner, driver of the motor vehicles and    companions of them, if there is any. To give compensations to the insured against the claim made by him due to his taking of insurance policy or any other claim due to personal injury of any third party or loss of property due to which insurer becomes liable.
  • To carry on all kinds of insurance business of different kinds of vehicles and to undertake insurance policies against the full or partial damages of the engines of the airplanes, trains, rail engines, engines, rolling staff coaches and to give compensations to the owners of such motor vehicles against the claims made by any third party for any loss or personal injury and any kind of damage to the property.
  • To undertake insurance on all kinds of movable and immovable properties, such as buildings, houses, factories, warehouses, plants or any other kind of building, goods and machines of all kinds where ever they are located within Bangladesh against the damage done to them due to flood, cyclone, hail storm, storm, fire, explosion, crash of thunder and/or any loss due to them and to undertake fire or accident insurance as result of or due to affray, civil commotions, public indiscipline and such other causes.
  • To carry on the business of marine insurance and to give insurance policies of ocean going levers, ships, traveler’s, boat and other kinds of naval ships and to undertake insurances on any kind or nature of damages/or losses against the goods of ocean going ships and to undertake insurances against fees of ships, shipping loan facilities, commissions, compensations and against other kinds of payments.
  • To give assurance for a condition by which medical care and any kind of medical treatment shall be provided to family/members of family of a person during their illness, delivery of a child, service oriented insurance during their diseases and at any period of any unforeseen accidents for which any company principal or master shall bear the liability of the insurance.
  • To provide policy according to the arrangements and on the basis of the conditions made by any person, firm, company, corporation or any kind of association and to make contracts with them, and if deemed to be justified then to make contracts for payment with money or in equivalent amount of money adopting the process of giving compensations for winding up.
  • To undertake the re-insurance or supplementary re-insurance for all or any risk with the other insurers and to take up the liabilities of the re-insurance, supplementary re-insurance of any business related to the business mentioned above. To carry on all the insurance business of all kinds, which have been excluded from the list, mentioned above.
  • To acquire any interest in any land, building, any tenancy interest acquired by succession or any property or any interest included in it by way of purchase, taking of lease, exchange or by any other means and/or if deemed necessary to hold any right concomitant to that land, give lease of it or include the same in the account.
  • To join itself to any business with any government or authority, municipal, local or any other corporation all the objectives or any one objective among them of which shall be helpful for this company. To acquire any facility, right and commission from that kind of government or authority which shall be deemed by the company to be executed, received and applied and to operate the activities in conformity with the rights, facilities and commissions.
  • To pay, satisfy or settle any claim raised against the company for any contract or policy approved, transacted or executed or accepted otherwise, if the same claim has been raised justifiably even if that decision has not been taken lawfully.
  • To establish branches within Bangladesh and in foreign countries and to create local committees, advisory committees and agencies and winding up of them.
  • To enter into a contact with the leases, loan givers, loan receivers, stipend holders and others for the creation of depreciation fund, reimbursement fund, recurring fund, or any other kind of special fund and for saving and payment of cash money at a time or for the annual premiums or with any other means, other determinable conditions and  facilities.


Business Functions

The company is carrying out following types of insurance/reinsurance businesses:

(i) Fire Insurance Business

(ii)  Marine Insurance Business

(iii) Motor Insurance Business

(iv) Miscellaneous Insurance Business

The above indicates that the company’s main product lines constitute of Motor and Marine insurance business.


Organize the human resources activity of the small organization and large organization

Small organization department are usually limited, to maintain employee record and helping manager and find new recruits. The large organization, the head of department directly report to the company president. The large organization’s specialist does the recruiting, training, and other necessary task.

 HRM are two model of HRM as following:

  1. System model of HRM
  2. Applied system of HRM

Applied System Model of HRM

HRM system transfer or converted some input to some output relating to the HR activity. HRM convert input to output. Output is to contribution of employee, motivation of employee, capability of employee.

Output is evaluated by the HRM and it indicates to feedback. If feedback is positive the organization performance is weal. If feedback is negative then the result two things such as HR activity are not properly or information need more or require more additional information.



