non life insurance companies & life insurance companies

8/3/2019 Non Life Insurance Companies & Life Insurance Companies

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Non Life Insurance Companies &Non Life Insurance Companies &

Life Insurance CompaniesLife Insurance Companies

GROUP MEMBERS:GROUP MEMBERS:

Faisal Bin HasanFaisal Bin Hasan BMBM--1502415024

Junaid KhalidJunaid Khalid BMEBME--738738

PRESENTED TOPRESENTED TO;; Sir KhalidSir Khalid

MBA MAJORSMBA MAJORS:: FinanceFinance

COURSE CODECOURSE CODE:: FinFin -- 604604


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Purpose of the ReportPurpose of the Report

The purpose of our report is to find out howThe purpose of our report is to find out how

Insurance Companies ( General & Life ) work andInsurance Companies ( General & Life ) work and

what are their future prospects.what are their future prospects.


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PRESENTATION ROAD MAPPRESENTATION ROAD MAP

Introduction. What is InsuranceIntroduction. What is Insurance

Difference b/w Life & Non LifeDifference b/w Life & Non LifeInsuranceInsurance

What does Life Insurance CompaniesWhat does Life Insurance Companiesoffer / dooffer / do

What does Non Life InsuranceWhat does Non Life InsuranceCompanies offer / doCompanies offer / do

BackgroundBackground

Insurance Industry of PakistanInsurance Industry of Pakistan

Products of Life & Non LifeProducts of Life & Non LifeInsuranceInsurance

Major Insurance Companies ofMajor Insurance Companies ofPakistan & World WidePakistan & World Wide

Current Scenario of InsuranceCurrent Scenario of Insurance

Mutual Insurance CompanyMutual Insurance Company Scope of InsuranceScope of Insurance

SWOT Analysis of Non Life & LifeSWOT Analysis of Non Life & Life

Textual DiscussionTextual Discussion

FindingsFindings

ConclusionsConclusions

RecommendationsRecommendations


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Introduction What is Insurance?Introduction What is Insurance?

Insurance is a formInsurance is a form of risk managementof risk management

It is a way of minimizing risks that may occur due to uncertain & unpredictableIt is a way of minimizing risks that may occur due to uncertain & unpredictable

future circumstancesfuture circumstances

The insured person transfers the cost of potential loss to another entity in exchangeThe insured person transfers the cost of potential loss to another entity in exchange

for monetary compensationfor monetary compensation

This monetary compensation is called premiumThis monetary compensation is called premium

The entity to which the monetary loss is transferred is the Insurance Company orThe entity to which the monetary loss is transferred is the Insurance Company or

AgencyAgency

If the uncertain event does occur than the Insurance Company is liable to pay theIf the uncertain event does occur than the Insurance Company is liable to pay the

claim of the Insured person / Vehicle / Property etcclaim of the Insured person / Vehicle / Property etc

Insurance allows individuals, businesses and other entities to protect themselvesInsurance allows individuals, businesses and other entities to protect themselves

against significant potential losses and financial hardship at a reasonably affordableagainst significant potential losses and financial hardship at a reasonably affordable


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InsuranceInsurance


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Introduction What is Insurance?Introduction What is Insurance?

Insurance is a highly useful product / service for every segment of the society. InInsurance is a highly useful product / service for every segment of the society. In

todays fast moving era there is more and more need for people to be insured fortodays fast moving era there is more and more need for people to be insured for

their better futuretheir better future

Like Insurance companies , there are also ReLike Insurance companies , there are also Re--Insurance Companies whichInsurance Companies whichInsure the smooth working of Insurance companiesInsure the smooth working of Insurance companies

Unlike Pakistan , there is a high trend of buying insurance policies in WesternUnlike Pakistan , there is a high trend of buying insurance policies in Western

& North American countries& North American countries

The two main or basic forms of Insurance which are offered are:The two main or basic forms of Insurance which are offered are:

Life InsuranceLife Insurance

Non Life Insurance or General InsuranceNon Life Insurance or General Insurance


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Difference b/w Life & Non Life InsuranceDifference b/w Life & Non Life Insurance

Life Insurance is a risk policy against death.Life Insurance is a risk policy against death.

It involves two parties, the insured and the insurer.It involves two parties, the insured and the insurer.

The insured transfers a risk to the insurer. In return, the insured receives a policyThe insured transfers a risk to the insurer. In return, the insured receives a policy

and pays a preand pays a pre--determined amount of premium for a set amount of timedetermined amount of premium for a set amount of time

Life insurance refers to the compensation paid to the families in the event of theLife insurance refers to the compensation paid to the families in the event of the

insured's death. What is compensated is the economic loss (earning capacity of theinsured's death. What is compensated is the economic loss (earning capacity of theinsured to the extent of the sum assured). This coverage is only for personsinsured to the extent of the sum assured). This coverage is only for persons


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Difference b/w Life & Non Life InsuranceDifference b/w Life & Non Life Insurance

General insurance is taken to cover for loss of any non life matter where loss ofGeneral insurance is taken to cover for loss of any non life matter where loss of

profit is possible or any monetary expense is possible like car, health, home,profit is possible or any monetary expense is possible like car, health, home,

jewelry, fire insurance etc.jewelry, fire insurance etc.

