Non Life Insurance Companies & Non Life Insurance Companies &

Life Insurance Companies Life Insurance Companies

GROUP MEMBERS: GROUP MEMBERS:
Faisal Bin Hasan Faisal Bin Hasan BM BM- -15024 15024
1unaid Khalid 1unaid Khalid BME BME- -738 738
PRESENTED TO PRESENTED TO; ; Sir Khalid Sir Khalid
MBA MA1ORS MBA MA1ORS: : Finance Finance
COURSE CODE COURSE CODE: : Fin Fin - - 604 604
Purpose of the Report Purpose of the Report
The purpose oI our report is to Iind out how The purpose oI our report is to Iind out how
Insurance Companies ( General & LiIe ) work and Insurance Companies ( General & LiIe ) work and
what are their Iuture prospects. what are their Iuture prospects.

PRESENTATION ROAD MAP PRESENTATION ROAD MAP

Introduction. What is Insurance Introduction. What is Insurance
DiIIerence b/w LiIe & Non LiIe DiIIerence b/w LiIe & Non LiIe
Insurance Insurance
What does LiIe Insurance Companies What does LiIe Insurance Companies
oIIer / do oIIer / do
What does Non LiIe Insurance What does Non LiIe Insurance
Companies oIIer / do Companies oIIer / do
Background Background
Insurance Industry oI Pakistan Insurance Industry oI Pakistan
Products oI LiIe & Non LiIe Products oI LiIe & Non LiIe
Insurance Insurance
Major Insurance Companies oI Major Insurance Companies oI
Pakistan & World Wide Pakistan & World Wide
Current Scenario oI Insurance Current Scenario oI Insurance
Mutual Insurance Company Mutual Insurance Company
Scope oI Insurance Scope oI Insurance
SWOT Analysis oI Non LiIe & LiIe SWOT Analysis oI Non LiIe & LiIe
Textual Discussion Textual Discussion
Findings Findings
Conclusions Conclusions
Recommendations Recommendations
Introduction What is Insurance? Introduction What is Insurance?
Insurance is a Iorm Insurance is a Iorm oI risk management oI risk management
It is a way oI minimizing risks that may occur due to uncertain & unpredictable It is a way oI minimizing risks that may occur due to uncertain & unpredictable
Iuture circumstances Iuture circumstances
The insured person transIers the cost oI potential loss to another entity in exchange The insured person transIers the cost oI potential loss to another entity in exchange
Ior monetary compensation Ior monetary compensation
This monetary compensation is called premium This monetary compensation is called premium
The entity to which the monetary loss is transIerred is the Insurance Company or The entity to which the monetary loss is transIerred is the Insurance Company or
Agency Agency
II the uncertain event does occur than the Insurance Company is liable to pay the II the uncertain event does occur than the Insurance Company is liable to pay the
claim oI the Insured person / Vehicle / Property etc claim oI the Insured person / Vehicle / Property etc
Insurance allows individuals, businesses and other entities to protect themselves Insurance allows individuals, businesses and other entities to protect themselves
against signiIicant potential losses and Iinancial hardship at a reasonably aIIordable against signiIicant potential losses and Iinancial hardship at a reasonably aIIordable
rate rate
nsurance nsurance
Introduction What is Insurance? Introduction What is Insurance?
Insurance is a highly useIul product / service Ior every segment oI the society. In Insurance is a highly useIul product / service Ior every segment oI the society. In
today`s Iast moving era there is more and more need Ior people to be insured Ior today`s Iast moving era there is more and more need Ior people to be insured Ior
their better Iuture their better Iuture
Like Insurance companies , there are also Re Like Insurance companies , there are also Re- -Insurance Companies which Insurance Companies which
Insure the smooth working oI Insurance companies Insure the smooth working oI Insurance companies
Unlike Pakistan , there is a high trend oI buying insurance policies in Western Unlike Pakistan , there is a high trend oI buying insurance policies in Western
& North American countries & North American countries
The two main or basic Iorms oI Insurance which are oIIered are: The two main or basic Iorms oI Insurance which are oIIered are:
LiIe Insurance LiIe Insurance
Non LiIe Insurance or General Insurance Non LiIe Insurance or General Insurance
Difference b/w Life & Non Life Insurance Difference b/w Life & Non Life Insurance
LiIe Insurance is a risk policy against death. LiIe 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 transIers a risk to the insurer. In return, the insured receives a policy The insured transIers a risk to the insurer. In return, the insured receives a policy
and pays a pre and pays a pre- -determined amount oI premium Ior a set amount oI time determined amount oI premium Ior a set amount oI time
LiIe insurance reIers to the compensation paid to the Iamilies in the event oI the LiIe insurance reIers to the compensation paid to the Iamilies in the event oI the
insured's death. What is compensated is the economic loss (earning capacity oI the insured's death. What is compensated is the economic loss (earning capacity oI the
insured to the extent oI the sum assured). This coverage is only Ior persons insured to the extent oI the sum assured). This coverage is only Ior persons

Difference b/w Life & Non Life Insurance Difference b/w Life & Non Life Insurance
General insurance is taken to cover Ior loss oI any non liIe matter where loss oI General insurance is taken to cover Ior loss oI any non liIe matter where loss oI
proIit is possible or any monetary expense is possible like car, health, home, proIit is possible or any monetary expense is possible like car, health, home,
jewelry, Iire insurance etc. jewelry, Iire insurance etc.