Human resource is a process that systematically forecasts or projects the future human resource and organization’s future demand for and supply of employee. This forecast include both number of employee, type of employee, what quality of employee, what skills of employee and what are knowledge of employee. HR department to develop staffing plans that support the organization strategy by allowing it to be proactive. It helps the HR to staff the organization with right number and right the people. All organization should identify their short run and long run need by examination of their corporate strategy. HR planning is useful to HR specialist in both small and large organization.

There are two causes of HR planning which are:

  • Demand causes
  • Supply

Demand Causes

Demand causes are the purpose of future need for human talent in the organization.  Some of these causes are within organization’s control and others are not.


Three reasons of demand causes which are External Causes or Challenges

The external causes or challenges that affect the organization’s strategies are difficult to predict in the short run and long run. The organization’s external factor – economic, social – political – legal, technology and competitor. The planners try to estimate the availability of current workers o meet that demand by analyzing the organizational external factor.

  • Organization decision and policy: sometime decision and policy may affect future need and demand for the HR in the organization. Decisions are made to modify the strategic plan like budgets, sale, and production forecast, production line, and organization.
  • Workforce factor: Termination of employee, rejection of employee, retirement of employee, death, long live absence f employee also effects future need or demand of HR in the organization.


Forecast Technique

Expert Forecast

This knowledge about HR activity all people are needed for manger of organization. Usually the HR department may survey all production supervisor and manager until an agreements is reached on the number of replacement needed for the next year.

Trend Projection Forecast

In this method passed or preceded trend  used to for forecast the future HR need of the organization.

Two methods are used under this technique:

Extrapolation: In this method past trend are expanded in to future HR need.

Indexation: In this method HR need are estimated on basis of a specific index of the organization e.g. 240 production worker will be added during the upcoming year.


Budget and Planning Analysis

In this method budget of the organization long run and the result of extrapolation are used for estimatig the short run HR need of the organization, long run HR need using long run analysis. Budget increases or cuts the most significant short-run HR need.

New Venture Analysis

In this method future payment for HR need of organization are estimated by making comparison with other organization that perform similar operation.

Computer Model

In this method a combination of varies technique and method is used for forecasting the future HR need of the organization. These techniques are mathematical method that simultaneously uses extrapolation, indexation, survey result, and estimates of workforce change to compute future staffing needs.


Supply Causes of HRM

Human resource manager must know source of supply. There are two supplies which are as follows:

Internal source of supply: internal source of supply include the current employees. Internal source of supply consist of existing employee who can be trained and or promoted, transferred at different level.

External source of supply: It includes the people or who are unemployed who are working in other organizations.

The Future Supply of HR

  1. Human resource audit
  2. Succession planning
  3. Replacement chart and replacement summary

Human Resource Audits

Human resource audit is a technique a method or process that explains or describes or summarize skill, ability of each employee of the organization-both managerial and non -managerial. Human resource audits for the non-managerial subordinate position are called skills inventory and human resource audits for managerial are called managerial inventory.

So some of information for the Managerial Inventor must be collected from the following information:

  • Number of employee supervised by the manger
  • Total budget manage by the manger
  • Duty and responsibility of the subordinate of the manger
  • Type of employee supervised by manger
  • Management training and development received by manger


Skill Inventory

Part1. Consist of following information

  1. Job Title
  2. Experience
  3. Age
  4. Previous job of the employee

This part is completed by HR department each part separate information and each completed by separate people

Part 2. Consist of following information

  1. Education and quality
  2. Skill and ability
  3. Duty and responsibility

This part is completed by the employee himself or herself.

Part 3. Consist of following information

  1. Quality of performance
  2. Effective short age
  3. Readiness of promotion

This part is completed by the immediate superior.

Part 4. Consist the following information

  1. The result of reprint performance appraisal
  2. Final japed check completeness which is command about the employee overall performance.

This part is completed by HR department of the organization.

Skill inventory of subordinate must be update time to time. Because people relegation must be change, people experience may be change and, people training and development may be change.


External Source of Supply

Not every future opening can be met with present employee. So, there is a need for external supplies of human resource to fill the vacancy in the organization.

Mangers should consider the following four factors in external source of supply.

External Need

  1. Employee Market analysis
  2. Community attitudes
  3. Demographics trend

Employee market analysis

HR department must analyses job market and employee market for high skill job and high managerial job. So two type of job market with high or low HR specialist are realized from region to region and city to city

Community attitudes

Community attitudes also affect the nature of labor market is the area  which recruits the employees .