General insurance or nonGeneral insurance or non--life insurance policies, including automobile andlife insurance policies, including automobile and

homeowners policies, provide payments depending on the loss from a particularhomeowners policies, provide payments depending on the loss from a particularfinancial eventfinancial event

General insurance typically comprises any insurance that is not determined to beGeneral insurance typically comprises any insurance that is not determined to be

life insurancelife insurance

General insurance covers household, motor, personal accident, travel, all risks,General insurance covers household, motor, personal accident, travel, all risks,

business insurance, Life Insurance is known as a "valued" policy. In other words,business insurance, Life Insurance is known as a "valued" policy. In other words,

you insure your life for a certain value and if you die, the policy pays up the sumyou insure your life for a certain value and if you die, the policy pays up the suminsured in totalinsured in total

General Insurance Policies are policies of "indemnity", you cover something but ifGeneral Insurance Policies are policies of "indemnity", you cover something but if

you claim on the policy, you may not get exactly the sum insured back due toyou claim on the policy, you may not get exactly the sum insured back due to

circumstances such as undercircumstances such as under--insurance, overinsurance, over--insurance, policy excess, certain coverinsurance, policy excess, certain cover

restrictions etc.restrictions etc.


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What does Life Insurance CompaniesWhat does Life Insurance Companies

offer /dooffer /do

Life Insurance Companies offer various plans. Most important are:Life Insurance Companies offer various plans. Most important are:

Child Life InsuranceChild Life Insurance

Accidental Death InsuranceAccidental Death Insurance

Disability InsuranceDisability Insurance

Final Expense InsuranceFinal Expense Insurance

Long Term Care InsuranceLong Term Care Insurance

Critical Illness InsuranceCritical Illness Insurance

Life Insurance RidersLife Insurance Riders

Child Education PlansChild Education Plans

Retirement PlansRetirement Plans

Child Marriage SchemesChild Marriage Schemes

Personal Care PlansPersonal Care Plans

Term InsuranceTerm Insurance

Endowment InsuranceEndowment Insurance


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What does Non Life Insurance Companies offer/ doWhat does Non Life Insurance Companies offer/ do

General Insurance offer:General Insurance offer:

Personal Accident Cover ( For Individuals as well as Groups )Personal Accident Cover ( For Individuals as well as Groups )

Health Insurance ( For Individuals as well as Groups )Health Insurance ( For Individuals as well as Groups )

Liability Insurance which covers legal liabilitiesLiability Insurance which covers legal liabilities

Credit InsuranceCredit Insurance

Property InsuranceProperty Insurance

Vehicle InsuranceVehicle Insurance

Machinery InsuranceMachinery Insurance

Shipping InsuranceShipping Insurance Marine cargo policy which cover goods in transitMarine cargo policy which cover goods in transit

Package policies offering a combination of covers mentioned abovePackage policies offering a combination of covers mentioned above

Customized or tailor made coversCustomized or tailor made covers

Catastrophe Insurance ( tsunami, earth quakes , floods )Catastrophe Insurance ( tsunami, earth quakes , floods )


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Insurance probably made a beginning in the ancient land of Babylonia In the 18thInsurance probably made a beginning in the ancient land of Babylonia In the 18th

century B.C., Babylonian king Hammurabi developed a code of law, known as thecentury B.C., Babylonian king Hammurabi developed a code of law, known as theCode of Hammurabi, which codified many specific rules governing the practices ofCode of Hammurabi, which codified many specific rules governing the practices of

early riskearly risk--sharing activitiessharing activities

This was similar to the system of insurance known as bottomry which existed inThis was similar to the system of insurance known as bottomry which existed in

Phoenicia in 1200 B.C. In this system, backers loaned money to merchants toPhoenicia in 1200 B.C. In this system, backers loaned money to merchants to

finance voyages. Merchants offered their ships (the hull was known as the shipsfinance voyages. Merchants offered their ships (the hull was known as the shipsbottom) as collateral for such loans. When a trip succeeded, the merchant wouldbottom) as collateral for such loans. When a trip succeeded, the merchant would

pay the trips backer the original loan plus interest, the equivalent of a premium. Ifpay the trips backer the original loan plus interest, the equivalent of a premium. If

a ship went down on its voyage, the trips backer would cancel the merchants loan.a ship went down on its voyage, the trips backer would cancel the merchants loan.

The Greeks and Romans developed the earliest systems of life insurance. TheyThe Greeks and Romans developed the earliest systems of life insurance. They

formed societies which paid dues that went toward paying for the burial offormed societies which paid dues that went toward paying for the burial ofmembers. Sometimes these societies also paid for the living expenses of deceasedmembers. Sometimes these societies also paid for the living expenses of deceased

members families.members families.


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In some sense we can say that insurance appears simultaneously with

the appearance of human society. We know of two types of economies

in human societies: natural or non-monetary economies (using barter

and trade with neither centralized nor standardized set of financial

instruments) and more modern monetary economies (with markets,

currency, financial instruments and so on)

Turning to insurance in the modern sense (i.e., insurance in a modern

money economy, in which insurance is part of the financial sphere),early methods of transferring or distributing risk were practiced by

Chinese and Babylonian traders as long ago as the 3rd and 2nd

millennia BC, respectively. Chinese merchants travelling treacherous

river rapids would redistribute their wares across many vessels to limit

the loss due to any single vessel's capsizing. The Babylonians

developed a system which was recorded in the famous Code ofHammurabi, c. 1750 BC, and practiced by early Mediterranean sailing

merchants. Achaemenian monarchs of Ancient Persia were the first to

insure their people and made it official by registering the insuring

process in governmental notary offices.