General insurance or non General insurance or non- -liIe insurance policies, including automobile and liIe insurance policies, including automobile and
homeowners policies, provide payments depending on the loss Irom a particular homeowners policies, provide payments depending on the loss Irom a particular
Iinancial event Iinancial event
General insurance typically comprises any insurance that is not determined to be General insurance typically comprises any insurance that is not determined to be
liIe insurance liIe insurance
General insurance covers household, motor, personal accident, travel, all risks, General insurance covers household, motor, personal accident, travel, all risks,
business insurance, LiIe Insurance is known as a "valued" policy. In other words, business insurance, LiIe Insurance is known as a "valued" policy. In other words,
you insure your liIe Ior a certain value and iI you die, the policy pays up the sum you insure your liIe Ior a certain value and iI you die, the policy pays up the sum
insured in total insured in total
General Insurance Policies are policies oI "indemnity", you cover something but iI General Insurance Policies are policies oI "indemnity", you cover something but iI
you claim on the policy, you may not get exactly the sum insured back due to you claim on the policy, you may not get exactly the sum insured back due to
circumstances such as under circumstances such as under- -insurance, over insurance, over- -insurance, policy excess, certain cover insurance, policy excess, certain cover
restrictions etc. restrictions etc.
What does Life Insurance Companies What does Life Insurance Companies
offer /do offer /do
LiIe Insurance Companies oIIer various plans. Most important are: LiIe Insurance Companies oIIer various plans. Most important are:
Child LiIe Insurance Child LiIe Insurance
Accidental Death Insurance Accidental Death Insurance
Disability Insurance Disability Insurance
Final Expense Insurance Final Expense Insurance
Long Term Care Insurance Long Term Care Insurance
Critical Illness Insurance Critical Illness Insurance
LiIe Insurance Riders LiIe Insurance Riders
Child Education Plans Child Education Plans
Retirement Plans Retirement Plans
Child Marriage Schemes Child Marriage Schemes
Personal Care Plans Personal Care Plans
Term Insurance Term Insurance
Endowment Insurance Endowment Insurance
What does Non Life Insurance Companies offer/ do What does Non Life Insurance Companies offer/ do
General Insurance oIIer: General Insurance oIIer:
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 liabilities Liability Insurance which covers legal liabilities
Credit Insurance Credit Insurance
Property Insurance Property Insurance
Vehicle Insurance Vehicle Insurance
Machinery Insurance Machinery Insurance
Shipping Insurance Shipping Insurance
Marine cargo policy which cover goods in transit Marine cargo policy which cover goods in transit
Package policies oIIering a combination oI covers mentioned above Package policies oIIering a combination oI covers mentioned above
Customized or tailor made covers Customized or tailor made covers
Catastrophe Insurance ( tsunami, earth quakes , Iloods ) Catastrophe Insurance ( tsunami, earth quakes , Iloods )
Background Background
Insurance probably made a beginning in the ancient land oI Babylonia In the 18th Insurance probably made a beginning in the ancient land oI Babylonia In the 18th
century B.C., Babylonian king Hammurabi developed a code oI law, known as the century B.C., Babylonian king Hammurabi developed a code oI law, known as the
Code oI Hammurabi, which codiIied many speciIic rules governing the practices oI Code oI Hammurabi, which codiIied many speciIic rules governing the practices oI
early risk early risk- -sharing activities sharing activities
This was similar to the system oI insurance known as bottomry which existed in This was similar to the system oI insurance known as bottomry which existed in
Phoenicia in 1200 B.C. In this system, backer`s loaned money to merchants to Phoenicia in 1200 B.C. In this system, backer`s loaned money to merchants to
Iinance voyages. Merchants oIIered their ships (the hull was known as the ship`s Iinance voyages. Merchants oIIered their ships (the hull was known as the ship`s
bottom`) as collateral Ior such loans. When a trip succeeded, the merchant would bottom`) as collateral Ior such loans. When a trip succeeded, the merchant would
pay the trip`s backer the original loan plus interest, the equivalent oI a premium. II pay the trip`s backer the original loan plus interest, the equivalent oI a premium. II
a ship went down on its voyage, the trip`s backer would cancel the merchant`s loan. a ship went down on its voyage, the trip`s backer would cancel the merchant`s loan.
The Greeks and Romans developed the earliest systems oI liIe insurance. They The Greeks and Romans developed the earliest systems oI liIe insurance. They
Iormed societies which paid dues that went toward paying Ior the burial oI Iormed societies which paid dues that went toward paying Ior the burial oI
members. Sometimes these societies also paid Ior the living expenses oI deceased members. Sometimes these societies also paid Ior the living expenses oI deceased
members` Iamilies. members` Iamilies.
Background Background
In some sense we can say that insurance appears simultaneously with
the appearance oI human society. We know oI two types oI economies
in human societies: natural or non-monetary economies (using barter
and trade with neither centralized nor standardized set oI Iinancial
instruments) and more modern monetary economies (with markets,
currency, Iinancial instruments and so on)
Turning to insurance in the modern sense (i.e., insurance in a modern
money economy, in which insurance is part oI the Iinancial sphere),
early methods oI transIerring 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 Iamous Code oI
Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing
merchants. .,0203,3 monarchs oI Ancient Persia were the Iirst to
insure their people and made it oIIicial by registering the insuring
process in governmental notary oIIices.
Insurance became Iar more sophisticated in post-Renaissance Europe,
and specialized varieties developed.
Insurance Industry of Pakistan Insurance Industry of Pakistan
In 1947 there were 77 insurance companies in Sub In 1947 there were 77 insurance companies in Sub - - Continent. Continent.
