Delta Life: Bangladesh

Delta Life Insurance Company was founded in late 1986, soon after the denationalisation of the Bangladesh financial sectors. Delta Life's initial products consisted primarily of endowment policies. In 1988, inspired by the growing success of the Grameen Bank and other microcredit schemes in Bangladesh, Delta launched an experiment of its own, Grameen Bima or village insurance.

Delta then developed its own delivery network and quickly realized the benefits of selling its own policies. Subsequently it developed and introduced an urban microinsurance project, Gono Bima, which offered a similar endowment product. In 1991, the company began introducing loans to complement the endowment policy. The loans were intended to stimulate additional income for policyholders, which would help to promote their economic development while making it easier for them to pay their premiums. This proved disastrous. Repayment fell to about fifty percent and Delta was left with a significant loan loss.

In the mid to late 1990s, Delta Life's microinsurance programmes experienced astonishing growth. Together, Grameen and Gono Bima grew from less than 40,000 new policies issued in 1994 to more than 450,000 policies issued in 1998. As the decade came to a close, however, Delta felt the effects of this reckless growth. The rapid expansion revealed significant weaknesses in information systems, internal controls and administration. Profits were also slow to come, or at least that was the impression. In 2002, Delta's board decided to spin off Gono and Grameen Bima into a non-profit company.However, after an actuarial report later that year showed that the microinsurance projects were actually contributing to profits, it was decided to retain the projects and reorganize them for greater efficiencies. A reengineering of the microinsurance operations in 2002 and 2003 included the following critical areas:

• Improving internal controls;
• Upgrading information systems to provide better analytical information;
• Consolidating Gono and Grameen Bima microinsurance projects into the Gono-Grameen Bima (GGB) division;
• Decentralizing authority to the regional and field levels.

The case study also examines lessons that Delta Life has learned in building its institutional capacity and designing and delivering its products over the past two decades.