Demographics trends

Demographic trend are another long-term development. Demographics are study of population characteristic that include birth rates, trend in job, immigration.



Human resources management will determine the requirement of each HR need and requirement of HR need through the job analysis and job description. What is the need of the job applicant and what are requirement of the people and who will fill the vacancy.

Human resource management must estimated existing HR and future HR need in the organization. HRM will be determined a requirement channel more than one requirement channel for purpose of requirement of employee. HR manager will build a pool of seeker by apply the selection channel or method.

Constraints or Barriers of the Recruitment

  1. Organizational polices
  2. HR planers
  3. Affirmative action plans
  4. Recruiter habit and capabilities
  5. Environmental condition
  6. Job requirement
  7. Costs
  8. Time
  9. Incentives

Channel or Method of Recruitment

  1. Walk-ins and Write-ins
  2. Employee referrals
  3. Advertising
  4. Government employee agencies
  5. Private employee agencies
  6. Professional search firm
  7. Educational institution

Consists of Job Application for Recruitment

  1. Personal data and information
  2. Employment status
  3. Education and skills
  4. Work history
  5. Military background ( if needed)
  6. Membership hobbies award
  7. References
  8. Signatures line or signatures block



Training:  It for operating people that training tech them how to perform their current jobs.

Steeps in Preparing Training and Development Program

HR specialists and managers must asses the needs, objective, continent, and learning principle associate with training.

Assessing the Training Needs

First steep, manager must identify which of the employee of the organization both manager and non managers need training and what type of training need.

Secondly, manager must identify the present problem and future challenges of the organization that it is required training of the employees to solve this problem and to face these challenges.

Thirdly, manager must identify and evaluate the changes both in the internal and external environment that it leads to requirement for training of the employees.

Designing the Training Objective

In this steep, a number of training program should be design with a specific objective or objectives and this objective or objectives must be decided before starting the training programs.

Designing the Training Contents

In this steep managers design the contents or tropics or subject makers for a specifics training program which  should be related to teaching specifics skills and abilities, providing special knowledge changing attitudes to the right direction and increasing or improving moral and job satisfaction of the employees.

 Designing the Learning Principles

 In this steep, manager will make arrangement for providing or delivering the contents of training or tropics of training or subject mater of training.  Manager or trainers must decide and tactics some principles pf learning such as participations, repetition, relevance, feedback etc.

Evaluating the Effectiveness of Training

In this steep after completion of a training manager will evaluate the effectiveness of training program in order to determine whether successful or not. If any training program is unsuccessful then manager should changes or modify either the content of training program or method of providing training.

Method or techniques of training of development

  1. On-the-Job Training Techniques
  2. Off-the-Job Training Techniques

On-the-Job Training Techniques

  1. Job Instruction Training
  2. Job Rotation Training
  3. Apprenticeship Training
  4. Coaching

Off-the-Job Training Techniques

  1. Lectures
  2. Video Presentation
  3. Vestibule Training
  4. Role Playing
  5. Behavior Modeling
  6. Case Study
  7. Simulation
  8. Self-study
  9. Program learning
  10. Laboratory Training

Evaluation of Effective of a Training Program

After complete the training program manger can be evaluated by applying the following outcome of training and development:

  1. Reaction of the trainees to the content of training and process of training program.
  2. The knowledge and learning that the trainees acquire through the training program.
  3. The changes in the behavior of the trainees that resulted from the training program.
  4. The measurement result or improvement in the trainees of a training program.



Compensation Management is human resource management function that deal with every type of reward individual reactive in exchange for performing organizational task. Effective compensation is adequate, equitable, balanced, cost-effective, secure, incentive-providing, and acceptable to the employee. Purposes of compensation are that help the organization to obtain, maintain, and retain employees and its performance are three Factor- Function as following:

Objective of compensation management are that Pay level should be match with market price, To obtain, maintain and retain employees, Ensure equity (internal and external), Should be SMART (Specific, Manageable, Attentive, Realistic, and Time-oriented).Top manger, compensation specialist and each level of management will make the compensation decision about how much to pay, what system to use and what benefits to offer, and so forth. 


Design the Total Compensation

Theoretical Version

Intrinsic are psychological states that result from doing a job and extrinsic reward are monetary and non-monetary reward from the job.