All oI these were Ioreign companies All oI these were Ioreign companies
Only 7 were incorporated in the Pakistani area Only 7 were incorporated in the Pakistani area
The share oI Muslim companies was very low The share oI Muslim companies was very low
In 1948 the govt. established the department within domain oI ministry oI commerce In 1948 the govt. established the department within domain oI ministry oI commerce
Pakistan insurance company was established in 1952 Pakistan insurance company was established in 1952
In 1955 National Coinsurance scheme was initiated to promote insurance culture, assist small In 1955 National Coinsurance scheme was initiated to promote insurance culture, assist small
insurance companies insurance companies
NCS yielded Iavorable results NCS yielded Iavorable results
In 1960`s the number oI insurance companies in Pak increased to26 and till 1971 it reached In 1960`s the number oI insurance companies in Pak increased to26 and till 1971 it reached
47 47
Foreign companies were reduced to 25 till 1971 due to political issues and separation oI East Foreign companies were reduced to 25 till 1971 due to political issues and separation oI East
Pak Pak
LiIe insurance was nationalized in 1972 LiIe insurance was nationalized in 1972
The business oI 41 nationalized insurance companies was consolidated in 1973 The business oI 41 nationalized insurance companies was consolidated in 1973
State liIe insurance enjoyed the corporate monopoly till 1990 State liIe insurance enjoyed the corporate monopoly till 1990
At present 55 insurance companies At present 55 insurance companies
5 are Ioreign out oI 55 5 are Ioreign out oI 55
The public sector consist oI NICL, SLIC, & PRCL The public sector consist oI NICL, SLIC, & PRCL
NICL provide coverage to public sector NICL provide coverage to public sector
PRCL is alone in the business oI Reinsurance PRCL is alone in the business oI Reinsurance
LiIe Insurance products can be categorized into the Iollowing types: LiIe Insurance products can be categorized into the Iollowing types:
Term Insurance Protection Ior selected term ) Term Insurance Protection Ior selected term )
Whole LiIe Insurance ( Whole LiIe Cover ) Whole LiIe Insurance ( Whole LiIe Cover )
Endowment Insurance ( BeneIits paid on death during the term or his survival till end Endowment Insurance ( BeneIits paid on death during the term or his survival till end
oI the term ) oI the term )
Annuities ( series oI equal payments Ior a Iixed period or during someone's liIe time Annuities ( series oI equal payments Ior a Iixed period or during someone's liIe time
There can be the following types of whole life policies: There can be the following types of whole life policies:
1. Ordinary Whole LiIe Insurance 1. Ordinary Whole LiIe Insurance
2. Limited Payment Whole LiIe Insurance 2. Limited Payment Whole LiIe Insurance
3. Convertible Whole LiIe Insurance 3. Convertible Whole LiIe Insurance
Products of Non Products of Non- - Life Insurance Companies Life Insurance Companies
Non Non- -LiIe Insurance products can be categorized into the Iollowing types: LiIe Insurance products can be categorized into the Iollowing types:
Plans Ior Corporate/ Business Plans Ior Corporate/ Business
Plans Ior Individuals Plans Ior Individuals
Corporate/Business Policies Corporate/Business Policies
W W Specialty Specialty
W W OIIice OIIice
W W Employee Employee
W W Property Property
Policies for Individuals Policies for Individuals
Home Travel Motor Accident Health Home Travel Motor Accident Health
Products of Life & Non Life Insurance Companies Products of Life & Non Life Insurance Companies
Major Insurance Companies of Pakistan & World Major Insurance Companies of Pakistan & World
Wide Wide
These are the world's largest insurance companies: These are the world's largest insurance companies:
1. Generali Group 1. Generali Group - - Italy Italy
2. China LiIe Insurance 2. China LiIe Insurance - - China China
3. Munich Re 3. Munich Re - - Germany Germany
4. MetLiIe 4. MetLiIe - - United States United States
5. Zurich Financial Services 5. Zurich Financial Services - - Switzerland Switzerland
6. AIG Group 6. AIG Group - - United States United States
7. AXA Group 7. AXA Group - - France France
8. Travelers 8. Travelers - - United States United States
9. Ping An Insurance Group 9. Ping An Insurance Group - - China China
10. Tokyo Marine Insurance 10. Tokyo Marine Insurance - - Japan Japan
11. CNP Assurances 11. CNP Assurances - - France France
Major Insurance Companies of Pakistan & Major Insurance Companies of Pakistan &
World Wide World Wide
44ng are the maj4r nsurance c4mpanes 41 Pakstan: 44ng are the maj4r nsurance c4mpanes 41 Pakstan:
East West L1e Assurance East West L1e Assurance
Ne Jubee nsurance Ne Jubee nsurance
Eastern edera Un4n ( EU ) Eastern edera Un4n ( EU )
State L1e nsurance C4rp4rat4n 41 Pakstan State L1e nsurance C4rp4rat4n 41 Pakstan
Amercan L1e nsurance C4 ( Pak ) Ltd Amercan L1e nsurance C4 ( Pak ) Ltd
Un;ersa nsurance C4 O1 Pakstan Ltd Un;ersa nsurance C4 O1 Pakstan Ltd
Adamjee nsurance C4mpany Adamjee nsurance C4mpany
Pak Pak - - Kuat Taka1u C4mpany Kuat Taka1u C4mpany
Metr4p4tan L1e nsurance C4 O1 Pakstan Ltd Metr4p4tan L1e nsurance C4 O1 Pakstan Ltd
Current Scenario of Insurance Current Scenario of Insurance
Concept oI 'TakaIul is introduced Concept oI 'TakaIul is introduced
It took 5 years to draIt TakaIul rules It took 5 years to draIt TakaIul rules
5 TakaIul companies are operating in Pak, 2 Iamily & 3 general TakaIul 5 TakaIul companies are operating in Pak, 2 Iamily & 3 general TakaIul
In TakaIul participants share the risk In TakaIul participants share the risk
Pakistan`s insurance sector has experienced accelerated growth in recent years. However, it Pakistan`s insurance sector has experienced accelerated growth in recent years. However, it
still lags behind many countries in the region, and the insurance penetration in Pakistan still lags behind many countries in the region, and the insurance penetration in Pakistan
remains low remains low
Its GDP contribution is oI 0.8 in Pak as compared to 4.8 in India, 8 in Malaysia, 7.6 in Its GDP contribution is oI 0.8 in Pak as compared to 4.8 in India, 8 in Malaysia, 7.6 in
Singapore and 15.3 in South AIrica Singapore and 15.3 in South AIrica
Out oI 0.8 0.3 comes Irom liIe insurance while rest 0.5 Irom non liIe insurance Out oI 0.8 0.3 comes Irom liIe insurance while rest 0.5 Irom non liIe insurance
In the non In the non- -liIe segment, premiums had been growing by 15 liIe segment, premiums had been growing by 15- -20 per year over 2005 20 per year over 2005- -2007. 2007.