Insurance became far more sophisticated in post-Renaissance Europe,

and specialized varieties developed.


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Insurance Industry of PakistanInsurance Industry of Pakistan In 1947 there were 77 insurance companies.In 1947 there were 77 insurance companies.

All of these were foreign companiesAll of these were foreign companies

Only 7 were incorporated in the Pakistani areaOnly 7 were incorporated in the Pakistani area The share of Muslim companies was very lowThe share of Muslim companies was very low

In 1948 the govt. established the department within domain of ministry of commerceIn 1948 the govt. established the department within domain of ministry of commerce

Pakistan insurance company was established in 1952Pakistan insurance company was established in 1952

In 1955 National Coinsurance scheme was initiated to promote insurance culture, assist smallIn 1955 National Coinsurance scheme was initiated to promote insurance culture, assist small

insurance companiesinsurance companies

NCS yielded favorable resultsNCS yielded favorable results In 1960s the number of insurance companies in Pak increased to26 and till 1971 it reachedIn 1960s the number of insurance companies in Pak increased to26 and till 1971 it reached

4747

Foreign companies were reduced to 25 till 1971 due to political issues and separation of EastForeign companies were reduced to 25 till 1971 due to political issues and separation of East

PakPak

Life insurance was nationalized in 1972Life insurance was nationalized in 1972

The business of 41 nationalized insurance companies was consolidated in 1973The business of 41 nationalized insurance companies was consolidated in 1973 State life insurance enjoyed the corporate monopoly till 1990State life insurance enjoyed the corporate monopoly till 1990

At present 55 insurance companiesAt present 55 insurance companies

5 are foreign out of 555 are foreign out of 55

The public sector consist of NICL, SLIC, & PRCLThe public sector consist of NICL, SLIC, & PRCL

NICL provide coverage to public sectorNICL provide coverage to public sector

PRCL is alone in the business of ReinsurancePRCL is alone in the business of Reinsurance


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Life Insurance products can be categorized into the following types:Life Insurance products can be categorized into the following types:

Term Insurance { Protection for selected term )Term Insurance { Protection for selected term )

Whole Life Insurance ( Whole Life Cover )Whole Life Insurance ( Whole Life Cover )

Endowment Insurance ( Benefits paid on death during the term or his survival till endEndowment Insurance ( Benefits paid on death during the term or his survival till end

of the term )of the term )

Annuities ( series of equal payments for a fixed period or during someone's life timeAnnuities ( series of equal payments for a fixed period or during someone's life time ))

There can be the following types of whole life policies:There can be the following types of whole life policies:

1. Ordinary Whole Life Insurance1. Ordinary Whole Life Insurance

2. Limited Payment Whole Life Insurance2. Limited Payment Whole Life Insurance

3. Convertible Whole Life Insurance3. Convertible Whole Life Insurance

Products of NonProducts of Non-- Life Insurance CompaniesLife Insurance Companies

NonNon--Life Insurance products can be categorized into the following types:Life Insurance products can be categorized into the following types:

Plans for Corporate/ BusinessPlans for Corporate/ Business

Plans for IndividualsPlans for Individuals

Corporate/Business PoliciesCorporate/Business Policies

SpecialtySpecialty

OfficeOffice

EmployeeEmployee

PropertyProperty

Policies for IndividualsPolicies for IndividualsHome Travel Motor Accident HealthHome Travel Motor Accident Health

Products of Life & Non Life Insurance CompaniesProducts of Life & Non Life Insurance Companies


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Major Insurance Companies of Pakistan & WorldMajor Insurance Companies of Pakistan & World

WideWide

These are the world's largest insurance companies:These are the world's largest insurance companies:

1. Generali Group1. Generali Group -- ItalyItaly2. China Life Insurance2. China Life Insurance -- ChinaChina

3. Munich Re3. Munich Re -- GermanyGermany

4. MetLife4. MetLife -- United StatesUnited States

5. Zurich Financial Services5. Zurich Financial Services -- SwitzerlandSwitzerland

6. AIG Group6. AIG Group -- United StatesUnited States

7. AXA Group7. AXA Group -- FranceFrance

8. Travelers8. Travelers -- United StatesUnited States

9. Ping An Insurance Group9. Ping An Insurance Group -- ChinaChina

10. Tokyo Marine Insurance10. Tokyo Marine Insurance -- JapanJapan

11. CNP Assurances11. CNP Assurances -- FranceFrance


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Major Insurance Companies of Pakistan &Major Insurance Companies of Pakistan &

World WideWorld Wide

Following are the majorinsurance companies ofPakistan:Following are the majorinsurance companies ofPakistan:

East West Life AssuranceEast West Life Assurance

New Jubilee InsuranceNew Jubilee Insurance

Eastern Federal Union ( EFU )Eastern Federal Union ( EFU )

State Life Insurance Corporation ofPakistanState Life Insurance Corporation ofPakistan

American Life Insurance Co. ( Pak. ) LtdAmerican Life Insurance Co. ( Pak. ) Ltd Universal Insurance Co. Of Pakistan LtdUniversal Insurance Co. Of Pakistan Ltd