Core job dimension of intrinsic reward are Skill inventory, Task identify, Task significance, Autonomy, Feedback (how am I doing)

These factors are supposed to motivate the employees to perform well, increase their satisfaction with their job, and so forth.

Core compensation of extrinsic reward are Base pay (wages and salary), Cost of living adjustment (COLA), Seniority pay (assume people get more experienced, more valuable-human capital increase), Merit pay permanent increase due to performance in last year, etc, pay for knowledge/ skill based pay.

Non-monetary are paid time off, Non-monetary incentive, and many others and its can be legally required, Discretionary (Protection-health, disability, Pay for time not worked, service are day care center, etc), and legally are which laws?


Compensation Role within Human Resource Management

    1. Setting pay so that it is internally consistent compensation reflects the relative value of employees, level of skills needed and complexity of jobs.
    2. Monitor this consistency through Job analysis (what are we doing?), Job evaluation (how much are we paying for different job duties).
    3. Setting pay is externally consistent (competitive with the market) and set through regular compensation (wages and salary) surveys.
    4. Recognize individual contribution through performance based pay and pay base on credential (get a degree, get paid more).

Job Analysis

Job Analysis: Job analysis is a process that systemically collects evaluates and organizes the information about the job of an organization.

Application of Job Analysis Information: Job analysis information is generally used for preparing the following document of the organization:

  1. Job description
  2. Job specification
  3. Job performances standard 

Job Description

Job description is a written description that it explains or describe the duty, responsibility, working condition, working hour, other aspect of each job of the organization

Position: Work consisting of responsibilities and duties assignable to one employee. There are as many positions as there employees.

Job: Work consisting of responsibilities and duties that are sufficiently alike to justify

Class: A group of job similar as to kinds of subject matter, education, experience, level of difficulty, complexity, and responsibility.

Class-series: A group of job classes having similar job content but differing in degree.

Family: Two or more class series within an organization that have related or common work content.

Occupation: A grouping of jobs or job classes within no. of different organization that similar effort skills, and responsibility.

Class description: Class description defines the work of relatively large numbers of employees, rather than define what one or a few employees do. These descriptions identify all or at least the “major” tasks are performed by all or a major group of employees in a work until or section of the organization.


Element of the Job Description

Job descriptions are included five sections as following:

  1. Identification
  2. Summary
  3. Definition
  4. Accountability
  5. Specifications



Many kinds of motor insurance contracts are offered to the insuring public and whilst it would prove impossible to decodable in detail every contract that is available, the principal features that are common to the majority are given. It follows that it is essentials for the insurers to collect, compare and contract the latest issue of motor proposal forms and prospectus used by different insurers. The main features are as follows:

  1. Proposal forms.
  2. Cover notes.
  3. Certificates of motor insurance.
  4. Policy forms.
  5. No claim discount.
  6. Renewal Procedure.
  7. Period of Insurance.

 Proposal Forms

Proposal in insurance means a request, from the proposer to the insurer, for giving protection against a risk. This request may be made orally (face to face or over telephone) or in writing through a letter or very formally through a printed proposal from supplied by the by the insurers. Even though a proposal may be made in either of the ways, a conviction has developed for using insurer’s printed forms in case of accident (Motor) business.

For properly understanding the proposal form the student try to go trough the specimen forms of various branches.

In this chapter attempt will be made to discuss in general terms the important common questions one is expected to find in any proposal form. These are:

Name: Name of proposes is very important for identification. It should be correctly and accurately written so that the policy can incorporate the correct name and identity.

Address: Address should be accurately given because of several reasons, such as, identity and communication, and sometimes this is important for fating purpose, e.g., motor, burglary etc.

Occupation: Information as to occupation is particularly important in case of accident insurance, as this will influence the rate or decision of an underwriter.

Subject matter: This is the subject matter of insurance and, therefore, should be properly described so that correct insertion can be made on the policy.

Sum-insured: The amount for which insurance cover is required should be adequately mentioned. This is the limit of the insurer’s liability. It must represent the actual value of the property or the subject matter of insurance.

Claims History: This has an influence on underwriter’s decision and must, therefore, be truthfully answered. Details of all previous related losses, whether insured or not, must be correctly given.