Growth slowed to 6 in 2008 and just 2 in 2009 Growth slowed to 6 in 2008 and just 2 in 2009
The insurance business has been under stress aIter the assassination oI Former PM The insurance business has been under stress aIter the assassination oI Former PM
Ms. Benazir Bhutto. An estimated 6 billion were paid in claims by Insurance companies Ms. Benazir Bhutto. An estimated 6 billion were paid in claims by Insurance companies
as a result oI violence aIter her assassination. as a result oI violence aIter her assassination.
However Sector posted strong gains in 2008 However Sector posted strong gains in 2008
AIterwards there have been ups & downs in this sector. AIterwards there have been ups & downs in this sector.
Private sector companies out perIormed public sector companies. Private sector companies out perIormed public sector companies.
Competition has gone stiII and premium collection has gone down Competition has gone stiII 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 Iuture oI this industry is not bad iI law & order improves , Provision oI relieI to Still the Iuture oI this industry is not bad iI law & order improves , Provision oI relieI to
this sector by Govt . this sector by Govt .
Current Scenario of Insurance Current Scenario of Insurance
Today, all private insurance companies oI Pakistan need a trained workIorce like Today, all private insurance companies oI Pakistan need a trained workIorce like
State LiIe State LiIe
How this is irony that in Western countries people are searching better to the best How 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 things companies, they are insuring their lives, auto, buildings and other valuable things
just in click order. Second side in Pakistan there is State owned insurance company just in click order. Second side in Pakistan there is State owned insurance company
named State LiIe which has more than 100,000 strong agents in Iield but still named State LiIe which has more than 100,000 strong agents in Iield but still
Insurance Companies are not booming. Insurance Companies are not booming.
Today in Pakistan State LiIe, a public sector company enjoys a dominant position in Today in Pakistan State LiIe, a public sector company enjoys a dominant position in
the sector with more than 70 per cent oI the market share. the sector with more than 70 per cent oI the market share.
And rest oI 30 per cent goes to private companies like EFU, NJI, Adamee and there And rest oI 30 per cent goes to private companies like EFU, NJI, Adamee and there
are lot oI names there aIter. are lot oI names there aIter.
And more interesting point is that, in a country with a population exceeding 170 And 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 extent million, insurance penetration is less than 0.3 per cent representing the huge extent
oI the untapped market. oI the untapped market.
Now it is really great challenge to those private companies like NJI, Alico, EFU etc Now it is really great challenge to those private companies like NJI, Alico, EFU etc
that they develop a trained Iield Iorce that can reach people and make them that they develop a trained Iield Iorce that can reach people and make them
understand the importance oI savings and investments through insurance, instead oI understand the importance oI savings and investments through insurance, instead oI
looking Ior just grabbing premiums and pulling graph higher in number game. looking Ior just grabbing premiums and pulling graph higher in number game.
Reasons why People Don`t Buy Insurance in Reasons why People Don`t Buy Insurance in
Pakistan Pakistan
One oI the biggest reasons is instability oI political system and governments One oI the biggest reasons is instability oI political system and governments
policies. Day by day changing happens in economic issues. People oI this country policies. Day by day changing happens in economic issues. People oI this country
are already living in panic situation due to terrorism and other domestic issues are already living in panic situation due to terrorism and other domestic issues
And the purchasing power oI the common people is out oI their own control. They And the purchasing power oI the common people is out oI their own control. They
even can`t save some amount Ior their rainy days then how they buy insurance even can`t save some amount Ior their rainy days then how they buy insurance
policies? policies?