Adamjee Insurance Company Adamjee Insurance Company

PakPak -- Kuwait Takaful CompanyKuwait Takaful Company

Metropolitan Life Insurance Co. Of Pakistan LtdMetropolitan Life Insurance Co. Of Pakistan Ltd


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Concept of Takaful is introducedConcept of Takaful is introduced

It took 5 years to draft Takaful rulesIt took 5 years to draft Takaful rules

5 Takaful companies are operating in Pak, 2 family & 3 general Takaful5 Takaful companies are operating in Pak, 2 family & 3 general Takaful

In Takaful participants share the riskIn Takaful participants share the risk

Pakistans insurance sector has experienced accelerated growth in recent years. However, itPakistans insurance sector has experienced accelerated growth in recent years. However, it

still lags behind many countries in the region, and the insurance penetration in Pakistanstill lags behind many countries in the region, and the insurance penetration in Pakistan

remains lowremains low

Its GDP contribution is of 0.8% in Pak as compared to 4.8% in India, 8% in Malaysia, 7.6% inIts GDP contribution is of 0.8% in Pak as compared to 4.8% in India, 8% in Malaysia, 7.6% in

Singapore and 15.3% in South AfricaSingapore and 15.3% in South Africa Out of 0.8% 0.3 comes from life insurance while rest 0.5 from non life insuranceOut of 0.8% 0.3 comes from life insurance while rest 0.5 from non life insurance

In the nonIn the non--life segment, premiums had been growing by 15life segment, premiums had been growing by 15--20% per year over 200520% per year over 2005--2007.2007.

Growth slowed to 6% in 2008 and just 2% in 2009Growth slowed to 6% in 2008 and just 2% in 2009..

The insurance business has been under stress after the assassination of Former PMThe insurance business has been under stress after the assassination of Former PM

Ms. Benazir Bhutto. An estimated 6 billion were paid in claims by Insurance companiesMs. Benazir Bhutto. An estimated 6 billion were paid in claims by Insurance companies

as a result of violence after her assassination.as a result of violence after her assassination. However Sector posted strong gains in 2008However Sector posted strong gains in 2008

Afterwards there have been ups & downs in this sector.Afterwards there have been ups & downs in this sector.

Private sector companies out performed public sector companies.Private sector companies out performed public sector companies.

Competition has gone stiff and premium collection has gone downCompetition has gone stiff and premium collection has gone down

Insurance penetration in India is 3 % while in Pakistan it is 0.3 %.Insurance penetration in India is 3 % while in Pakistan it is 0.3 %.

Still the future of this industry is not bad if law & order improves , Provision of relief toStill the future of this industry is not bad if law & order improves , Provision of relief tothis sector by Govt .this sector by Govt .


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Today, all private insurance companies of Pakistan need a trained workforce likeToday, all private insurance companies of Pakistan need a trained workforce likeState LifeState Life

How this is irony that in Western countries people are searching better to the bestHow this is irony that in Western countries people are searching better to the best

companies, they are insuring their lives, auto, buildings and other valuable thingscompanies, they are insuring their lives, auto, buildings and other valuable things

just in click order. Second side in Pakistan there is State owned insurance companyjust in click order. Second side in Pakistan there is State owned insurance company

named State Life which has more than 100,000 strong agents in field but stillnamed State Life which has more than 100,000 strong agents in field but still

Insurance Companies are not booming.Insurance Companies are not booming. Today in Pakistan State Life, a public sector company enjoys a dominant position inToday in Pakistan State Life, a public sector company enjoys a dominant position in

the sector with more than 70 per cent of the market share.the sector with more than 70 per cent of the market share.

And rest of 30 per cent goes to private companies like EFU, NJI, Adamee and thereAnd rest of 30 per cent goes to private companies like EFU, NJI, Adamee and there

are lot of names there after.are lot of names there after.

And more interesting point is that, in a country with a population exceeding 170And more interesting point is that, in a country with a population exceeding 170

million, insurance penetration is less than 0.3 per cent representing the huge extentmillion, insurance penetration is less than 0.3 per cent representing the huge extentof the untapped market.of the untapped market.

Now it is really great challenge to those private companies like NJI, Alico, EFU etcNow it is really great challenge to those private companies like NJI, Alico, EFU etc

that they develop a trained field force that can reach people and make themthat they develop a trained field force that can reach people and make them

understand the importance of savings and investments through insurance, instead ofunderstand the importance of savings and investments through insurance, instead of

looking for just grabbing premiums and pulling graph higher in number game.looking for just grabbing premiums and pulling graph higher in number game.


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Reasons why People Dont Buy Insurance inReasons why People Dont Buy Insurance in

PakistanPakistan One of the biggest reasons is instability of political system and governmentsOne of the biggest reasons is instability of political system and governments

policies. Day by day changing happens in economic issues. People of this countrypolicies. Day by day changing happens in economic issues. People of this country

are already living in panic situation due to terrorism and other domestic issuesare already living in panic situation due to terrorism and other domestic issues

And the purchasing power of the common people is out of their own control. TheyAnd the purchasing power of the common people is out of their own control. They

even cant save some amount for their rainy days then how they buy insuranceeven cant save some amount for their rainy days then how they buy insurance

policies?policies?