Other Insurance: Information as to other past or present related insurances is required to be given. This is important for applying contribution amongst various policies wherever applicable. This is also important for assessing the moral hazard of the proposer since it might indicate the reason of effecting, numbers of policies. Information as to other insurances also enables the insurer to make necessary quarries with other insurers about the proposer.

Declinature: The insurer would like to know whether any other insurers previously declined any insurance of this proposer. This information would enable the insurer to find out from insurers the cause of Declinature.


Declaration: Every proposal form contains a declaration to the effect that:

  1. The answers given in the proposal form are true and nothing has been concealed or misrepresented.
  2. The proposer agrees to pay the premium and accept a policy that is usually issued by the insurer for that class of business.
  3. The proposal form and the declaration will form the

Signature: The proposal is required to be signed by the proposer, or by the authorized person when the proposer is not an individual.

Date: The signature is to be dated.

Policy Forms

Since most of the insurance contracts are simple contracts, these need not necessarily be in writing. The exceptions are fidelity guarantee contracts and marine insurance contracts, which are required to be evidenced in writing because of the requirements of law. However, as a rule, insurers do issue policies with regard to all types of insurance contracts. It should be known by the students that a policy as such is not the contract in itself; it is simply evidence to the contract, which already exists.


Policy Sections

Whatever might be the type or class of a policy, it will invariably have the following sections:

  • Heading: In this section will appear the name and address of the company.
  • Recital Clause: This is also known as preamble. It gives a start for arriving at the Operative Clause by saying that as the insured has made a proposal and declaration (which will form the basis of the contract) for taking out a policy of insurance and as he/she has paid or agreed to pay the premium, therefore, the insurer agrees to provide him/ her cover in respect of loss, damage or destruction etc. as per the Operative Clause.
  • Operative Clause: In this section, the scope of cover provided under the policy is mentioned, followed up by exceptions in order to indicate the precise range of cover. Sometimes exceptions do also appear partly under conditions, but in scheduled form of policies these are usually grouped in one place and mostly within the operative clause. It becomes easier than to understand as to what is precisely covered by the policy and what is not. There is usually a war exclusion clause appearing whining the operative clause.
  • Schedule: Most of the vital information about the particular insurance is grouped here. It gives the name, address and occupation of the insured, subject-matter of insurance, premium and renewal premium, period of insurance, policy number, renewal date, renewal premium, sum-insured etc.
  • Attestation Clause: This is also known as signature clause and appears just below the Schedule. The person authorized puts his/ her signature and date here for and on behalf on the insurer.
  • Conditions: In some policies the conditions appear after the Attestation Clause and in some policies these appear before the Schedule. Whatever it is, these are usually grouped together. Some of these conditions are (a) conditions precedent to contract, e.g., disclosure of material facts prior to completion of the contract, some are (b) conditions subsequent to contract, e.g., notice of alternation to insurers, and some are (c) conditions precedent to liability, e.g., notice of loss to insurers. Generally, all these conditions fall under two main categories, viz., express conditions and implied conditions. Express conditions are those, which appear on the policy specially, and implied conditions are those, which even though are not appearing on the policy but, nevertheless, would apply. Examples of implied conditions are observance of the duty of utmost good faith, existence of insurable interest, existence of the subject matter etc. 


Cover Notes

Since preparation of a permanent policy might take sometime and since pending issuance of the policy insurance, it has become a common practice for insurers to issue a temporary cover during negotiation period pending finalization of the matter. The cover may be given either by a letter or through a standard cover-note form. The cover is usually given for 15 days or 30 days and the period is mentioned on the document. The issuance of such a temporary cover does not put the insurers under an obligation to enter into a permanent contract, it would be as per insurer’s standard form of policy used for that class.

The information that would usually appear on a cover note is:

Name, address and occupation of the insured.

  1. Sum-insured and provisional premium.
  2. Date and time of the commencement of cover.
  3. Duration of cover.
  4. Scope of cover, i.e., perils covered.
  5. Description of the property or subject matter covered.
  6. Cancellation provision, which provides that either of parties cancel the cover by giving a written notice within a prescribed time.
  7. A statement usually appears at the bottom of the cover note indicating that the insured is held covered as per usual terms and conditions of the company’s standard policy form used for this class of business.
  8. Signature and date of insurer.