Secondly the bed reputation oI the insurance agents has also made rowdy impact on Secondly the bed reputation oI the insurance agents has also made rowdy impact on
this protected industry. In Pakistan it is well said that when any unemployed this protected industry. In Pakistan it is well said that when any unemployed
youngster can`t Ietch a Government service then usually they communicate with the youngster can`t Ietch a Government service then usually they communicate with the
non non- -governmental organizations (NGOs) or Insurance companies. And Ior the governmental organizations (NGOs) or Insurance companies. And Ior the
insurance companies who are even labeled with ISO insurance companies who are even labeled with ISO- -9002 or some sorts oI 9002 or some sorts oI
certiIications, they do not take any bother Ior capacity building oI those Iresh certiIications, they do not take any bother Ior capacity building oI those Iresh
agents but they just see that how much he / she has inIluence and how much new agents but they just see that how much he / she has inIluence and how much new
agents can bring annual premium income (API). The managers oI the companies agents can bring annual premium income (API). The managers oI the companies
are Iocusing just on their targets rather than services Ior the clients. are Iocusing just on their targets rather than services Ior the clients.
Thirdly lack oI Education & awareness is a major hurdle in Insurance sales b/c Thirdly lack oI Education & awareness is a major hurdle in Insurance sales b/c
still Pakistan has a low literacy rate & people are unaware oI their rights. still Pakistan has a low literacy rate & people are unaware oI their rights.
Lack oI Insurance Friendly Environment by the Govt . is also a big concern Ior Lack oI Insurance Friendly Environment by the Govt . is also a big concern Ior
Insurance Companies. Insurance Companies.
Mutual Insurance Company Mutual Insurance Company
A A Mutual insurance Mutual insurance company is an company is an insurance insurance company which has no shareholders company which has no shareholders
but instead is owned entirely by its but instead is owned entirely by its policyholders policyholders
Under this idea, what would have been Under this idea, what would have been proIits proIits are instead rebated to the clients in are instead rebated to the clients in
the Iorm oI the Iorm oI dividend dividend distributions or reduced Iuture premiums. distributions or reduced Iuture premiums.
A mutual organization or society is oIten simply reIerred to as A mutual organization or society is oIten simply reIerred to as ,2:9:, ,2:9:,. This could . This could
be seen as a competitive advantage to such companies be seen as a competitive advantage to such companies the idea oI owning a piece the idea oI owning a piece
oI the company could be more attractive to some potential clients than the idea oI oI the company could be more attractive to some potential clients than the idea oI
being a source oI proIits Ior investors. being a source oI proIits Ior investors.
Ownership rights typically include voting rights, Ior instance in the election oI the Ownership rights typically include voting rights, Ior instance in the election oI the
Board oI Directors. Board oI Directors.
In a mutual insurance company, any distributed surplus Iunds are paid entirely to In a mutual insurance company, any distributed surplus Iunds are paid entirely to
policyholders, whereas in a proprietary or stock company (one with shareholders) a policyholders, whereas in a proprietary or stock company (one with shareholders) a
proportion oI the surplus is paid to shareholders while the balance is held in reserve proportion oI the surplus is paid to shareholders while the balance is held in reserve
by the insurer by the insurer
The global The global trade association trade association Ior the industry, the International Cooperative and Ior the industry, the International Cooperative and
Mutual Insurance Federation, claims 216 members in 74 countries, in turn Mutual Insurance Federation, claims 216 members in 74 countries, in turn
representing over 400 insurers. representing over 400 insurers.
Scope of Insurance Scope of Insurance
The scope oI our product ( Insurance ) is very vast ; specially in Western countries The scope oI our product ( Insurance ) is very vast ; specially in Western countries
In West people run aIter Insurance Agent while in Pakistan people run Irom In West people run aIter Insurance Agent while in Pakistan people run Irom
Insurance agent. Insurance agent.
In Pakistan surely but surely insurance business is progressing by way oI In Pakistan surely but surely insurance business is progressing by way oI
introducing new products and services which cater Ior the needs oI every segment introducing new products and services which cater Ior the needs oI every segment
oI the society oI the society
However, still more than 95 per cent population is out oI the purview oI the However, still more than 95 per cent population is out oI the purview oI the
insurance industry and there is a lot to do to make the sector well managed insurance 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 low The villagers and the low- -income people are unable to avail insurance service due income people are unable to avail insurance service due
to lack oI special package programmes to lack oI special package programmes
The main reason Ior the lack oI enthusiasm among people towards insurance is the The main reason Ior the lack oI enthusiasm among people towards insurance is the
low level oI awareness among the masses. The literacy rate is still low. low level oI awareness among the masses. The literacy rate is still low.
Next is the perspective oI people towards insurance. We still have very little Next is the perspective oI people towards insurance. We still have very little
knowledge oI insurance. Majority oI the population has no idea why we need knowledge oI insurance. Majority oI the population has no idea why we need
insurance and Ior what. As insurance is a means oI secure Iuture, very Iew numbers insurance and Ior what. As insurance is a means oI secure Iuture, very Iew numbers
oI people have been positive towards this. oI people have been positive towards this.