Secondly the bed reputation of the insurance agents has also made rowdy impact onSecondly the bed reputation of the insurance agents has also made rowdy impact onthis protected industry. In Pakistan it is well said that when any unemployedthis protected industry. In Pakistan it is well said that when any unemployed

youngster cant fetch a Government service then usually they communicate with theyoungster cant fetch a Government service then usually they communicate with the

nonnon--governmental organizations (NGOs) or Insurance companies. And for thegovernmental organizations (NGOs) or Insurance companies. And for the

insurance companies who are even labeled with ISOinsurance companies who are even labeled with ISO--9002 or some sorts of9002 or some sorts of

certifications, they do not take any bother for capacity building of those freshcertifications, they do not take any bother for capacity building of those fresh

agents but they just see that how much he / she has influence and how much newagents but they just see that how much he / she has influence and how much newagents can bring annual premium income (API). The managers of the companiesagents can bring annual premium income (API). The managers of the companies

are focusing just on their targets rather than services for the clients.are focusing just on their targets rather than services for the clients.

Thirdly lack of Education & awareness is a major hurdle in Insurance sales b/cThirdly lack of Education & awareness is a major hurdle in Insurance sales b/c

still Pakistan has a low literacy rate & people are unaware of their rights.still Pakistan has a low literacy rate & people are unaware of their rights.

Lack of Insurance Friendly Environment by the Govt . is also a big concern forLack of Insurance Friendly Environment by the Govt . is also a big concern for

Insurance Companies.Insurance Companies.


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Mutual Insurance CompanyMutual Insurance Company

AA Mutual insuranceMutual insurance company is ancompany is an insuranceinsurance company which has no shareholderscompany which has no shareholders

but instead is owned entirely by itsbut instead is owned entirely by itspolicyholderspolicyholders

Under this idea, what would have beenUnder this idea, what would have beenprofitsprofits are instead rebated to the clients inare instead rebated to the clients in

the form ofthe form ofdividenddividend distributions or reduced future premiums.distributions or reduced future premiums.

A mutual organization or society is often simply referred to asA mutual organization or society is often simply referred to as a mutuala mutual. This could. This could

be seen as a competitive advantage to such companiesbe seen as a competitive advantage to such companies the idea of owning a piecethe idea of owning a piece

of the company could be more attractive to some potential clients than the idea ofof the company could be more attractive to some potential clients than the idea ofbeing a source of profits for investors.being a source of profits for investors.

Ownership rights typically include voting rights, for instance in the election of theOwnership rights typically include voting rights, for instance in the election of the

Board of Directors.Board of Directors.

In a mutual insurance company, any distributed surplus funds are paid entirely toIn a mutual insurance company, any distributed surplus funds are paid entirely to

policyholders, whereas in a proprietary or stock company (one with shareholders) apolicyholders, whereas in a proprietary or stock company (one with shareholders) a

proportion of the surplus is paid to shareholders while the balance is held in reserveproportion of the surplus is paid to shareholders while the balance is held in reserve

by the insurerby the insurer

The globalThe global trade associationtrade association for the industry, the International Cooperative andfor the industry, the International Cooperative and

Mutual Insurance Federation, claims 216 members in 74 countries, in turnMutual Insurance Federation, claims 216 members in 74 countries, in turnrepresenting over 400 insurers.representing over 400 insurers.


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Scope of InsuranceScope of Insurance

The scope of our product ( Insurance ) is very vast ; specially in Western countriesThe scope of our product ( Insurance ) is very vast ; specially in Western countries

In West people run after Insurance Agent while in Pakistan people run fromIn West people run after Insurance Agent while in Pakistan people run fromInsurance agent.Insurance agent.

In Pakistan surely but surely insurance business is progressing by way ofIn Pakistan surely but surely insurance business is progressing by way of

introducing new products and services which cater for the needs of every segmentintroducing new products and services which cater for the needs of every segment

of the societyof the society

However, still more than 95 per cent population is out of the purview of theHowever, still more than 95 per cent population is out of the purview of the

insurance industry and there is a lot to do to make the sector well managedinsurance industry and there is a lot to do to make the sector well managed

expanding its scope and services.expanding its scope and services.

The villagers and the lowThe villagers and the low--income people are unable to avail insurance service dueincome people are unable to avail insurance service due

to lack of special package programmesto lack of special package programmes

The main reason for the lack of enthusiasm among people towards insurance is theThe main reason for the lack of enthusiasm among people towards insurance is the

low level of awareness among the masses. The literacy rate is still low.low level of awareness among the masses. The literacy rate is still low. Next is the perspective of people towards insurance. We still have very littleNext is the perspective of people towards insurance. We still have very little

knowledge of insurance. Majority of the population has no idea why we needknowledge of insurance. Majority of the population has no idea why we need

insurance and for what. As insurance is a means of secure future, very few numbersinsurance and for what. As insurance is a means of secure future, very few numbers

of people have been positive towards this.of people have been positive towards this.