The student should note that a motor cover note will contain some additional information, as is required by law, such as, (a) use of the vehicle, (b) registration number of the vehicle and (c) a certificate from the insurer to the effect cover has been given in accordance with the provision of Motor Vehicles Act. 1939. 


Certificate of Insurance

In motor insurance, law compulsorily requires issuance of a certificate of insurance, and this is the only acceptable legal document by the law-enforcing agency. The information required in the certificate and the wordings thereof are prescribed in the Motor Vehicles Act, 1939. The information is:

  1. Name and address of the insurer.
  2. Certificate number.
  3. Description of the vehicle, including registration number and mark.
  4. Name and address pf the insured.
  5. Effective date and time of commencement of insurance for the purpose of the Act.
  6. Date of expiry of insurance.
  7. Persons or classes of persons entitled to drive.
  8. Limitation as to use.
  9. Certificate of the insurer to the effect that this certificate of insurance has been given in accordance with the provision of Motor Vehicles Act, 1939.
  10. Signature of the insurer and date of issue.

The students should not that a motor cover note or a motor certificate cannot be backdated or anti-dated and any attempt thereto would be a criminal offence.

Apart from motor insurance, discussed so far, there is a practice of issuing certificates in marine cargo insurance also, particularly when open policies are issued. Certificates are then issued in respect of each specific shipment, as & when declared under the open policy. Unlike motor insurance, there is no legal mandate for the issuance of certificate in marine insurance. It is merely a common practice. The certificate contains most of the information as appear in a cover note pertaining to the insured, risk, coverage, sum-insured, premium etc. In addition it contains the name of the carrying vessel, voyage from and to, sailing date etc.



In insurance contracts the consideration is in fact the premium. It is the cost of the risk coverage and is determined through the mathematical valuation of a risk. Premiums are usually computed and charged on annual basis and this is payable in advance.

Even though insurance policies are mostly yearly policies (as in general insurance) or even for a longer period than that (as in life insurance, which are long term permanent contracts, since yearly renewals cannot be refused if premium tendered), short-term policies for a period of less than 12 premium charged is not the pro-rata (proportionate) of the yearly premium but more than that because of the following reasons:

  1. Certain fixed charges are there such as cost of the policy, stamp- duty etc.
  2. Premiums are usually calculated on yearly basis in anticipation of getting it in advance. The insurers lose interest if they are to charge pro-rata premium for short period policies.
  3. The main features in deciding the basic premium for motor vehicle, are: Use and Types of vehicle


Renewal Procedure

Renewing the same usually reactivates insurance contracts. Although there is no legal compulsion on insurers to invite renewal, as a matter of common practice insurers do usually send renewal notices to insured sufficient times ahead of expiry requesting renewal.  If premium is not forthcoming within this extended period than it is customary to send a second notice or reminder. If premium is paid, then the policy takes its effect from the date of premium payment. If premium is still not forthcoming then most of the insurers would like to issue a last reminder before finally striking off the policy from their books.

Period of Insurance

The premiums on policy issued or renewed are payable for One Year. No policy may be issued or renewed for a period longer than one year, provided however that it is permissible to extend the policy period for a further period less than one year to suit the convenience of an Insured in regard to renewal date, in which case the additional premium payable by the Insured may be calculated on a pro-rata basis subject to the following Warranty being inserted in the policy:

Short Period Scale

Policy issued or renewed for on the following scale which must also be applied in calculating a premium when policies are cancelled during the currency at the request of the Insured:

PERIOD                                            SCALE

(Not exceeding)

1 Week                                       20% of the Annual Premium

1 Month                                     25% of the Annual Premium

2 Months                                    35% of the Annual Premium

3 Months                                    50% of the Annual Premium

4 Months                                    60% of the Annual Premium

6 Months                                    75% of the Annual Premium

8 Months                                    85% of the Annual Premium

Exceeding 8 Months                  Full Annual Premium

N.B.-Policy issued or renewed for a short period may not be extended upon payment of the difference between the premium for the short period and that for the extended period.



For the purpose of insurance, Motor Vehicles have been divided into three (3) classes. These are outlined below:

Private Cars: This category comprises cars of private type including station wagons used for social, domestic and pleasure purposes and business or professional purposes (excluding the carriage of goods).