Sc4pe Sc4pe
Waiver of Premium Waiver of Premium
A wise agent suggests to his valued and incoming insured person that he / she must take this A 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 liIe insurance The rider plan. And this is really very good additional plan in your basic liIe insurance The
waiver oI premium is giving you total guarantee that your policy will not be terminated even waiver oI 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 can`t aIIord you are not able to pay your premium when you really can`t aIIord
When your Iinancial resources squeezed due to any valid reason When your Iinancial resources squeezed due to any valid reason
Waiver oI premium is called a basic rider plan which is mostly depending on the decision oI Waiver oI premium is called a basic rider plan which is mostly depending on the decision oI
insured person that whether he / she is selecting or not But it is commonly viewed that almost insured person that whether he / she is selecting or not But it is commonly viewed that almost
all insurance and especially liIe insurance policies are equipped with it. But it is advised to y all insurance and especially liIe insurance policies are equipped with it. But it is advised to y
that beIore buying insurance it may be conIirmed Irom your agent about this Iacility that beIore buying insurance it may be conIirmed Irom your agent about this Iacility
This rider is basic component oI only liIe insurance This rider is basic component oI only liIe insurance
Simply we can say that during the period oI your illness or some sorts oI accidents iI Simply we can say that during the period oI your illness or some sorts oI accidents iI
submission date oI premium is due and you can`t aIIord that then insurance company will submission date oI premium is due and you can`t aIIord that then insurance company will
pay your premium to smoothly run your liIe insurance policy pay your premium to smoothly run your liIe insurance policy
SWOT SWOT Analysis of Non Life & Life Insurance Analysis of Non Life & Life Insurance
Companies Companies
Strengths Strengths
Huge Human Resources ( Population ) Of Pakistan Huge Human Resources ( Population ) Of Pakistan
New Concept Advancements providing user friendly policies New Concept Advancements providing user friendly policies
97 people not under the cover of any Insurance 97 people not under the cover of any Insurance
Ability to minimize risk Ability to minimize risk
Waiver of Premium offered by many companies Waiver of Premium offered by many companies
Weaknesses Weaknesses
Uneducated Population Uneducated Population
Decrease in Household income Decrease in Household income
Un islamic perception barriers for companies Un islamic perception barriers for companies
Low Product Knowledge Low Product Knowledge
Delays in Claim Process Delays in Claim Process
High moral hazards High moral hazards
Weak Distribution Channels Weak Distribution Channels
SWOT SWOT Analysis of Non Life & Life Insurance Analysis of Non Life & Life Insurance
Companies Companies
Oppurtunities Oppurtunities
TakaIul should target rural areas TakaIul should target rural areas
Promote Retail Insurance Promote Retail Insurance
Improve distribution channels Improve distribution channels
Introduce more products Introduce more products
Insure on individual level Insure on individual level
Threats Threats
Competition with International Companies Competition with International Companies
Worse law & order situation Worse law & order situation
Weak Ioreign investment in sector Weak Ioreign investment in sector
Natural Catastrophe Natural Catastrophe
Terrorism Terrorism
Corruption / Money Laundering Corruption / Money Laundering
Textual Discussion Textual Discussion
Situation Analysis of General Insurance Situation Analysis of General Insurance
The Pakistani insurance market has undergone major structural changes in last Iew years The Pakistani insurance market has undergone major structural changes in last Iew years
through mergers oI companies to meet the increased statutory requirement oI minimum paid through mergers oI companies to meet the increased statutory requirement oI minimum paid
up capital as per Insurance Ordinance 2000. Some companies who were unable to raise this up capital as per Insurance Ordinance 2000. Some companies who were unable to raise this
capital have been asked to close down their operations. capital have been asked to close down their operations.
The Security and Exchange Commission oI Pakistan (SECP), Insurance Division, is trying to The Security and Exchange Commission oI Pakistan (SECP), Insurance Division, is trying to
improve the image oI Pakistan Insurance Industry by issuing directives on Iinancial security improve the image oI Pakistan Insurance Industry by issuing directives on Iinancial security
and transparency, code oI good governance and sound market practice and transparency, code oI good governance and sound market practice
Key Market Players Key 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 oI 42 Local companies (29 are active) and 1 Ioreign company. Private Sector is composed oI 42 Local companies (29 are active) and 1 Ioreign company.
National Insurance Company Limited (NICL) is the only direct insurer Ior public sector National Insurance Company Limited (NICL) is the only direct insurer Ior public sector
Allianz Allianz- -EFU Health insurance company was set up as the Iirst Specialized Health Insurance EFU Health insurance company was set up as the Iirst Specialized Health Insurance
Company in Pakistan. Company in Pakistan.
The Market Share oI top Iour companies (including NICL) is 74, while remaining The Market Share oI top Iour companies (including NICL) is 74, while remaining
companies share the balance oI 26. This shows that non companies share the balance oI 26. This shows that non- -liIe insurance Sector is highly liIe insurance Sector is highly
Iragmented Iragmented
Allianz EFU Allianz EFU It is the Iirst specialized insurance company oI Pakistan. It is the Iirst specialized insurance company oI Pakistan.
EE- -Commerce Commerce - - A new technology Ior selling insurance. A new technology Ior selling insurance.
The future of Non Life Market The future of Non Life Market
The Iuture looks very positive Ior the non The Iuture looks very positive Ior the non- -liIe insurance market in Pakistan. Although there liIe insurance market in Pakistan. Although there
are many challenges ahead. It is likely that general insurance market would lead to are many challenges ahead. It is likely that general insurance market would lead to
signiIicant premium growth in the years ahead. signiIicant premium growth in the years ahead.
Textual Discussion Textual Discussion
The future of Life Insurance Market The future of Life Insurance Market
The Iuture oI liIe insurance is also bright with diversiIied plans being oIIered to The Iuture oI liIe insurance is also bright with diversiIied plans being oIIered to
cater Ior the needs oI diIIerent segments oI the society cater Ior the needs oI diIIerent segments oI the society
Competitive Forces Competitive Forces
Threat oI new entrant Threat oI new entrant
Bargaining power oI suppliers Bargaining power oI suppliers
Competitive rivalry within Industry Competitive rivalry within Industry
Bargaining power oI customers Bargaining power oI customers
Threat oI substitutes Threat oI substitutes
Takaful Insurance Takaful Insurance
Government has taken keen interest in promoting Islamic modes oI banking, Government has taken keen interest in promoting Islamic modes oI banking,
investment and Insurance. investment and Insurance.