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ScopeScope


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Waiver of PremiumWaiver of Premium A wise agent suggests to his valued and incoming insured person that he / she must take thisA wise agent suggests to his valued and incoming insured person that he / she must take this

rider plan. And this is really very good additional plan in your basic life insurance Therider plan. And this is really very good additional plan in your basic life insurance The

waiver of premium is giving you total guarantee that your policy will not be terminated evenwaiver of premium is giving you total guarantee that your policy will not be terminated even

you are not able to pay your premium when you really cant affordyou are not able to pay your premium when you really cant afford

When your financial resources squeezed due to any valid reasonWhen your financial resources squeezed due to any valid reason

Waiver of premium is called a basic rider plan which is mostly depending on the decision ofWaiver of premium is called a basic rider plan which is mostly depending on the decision of

insured person that whether he / she is selecting or not But it is commonly viewed that almostinsured person that whether he / she is selecting or not But it is commonly viewed that almost

all insurance and especially life insurance policies are equipped with it. But it is advised to yall insurance and especially life insurance policies are equipped with it. But it is advised to y

that before buying insurance it may be confirmed from your agent about this facilitythat before buying insurance it may be confirmed from your agent about this facility This rider is basic component of only life insuranceThis rider is basic component of only life insurance

Simply we can say that during the period of your illness or some sorts of accidents ifSimply we can say that during the period of your illness or some sorts of accidents if

submission date of premium is due and you cant afford that then insurance company willsubmission date of premium is due and you cant afford that then insurance company will

pay your premium to smoothly run your life insurance policy pay your premium to smoothly run your life insurance policy


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SWOTSWOT Analysis of Non Life & Life InsuranceAnalysis of Non Life & Life Insurance

CompaniesCompanies StrengthsStrengths

Huge Human Resources ( Population ) Of PakistanHuge Human Resources ( Population ) Of Pakistan

New Concept Advancements providing user friendly policiesNew Concept Advancements providing user friendly policies

97 % people not under the cover of any Insurance97 % people not under the cover of any Insurance

Ability to minimize riskAbility to minimize risk

Waiver of Premium offered by many companiesWaiver of Premium offered by many companies

WeaknessesWeaknesses

Uneducated PopulationUneducated Population

Decrease in Household incomeDecrease in Household income

Un islamic perception barriers for companiesUn islamic perception barriers for companies Low Product KnowledgeLow Product Knowledge

Delays in Claim ProcessDelays in Claim Process

High moral hazardsHigh moral hazards

Weak Distribution ChannelsWeak Distribution Channels


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SWOTSWOT Analysis of Non Life & Life InsuranceAnalysis of Non Life & Life Insurance

CompaniesCompanies OppurtunitiesOppurtunities

Takaful should target rural areasTakaful should target rural areas

Promote Retail InsurancePromote Retail Insurance

Improve distribution channelsImprove distribution channels

Introduce more productsIntroduce more products

Insure on individual levelInsure on individual level

ThreatsThreats

Competition with International CompaniesCompetition with International Companies

Worse law & order situationWorse law & order situation

Weak foreign investment in sectorWeak foreign investment in sector Natural CatastropheNatural Catastrophe

TerrorismTerrorism

Corruption / Money LaunderingCorruption / Money Laundering


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Textual DiscussionTextual Discussion Situation Analysis of General InsuranceSituation Analysis of General Insurance

The Pakistani insurance market has undergone major structural changes in last few yearsThe Pakistani insurance market has undergone major structural changes in last few years

through mergers of companies to meet the increased statutory requirement of minimum paidthrough mergers of companies to meet the increased statutory requirement of minimum paid

up capital as per Insurance Ordinance 2000. Some companies who were unable to raise thisup capital as per Insurance Ordinance 2000. Some companies who were unable to raise thiscapital have been asked to close down their operations.capital have been asked to close down their operations.

The Security and Exchange Commission of Pakistan (SECP), Insurance Division, is trying toThe Security and Exchange Commission of Pakistan (SECP), Insurance Division, is trying to

improve the image of Pakistan Insurance Industry by issuing directives on financial securityimprove the image of Pakistan Insurance Industry by issuing directives on financial security

and transparency, code of good governance and sound market practiceand transparency, code of good governance and sound market practice

Key Market PlayersKey Market Players

The general insurance market comprises two segments Private Sector and Public Sector.The general insurance market comprises two segments Private Sector and Public Sector. Private Sector is composed of 42 Local companies (29 are active) and 1 foreign company.Private Sector is composed of 42 Local companies (29 are active) and 1 foreign company.

National Insurance Company Limited (NICL) is the only direct insurer for public sectorNational Insurance Company Limited (NICL) is the only direct insurer for public sector

AllianzAllianz--EFU Health insurance company was set up as the first Specialized Health InsuranceEFU Health insurance company was set up as the first Specialized Health Insurance

Company in Pakistan.Company in Pakistan.

The Market Share of top four companies (including NICL) is 74%, while remainingThe Market Share of top four companies (including NICL) is 74%, while remaining

companies share the balance of 26%. This shows that noncompanies share the balance of 26%. This shows that non--life insurance Sector is highlylife insurance Sector is highlyfragmentedfragmented

Allianz EFUAllianz EFU It is the first specialized insurance company of Pakistan.It is the first specialized insurance company of Pakistan.

EE--CommerceCommerce -- A new technology for selling insurance.A new technology for selling insurance.

The future of Non Life MarketThe future of Non Life Market

The future looks very positive for the nonThe future looks very positive for the non--life insurance market in Pakistan. Although therelife insurance market in Pakistan. Although there

are many challenges ahead. It is likely that general insurance market would lead toare many challenges ahead. It is likely that general insurance market would lead tosignificant premium growth in the years ahead.significant premium growth in the years ahead.


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Textual DiscussionTextual Discussion

The future of Life Insurance MarketThe future of Life Insurance Market

The future of life insurance is also bright with diversified plans being offered toThe future of life insurance is also bright with diversified plans being offered tocater for the needs of different segments of the societycater for the needs of different segments of the society..