Commercial Vehicles: All vehicles other than Private cars or Motor cycles excluding vehicles running on rails come under this category.

Motor Cycles: Motor cycles with or without side cars, pedal cycles and motor scooters with or without side cars come under this category.

Types of Motor Insurance:

  1. Comprehensive Policy.
  2. Act Policy.


Comprehensive Motor Policy

Scope of cover under comprehensive Motor Policy in respect of each category of vehicle.

(1). Private Car: The risk covers the loss or damage due to the followings

-Fire, Lighting, External explosion, Self-ignition, Flood, Riot & Strike, Earthquake.

-Accidental external means.

-Burglary, Housebreaking or theft or Malicious Act.


-Legal Liability to the Third parties for death, bodily injury or damage to property arising out of use of the car.

-Legal Liability to the occupants in the car provided they are not carried for hire or reward and are not employees’ family members of insured.

-Legal Liability to driver for death or bodily injury, who is driving the vehicle with the permission, provided the driver does not have any other similar cover.

(2)  Commercial Vehicles: The cover is similar to that of the private car except for the following differences:

  • Loss of or damage to accessories as a result of theft is covered only when the vehicles are also stolen at the sometime.
  • Loss or damage, resulting from over loading thereon or strain of the motor vehicle is not covered.
  • Legal liability to the third parties will be available not only when the vehicle is used but also damage loading and unloading operations.
  • Legal liability to the employees engaged in the vehicle under the workmen’s compensation Act.

(3) Motor Cycles: The cover is similar to that of the motorcar except for the following differences:

  • Loss or damage to accessories as a result of burglary or theft is covered only when the vehicle is also stolen at the same time.
  • No provision for reimbursement of medical expenses incurred by the insured for any injury sustained as a result of an accident to the vehicle.
  • Liability for accidents to pillion provided he/ she is not carried for hire or reward.


Extensions of cover can be obtained in conjunction with the standard cover for:

Private Cars

  1. Personal Accident benefits for insured, his/ her spouse and unnamed passengers.
  2. Legal Liability to the employees of the insured.
  3. Wider legal liability.

Commercial Vehicles

  1. Legal Liability for accidents to non-fare paying passengers.
  2. Legal Liability for accidents to passengers carried for hire or reward.
  3. Wider legal liability to driver, cleaner, etc.

Motor Cycles:

  1. Legal liability to passengers in sidecar.
  2. Personal Accident benefits to insured or any named person other than a pillion passenger.
  3. Personal Accident benefits for insured sidecar and pillion passenger.

General Exceptions

The insurer will not be liable under this policy in respect of –

  1. Any accident loss or damage caused sustained or incurred outside Bangladesh.
  2. Any claim arising out of any contractual liability.
  3. Any accident loss damage and/or liability caused sustained or incurred whilst any Motor Vehicle is
    1. Being used otherwise.
    2. Being driven by any person other than a driver.

Any accident loss or damage to any property whatsoever or any loss or expense whatsoever

  1. Directly or indirectly caused by or contributed to by or arising from ionizing radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel. For the purpose of this exception combustion will include any self-sustaining process of nuclear fission.
  2. Any accident loss or damage or liability directly or indirectly or proximately or remotely occasioned by or continued to by or traceable to or arising out of or in connection with.

War, Invasion, the Act of foreign enemies, hostilities or Warlike operations (whether before or after declaration of War) Civil War, Mutiny Rebellion, Military or usurped power or by any direct or indirect consequences of any of the said occurrences and in the event of any claim hereunder the Insured will prove that the accident loss damage and/or liability arose independently of and was in no way connected with or occasioned by or contributed to by or traceable to any of the said occurrences or any consequences thereof and in default of such proof the insurer will not be liable to make any payment in respect of such a claim.


Competitive Conditions in the Business

Though, soon after liberation in 1971, the insurance industry was nationalised and was controlled by two state owned institutions namely Sadharan Bima Corporation for general insurance and Jiban Bima Corporation for life Insurance (with the exception of American Life Insurance Co. in the private sector), there are at present 43 general insurance and 17 life insurance companies operating in the private sector. Over the years general insurance business has grown very competitive as the economic growth, especially the private sector industrial growth, has not been as expected. It is however; need to mention that despite tough competition, the company’s business operations show satisfactory performance. So far already 24 insurance companies have gone Public (including 6 life insurance companies).