Recently the SECP created a Task Force to draIt TakaIul Rules Recently the SECP created a Task Force to draIt TakaIul Rules current current
regulations do not cater to TakaIul products. regulations do not cater to TakaIul products.
Individual liIe TakaIul products will primarily Iollow the unit linked structure Individual liIe TakaIul products will primarily Iollow the unit linked structure
Textual Discussion Textual Discussion
SECP to have a Central Shariah Board SECP to have a Central Shariah Board
Requirement to have a certain percentage oI business Irom rural areas Requirement to have a certain percentage oI business Irom rural areas
5 banks oIIering credit liIe on group basis 5 banks oIIering credit liIe on group basis - - premiums explicitly charged Irom customer premiums explicitly charged Irom customer
2 banks have commenced telemarketing oI insurance products 2 banks have commenced telemarketing oI insurance products personal accident and critical personal accident and critical
illness products. illness products.
2 banks have entered into banc assurance agreements 2 banks have entered into banc assurance agreements products oIIered: personal accident, products oIIered: personal accident,
unit unit- -linked liIe assurance linked liIe assurance
Major banking groups intend launching liIe insurance companies in Iuture Major banking groups intend launching liIe insurance companies in Iuture
Major Competitors in Life Insurance: Major Competitors in Life Insurance:
State LiIe Insurance State LiIe Insurance
EIu LiIe EIu LiIe
Alico Alico
Adamjee Adamjee
New Jubilee Insurance New Jubilee Insurance
East West LiIe Assurance East West LiIe Assurance
Major Competitors in Non Major Competitors in Non- - Life Insurance: Life Insurance:
EIu General EIu General
Adamjee Adamjee
Universal Insurance Co. Universal Insurance Co.
Findings Findings
Our Iindings while doing this project are given below Our Iindings while doing this project are given below: :
LiIe Insurance is an Expense as well as an Asset LiIe Insurance is an Expense as well as an Asset
Flexibility in Coverage Flexibility in Coverage
Government Regulation provides SaIety Government Regulation provides SaIety
Risk Coverage Risk Coverage
A Planning Ior liIe stage needs A Planning Ior liIe stage needs
Protection against rising health expenses Protection against rising health expenses
Builds the habit oI Savings Builds the habit oI Savings
Assured income through annuities Assured income through annuities
Protection plus savings over a long term Protection plus savings over a long term
Facility oI loans without aIIecting the policy beneIits Facility oI loans without aIIecting the policy beneIits
Tax BeneIits Tax BeneIits
Mortgage Redemption Mortgage Redemption
Medical and Health insurance Medical and Health insurance take care oI your medical bills iI you need to undergo any take care oI your medical bills iI you need to undergo any
medical treatment medical treatment
Accident Insurance Accident Insurance takes care oI expenses incurred in relation to an accident. takes care oI expenses incurred in relation to an accident.
Motor vehicle/ Auto insurance Motor vehicle/ Auto insurance takes care oI the cost oI repairs to your motor vehicle in case takes care oI the cost oI repairs to your motor vehicle in case
oI an accident oI an accident
nsurance s a sheter nsurance s a sheter
Travel Insurance - Travel Insurance - takes care oI expenses incurred due to any unIoreseen event during travel. takes care oI expenses incurred due to any unIoreseen event during travel.
Home Insurance Home Insurance it covers expenses incurred in the event oI robbery or damage to property it covers expenses incurred in the event oI robbery or damage to property
in case oI Iire, earthquake etc. in case oI Iire, earthquake etc.
Mortgage insurance takes care oI loan or mortgage payments in the event oI a contingency. Mortgage insurance takes care oI loan or mortgage payments in the event oI a contingency.
Unemployment Insurance Unemployment Insurance- - this type oI insurance keeps one Iinancially secure in the event oI this type oI insurance keeps one Iinancially secure in the event oI
loss oI employment. loss oI employment.
Buying LiIe Insurance when you have no Need Buying LiIe Insurance when you have no Need
Buying Complex LiIe Insurance Products like Endowment, Child Plans etc which give sub Buying Complex LiIe Insurance Products like Endowment, Child Plans etc which give sub
optimal returns optimal returns
Buying Expensive Policies Buying Expensive Policies
One common health insurance issue is what happens to your coverage when you change jobs One common health insurance issue is what happens to your coverage when you change jobs
or lose your job or lose your job
Findings Findings
Findings Findings
Competitor Analysis Competitor Analysis
Major LiIe Insurance Companies: Major LiIe Insurance Companies:
State LiIe Insurance Corporation oI Pakistan State LiIe Insurance Corporation oI Pakistan
EIu LiIe EIu LiIe
Adamjee Adamjee
New Jubilee Insurance New Jubilee Insurance
Alico ( Pak ) Alico ( Pak )
East West LiIe Assurance East West LiIe Assurance
Major General Insurance Companies: Major General Insurance Companies:
EIu General EIu General
Alico Alico
Adamjee Adamjee
Universal Insurance Co. Universal Insurance Co.
Conclusion Conclusion
AIter conducting this project we conclude here as under : AIter conducting this project we conclude here as under :
Both Non liIe & liIe insurance are beneIicial Ior people oI diIIerent segments Both Non liIe & liIe insurance are beneIicial Ior people oI diIIerent segments
In western countries there is a huge demand Ior both Iorms oI insurance & People In western countries there is a huge demand Ior both Iorms oI insurance & People
search Ior Insurance Actuaries not People running away Irom Insurance Agents search Ior Insurance Actuaries not People running away Irom Insurance Agents
In Pakistan people are generally skeptical about payment oI claims by insurance In Pakistan people are generally skeptical about payment oI claims by insurance
companies. companies.