Competitive ForcesCompetitive Forces

Threat of new entrantThreat of new entrant

Bargaining power of suppliersBargaining power of suppliers

Competitive rivalry within IndustryCompetitive rivalry within Industry

Bargaining power of customersBargaining power of customers

Threat of substitutesThreat of substitutes

Takaful InsuranceTakaful Insurance

Government has taken keen interest in promoting Islamic modes of banking,Government has taken keen interest in promoting Islamic modes of banking,

investment and Insurance.investment and Insurance.

Recently the SECP created a Task Force to draft Takaful RulesRecently the SECP created a Task Force to draft Takaful Rules currentcurrent

regulations do not cater to Takaful products.regulations do not cater to Takaful products.

Individual life Takaful products will primarily follow the unit linked structureIndividual life Takaful products will primarily follow the unit linked structure


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Textual DiscussionTextual Discussion SECP to have a Central Shariah BoardSECP to have a Central Shariah Board

Requirement to have a certain percentage of business from rural areasRequirement to have a certain percentage of business from rural areas

5 banks offering credit life on group basis5 banks offering credit life on group basis -- premiums explicitly charged from customerpremiums explicitly charged from customer

2 banks have commenced telemarketing of insurance products2 banks have commenced telemarketing of insurance products personal accident and criticalpersonal accident and critical

illness products.illness products.

2 banks have entered into banc assurance agreements2 banks have entered into banc assurance agreements products offered: personal accident,products offered: personal accident,

unitunit--linked life assurancelinked life assurance

Major banking groups intend launching life insurance companies in futureMajor banking groups intend launching life insurance companies in future

Major Competitors in Life Insurance:Major Competitors in Life Insurance:

State Life InsuranceState Life Insurance

Efu LifeEfu Life

AlicoAlico

AdamjeeAdamjee

New Jubilee Insurance New Jubilee Insurance


Major Competitors in NonMajor Competitors in Non-- Life Insurance:Life Insurance:

Efu GeneralEfu General

AdamjeeAdamjee

Universal Insurance Co.Universal Insurance Co.


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FindingsFindings Our findings while doing this project are given belowOur findings while doing this project are given below::

Life Insurance is an Expense as well as an AssetLife Insurance is an Expense as well as an Asset

Flexibility in CoverageFlexibility in Coverage

Government Regulation provides SafetyGovernment Regulation provides Safety

Risk CoverageRisk Coverage

A Planning for life stage needsA Planning for life stage needs

Protection against rising health expensesProtection against rising health expenses

Builds the habit of SavingsBuilds the habit of Savings

Assured income through annuitiesAssured income through annuities

Protection plus savings over a long termProtection plus savings over a long term

Facility of loans without affecting the policy benefitsFacility of loans without affecting the policy benefits

Tax BenefitsTax Benefits

Mortgage RedemptionMortgage Redemption Medical and Health insuranceMedical and Health insurance take care of your medical bills if you need to undergo anytake care of your medical bills if you need to undergo any

medical treatmentmedical treatment

Accident InsuranceAccident Insurance takes care of expenses incurred in relation to an accident.takes care of expenses incurred in relation to an accident.

Motor vehicle/ Auto insuranceMotor vehicle/ Auto insurance takes care of the cost of repairs to your motor vehicle in casetakes care of the cost of repairs to your motor vehicle in case

of an accidentof an accident


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Insurance is a shelterInsurance is a shelter


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Travel Insurance -Travel Insurance - takes care of expenses incurred due to any unforeseen event during travel.takes care of expenses incurred due to any unforeseen event during travel.

Home InsuranceHome Insurance it covers expenses incurred in the event of robbery or damage to propertyit covers expenses incurred in the event of robbery or damage to property

in case of fire, earthquake etc.in case of fire, earthquake etc.

Mortgage insurance takes care of loan or mortgage payments in the event of a contingency.Mortgage insurance takes care of loan or mortgage payments in the event of a contingency.

Unemployment InsuranceUnemployment Insurance-- this type of insurance keeps one financially secure in the event ofthis type of insurance keeps one financially secure in the event ofloss of employment.loss of employment.

Buying Life Insurance when you have no NeedBuying Life Insurance when you have no Need

Buying Complex Life Insurance Products like Endowment, Child Plans etc which give subBuying Complex Life Insurance Products like Endowment, Child Plans etc which give sub

optimal returnsoptimal returns

Buying Expensive PoliciesBuying Expensive Policies

One common health insurance issue is what happens to your coverage when you change jobsOne common health insurance issue is what happens to your coverage when you change jobs

or lose your jobor lose your job

FindingsFindings


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FindingsFindings

Competitor AnalysisCompetitor Analysis

Major Life Insurance Companies:Major Life Insurance Companies:

State Life Insurance Corporation of PakistanState Life Insurance Corporation of Pakistan

Efu LifeEfu Life

AdamjeeAdamjee

New Jubilee InsuranceNew Jubilee Insurance

Alico ( Pak )Alico ( Pak )


Major General Insurance Companies:Major General Insurance Companies:

Efu GeneralEfu General

AlicoAlico

AdamjeeAdamjee

Universal Insurance Co.Universal Insurance Co.