Raw Materials

The Company, being a service provider, operates on the basis of professional expertise relevant to insurance industry. Its’ product is a service and its’ raw materials are human resources. The general insurance industry has since developed and expanded fast in order to meet the growing need of the economy. The company has procured the services of experienced professional personnel from the existing insurance industry. The company has also set up training programs for training fresh graduates for development of its growing need of human resources.

Sources of, and Requirement for, Power, gas & Water

The Company does not need any power, gas and water except for ordinary uses in office work.

Customers Providing 10% or More Revenues

The Company’s customer list does not include any one providing 10% or more of its revenues. 



This research on HR in Insurance Industry of Bangladesh-Case Study of Nitol Insurance Company the following recommendations are suggested for the improvement of HR activity. These recommendations will definitely improve the overall company image if implemented efficiently.

  • HR should be considering as the tactical factor which resist managerial leadership activity on possible areas. Therefore to get the job done by the HR they should be closely supervised strictly controlled and, there should be thread of punishment.
  • Management can largely depend on the group or team of company to establishes their own goals and decide the activities those are needed to achieve these goals, to identify there own problems and solve the problem. Because employee is self motivated, self trained, self disciplined and controlled.
  • To sustain in the edge of globalization and highly competitive market and make the Insurance industry competitive, fixed rate or tariff rate should be free from the restrictions of Central Rating Committee on Insurance business and more policies should be updated simultaneously
  • The Central Rating Committee regulates the rates of premium and terms on Motor Insurance. Freeing the market from the restrictions of Central Rating Committee on Insurance business is also necessary.
  • The basic features in determining the Premium for motor vehicles are use, types of vehicles, place of use, horsepower, cover-required etc. Instead of these features, premium should be calculated mathematical valuation of risks and market value of a vehicle.
  • Generally the premiums on policy issued or renewed are payable for one year and no policy may be issued or renewed for a period longer than one year. This rule needs to be revised and period or duration should be relaxed as per client’s demand.
  • Instead of receiving premium at a time, premium may be payable through two installments so that clients have a positive impression regarding insurance business.
  • Usually, in our country, Insurance companies are not interested issue comprehensive insurance on Motor policy after a certain year because of physical hazard. It also needs to be removed and there should be a system to issue insurance policy on such type of vehicles.
  • Act liability compensation is very poor. In case of death, the Act liability compensation is only Tk-20000 which is very insufficient. So this amount needs to be revised. Although it is not possible to compensate a life in monetary term and in context our country, the settlement procedure needs to be easier and less time consuming.
  • The Company should offer some training regarding top-level management for developing the corporate type of strategy.
  • HR department a conduct an effectiveness assessment to assure the continued success and it may be introduced with a evaluation form in company’s meeting.
  • For the pay component of compensation program to be appropriate, wages, and salaries must be internally and externally equitable. The 5-year statistics shows that the employment opportunity of the company is satisfactory. They should emphasize on this matter
  • Performance guides career decision that there performance is improved with appropriate action in HR department. To know good or bad performances how well the human resource function is performing.
  • HR manger must handle HR activity and work is delegated to subordinate.



Human resource management draws on many sources for its theories and practices. Sociologists, psychologists and management theorists, especially, have contributed a constant stream of new and reworked ideas. They offer theoretical insights and practical assistance in areas of people management such as recruitment and selection, performance measurement, team composition and organizational design. Many of their concepts have been integrated into broader approaches which have contributed to management thinking in various periods and ultimately the development of HRM

Insurance business is totally different from other businesses. Insurers do not sell product but they sell promise to pay or reimburse on future date for a named contingency Insurance fund is a pool to which the members of the insuring public contribute by way of premium and from which the losses suffered by a few are indemnified. As a result of this it differs from other business organizations in various respects including determination of profit, assessment of solvency, etc. Insurance company charges price front ended while the claim delivery /settlement is on some future date. Insurance companies are therefore unique as far as their recognition of income; expenses, liabilities and profits are concerned.

Therefore, from this study of insurance company can get the indications on which of the issues they have to pay more attention to do the HR activity and to compare the modern HR policy in Insurance Industry of Bangladesh.

Finally, this research will encourage further study and useful guidelines for these types of researches.