Some Irauds have been Iound at the time oI claims by policy holders Some Irauds have been Iound at the time oI claims by policy holders
Underwriters play a vital role at the time oI settlement oI claim Underwriters play a vital role at the time oI settlement oI claim
In Pakistan General Insurance market is better than LiIe market In Pakistan General Insurance market is better than LiIe market
TakaIul would gain market strength in Iuture hopeIully. TakaIul would gain market strength in Iuture hopeIully.
In Pakistan the Insurance Companies have launched diIIerent liIe & non In Pakistan the Insurance Companies have launched diIIerent liIe & non llIe llIe
plans designed to cater Ior the needs oI diIIerent segments oI the society. plans designed to cater Ior the needs oI diIIerent segments oI the society.
Sometimes premium payment is too expensive Ior the prospective policy buyer Sometimes premium payment is too expensive Ior the prospective policy buyer
Not enough incentives provided to Insurance Companies in Pakistan Not enough incentives provided to Insurance Companies in Pakistan
Marketing oI insurance products needs to be improved Marketing oI insurance products needs to be improved
Insurance penetration in Pakistan is 3 which is really too low Insurance penetration in Pakistan is 3 which is really too low
Out oI these also mostly don`t know which policy they have bought & what are Out oI these also mostly don`t know which policy they have bought & what are
the beneIits the beneIits
Generally People Consider it an Un Islamic way Generally People Consider it an Un Islamic way
Most oI the Govt. Employees are insured through State LiIe Insurance Company Most oI the Govt. Employees are insured through State LiIe Insurance Company
but they don`t know too much about it but they don`t know too much about it
Purchasing power oI people has squeezed so much in Pakistan that many cannot Purchasing power oI people has squeezed so much in Pakistan that many cannot
buy policies even iI they want . buy policies even iI they want .
Un employment Insurance still not introduced in Pakistan which can boost Un employment Insurance still not introduced in Pakistan which can boost
sales oI companies iI it is low premium policy. sales oI companies iI it is low premium policy.
Waiver oI Premium is oIIered at an additional price other than normal premium. Waiver oI Premium is oIIered at an additional price other than normal premium.
This trend must be Iinished. This trend must be Iinished.
In short in Pakistan , Insurance is a business which can bring average returns but In short in Pakistan , Insurance is a business which can bring average returns but
it has good Iuture prospects in case oI better marketing strategies by companies & it has good Iuture prospects in case oI better marketing strategies by companies &
incentives provided by Government. incentives provided by Government.
Conclusion
Recommendations Recommendations
Premium amount should be taken in to account by Insurance Companies with Premium amount should be taken in to account by Insurance Companies with
respect to rising inIlation in Pakistan b/c purchasing power oI people is not respect to rising inIlation in Pakistan b/c purchasing power oI people is not
suIIicient in Pakistan. suIIicient in Pakistan.
With regards to claim payment in case oI accident or death , there should be Iair With regards to claim payment in case oI accident or death , there should be Iair
dealing by every party involved dealing by every party involved
This would encourage people to buy liIe plans & liIe market would increase This would encourage people to buy liIe plans & liIe market would increase
General Market is reasonably stable in Pakistan specially b/c oI rising vehicle theIt General Market is reasonably stable in Pakistan specially b/c oI rising vehicle theIt
but vehicle theIt should be stopped by concerned authorities & other incentives but vehicle theIt should be stopped by concerned authorities & other incentives
should be provided by non liIe companies to sell their plans should be provided by non liIe companies to sell their plans
MNCs need to enter the insurance market but premium amount oI plans should be MNCs need to enter the insurance market but premium amount oI plans should be
reasonable reasonable
In this regard our Government must Iacilitate Ioreign well trusted major In this regard our Government must Iacilitate Ioreign well trusted major
insurance companies to commence business in Pakistan insurance companies to commence business in Pakistan
In this regard law & order situation should be improved Iirst oI all In this regard law & order situation should be improved Iirst oI all
An investment climate should be promoted in Pakistan An investment climate should be promoted in Pakistan

Recommendations Recommendations
The well educated class oI Pakistan trust on major MNCs , so iI they commence The well educated class oI Pakistan trust on major MNCs , so iI they commence
business here than this segment oI society would be a major buyer oI insurance business here than this segment oI society would be a major buyer oI insurance
plans plans
Marketing oI insurance plans must be improved also Marketing oI insurance plans must be improved also
New & improved marketing strategies must be applied by insurance companies to New & improved marketing strategies must be applied by insurance companies to
sell their plans sell their plans
The Government should provide incentives to Insurance Industry specially with The Government should provide incentives to Insurance Industry specially with
regards to sales & income tax regards to sales & income tax
Insurance is essentially a social welIare plan so the Government must see this Insurance is essentially a social welIare plan so the Government must see this
aspect oI Insurance industry while applying taxes on it aspect oI Insurance industry while applying taxes on it
Education is the key to progress. People are generally not aware oI insurance Education is the key to progress. People are generally not aware oI insurance
beneIits . Only educated masses can be taught beneIits oI insurance beneIits . Only educated masses can be taught beneIits oI insurance
In this regard Pakistan must increase its literacy level also . In this regard Pakistan must increase its literacy level also .
THANK YOU THANK YOU