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ConclusionConclusion

After conducting this project we conclude here as under :After conducting this project we conclude here as under :

Both Non life & life insurance are beneficial for people of different segmentsBoth Non life & life insurance are beneficial for people of different segments

In western countries there is a huge demand for both forms of insurance & PeopleIn western countries there is a huge demand for both forms of insurance & People

search for Insurance Actuaries not People running away from Insurance Agentssearch for Insurance Actuaries not People running away from Insurance Agents

In Pakistan people are generally skeptical about payment of claims by insuranceIn Pakistan people are generally skeptical about payment of claims by insurance

companies.companies. Some frauds have been found at the time of claims by policy holdersSome frauds have been found at the time of claims by policy holders

Underwriters play a vital role at the time of settlement of claimUnderwriters play a vital role at the time of settlement of claim

In Pakistan General Insurance market is better than Life marketIn Pakistan General Insurance market is better than Life market

Takaful would gain market strength in future hopefully.Takaful would gain market strength in future hopefully. In Pakistan the Insurance Companies have launched different life & nonIn Pakistan the Insurance Companies have launched different life & non llfellfe

plans designed to cater for the needs of different segments of the society.plans designed to cater for the needs of different segments of the society.

Sometimes premium payment is too expensive for the prospective policy buyerSometimes premium payment is too expensive for the prospective policy buyer


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Not enough incentives provided to Insurance Companies in PakistanNot enough incentives provided to Insurance Companies in Pakistan

Marketing of insurance products needs to be improvedMarketing of insurance products needs to be improved

Insurance penetration in Pakistan is 3 % which is really too lowInsurance penetration in Pakistan is 3 % which is really too low

Out of these also mostly dont know which policy they have bought & what areOut of these also mostly dont know which policy they have bought & what are

the benefitsthe benefits

Generally People Consider it an Un Islamic wayGenerally People Consider it an Un Islamic way Most of the Govt. Employees are insured through State Life Insurance CompanyMost of the Govt. Employees are insured through State Life Insurance Company

but they dont know too much about itbut they dont know too much about it

Purchasing power of people has squeezed so much in Pakistan that many cannotPurchasing power of people has squeezed so much in Pakistan that many cannot

buy policies even if they want . buy policies even if they want .

Un employment Insurance still not introduced in Pakistan which can boostUn employment Insurance still not introduced in Pakistan which can boost

sales of companies if it is low premium policy.sales of companies if it is low premium policy.

Waiver of Premium is offered at an additional price other than normal premium.Waiver of Premium is offered at an additional price other than normal premium.

This trend must be finished.This trend must be finished.

In short in Pakistan , Insurance is a business which can bring average returns butIn short in Pakistan , Insurance is a business which can bring average returns but

it has good future prospects in case of better marketing strategies by companies &it has good future prospects in case of better marketing strategies by companies &

incentives provided by Government.incentives provided by Government.

Conclusion


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Premium amount should be taken in to account by Insurance Companies withPremium amount should be taken in to account by Insurance Companies with

respect to rising inflation in Pakistan b/c purchasing power of people is notrespect to rising inflation in Pakistan b/c purchasing power of people is not

sufficient in Pakistan.sufficient in Pakistan.

With regards to claim payment in case of accident or death , there should be fairWith regards to claim payment in case of accident or death , there should be fair

dealing by every party involveddealing by every party involved

This would encourage people to buy life plans & life market would increaseThis would encourage people to buy life plans & life market would increase

General Market is reasonably stable in Pakistan specially b/c of rising vehicle theftGeneral Market is reasonably stable in Pakistan specially b/c of rising vehicle theftbut vehicle theft should be stopped by concerned authorities & other incentivesbut vehicle theft should be stopped by concerned authorities & other incentives

should be provided by non life companies to sell their plansshould be provided by non life companies to sell their plans

MNCs need to enter the insurance market but premium amount of plans should beMNCs need to enter the insurance market but premium amount of plans should be

reasonablereasonable

In this regard our Government must facilitate foreign well trusted majorIn this regard our Government must facilitate foreign well trusted major

insurance companies to commence business in Pakistaninsurance companies to commence business in Pakistan

In this regard law & order situation should be improved first of allIn this regard law & order situation should be improved first of all

An investment climate should be promoted in PakistanAn investment climate should be promoted in Pakistan


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The well educated class of Pakistan trust on major MNCs , so if they commenceThe well educated class of Pakistan trust on major MNCs , so if they commence

business here than this segment of society would be a major buyer of insurancebusiness here than this segment of society would be a major buyer of insuranceplansplans

Marketing of insurance plans must be improved alsoMarketing of insurance plans must be improved also

New & improved marketing strategies must be applied by insurance companies toNew & improved marketing strategies must be applied by insurance companies to

sell their planssell their plans

The Government should provide incentives to Insurance Industry specially withThe Government should provide incentives to Insurance Industry specially withregards to sales & income taxregards to sales & income tax

Insurance is essentially a social welfare plan so the Government must see thisInsurance is essentially a social welfare plan so the Government must see this

aspect of Insurance industry while applying taxes on itaspect of Insurance industry while applying taxes on it

Education is the key to progress. People are generally not aware of insuranceEducation is the key to progress. People are generally not aware of insurance

benefits . Only educated masses can be taught benefits of insurance benefits . Only educated masses can be taught benefits of insurance

In this regard Pakistan must increase its literacy level also .In this regard Pakistan must increase its literacy level also .


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THANK YOUTHANK YOU

non life insurance companies & life insurance companies

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