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    CHAPTER 1

    1. INTRODUCTION

    1.1 Background of the study

    The world is full of risk and uncertainties. When, where, what happens is

    unknown. Safety of life and security of property is what ones seek for. What is

    going to be happened in future, what loss we are going to bear; is that one penny

    or millions rupees or is that which is incomparable with money? It is uncertain

    but whatever the loss be it is harmful to us. Basically there are two types of loss-

    corporal and emotional loss. Emotional loss is related to human sentiments which

    can be felt but cant be valued in terms of money. Corporal loss can be

    indemnified, might not be full but in a way that loss doesnt become a burden for

    the looser for which the concept of insurance evolve.

    Insurance is the pooling of fortuitous loss by transfer of such risk to insurer who

    agrees to indemnify insured for loss to provide precautionary benefit on the

    occurrence of loss or to render service connecting with the risk.

    Insurance are of various types such as life insurance, fire insurance, marine

    insurance, aviation insurance, households insurance, personal accident insurance,

    liability insurance, motor insurance, etc. among these, I have selected marine

    insurance as the subject matter for this field work report. This report is prepared

    on the basis of data and information that has been provided by EIC and Rastriya

    Beema Samiti. All the informations included in this report are based on the

    secondary data provided by the concerned companies, books and magazines. Inthis report, I had tried the best to include as much as possible information's I had

    gathered in suitable figures and chart also.

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    1.2 Introduction to Everest Insurance Company

    EIC was established in 1994 as a public limited company. Established with an

    ambition of safekeeping Nepal, EIC has come a long way after the privatization

    of insurance sector in Nepal. EIC in todays insurance sector of Nepal is one of

    the leading insurance companies. With the mission Security & Support when

    you need them most company has been able to win the trust from its more than

    20,000 clients. Few amongst them:-

    - Manufacturing Industry/Trading Houses

    - Banks/Financial Institutions

    - Multinational Companies

    - Airlines

    - Hotels

    - Automobiles

    - Contractors

    - Publication

    - Embassies

    - NGO/INGO and many more

    The company in its present form has been the outcome of strong management

    committee, dynamic staff of 60 members and countrywide network of 300

    agents.

    1.2.1 General Information about the Company

    Registration 2051-02-17

    Year of starting business 2051-04-07

    Main Office Hattisar, KTM, Nepal

    Contact Tel. no. 4444717, 4444718

    Fax: 977-1-4444366

    P.O. Box 10675, KTM

    E-mail: [email protected]

    Branch office Biratnagar

    Birgunj

    Pokhara

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    mailto:[email protected]:[email protected]
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    Liaison office Butwal

    Dharan

    Narayangarh

    Patan

    Shareholders

    40% of its total capital is with the general public, which numbers around 6000

    shareholder. The leading business and industrial houses of Nepal and individuals

    have taken the shares of the company.

    Reinsurance Arrangements

    EIC has the re-insurance business with the foreign insurance companies like

    Zurich International, Italy

    Gerling Konzern Global, Germany

    General Insurance Corporation of India

    Tokyo Fire & Marine, Japan

    Mitsui Sumitomo, Japan

    Assicurazioni Generali, Dubai

    AIG Europe Ltd., UK

    Swiss Re, Switzerland

    Royal Sun Alliance, UK

    ARIG Bahrain

    Mille Re, Turkey

    African Re, Nairobi

    Korean Re, Korea

    QBE International Insurance Ltd.

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    Management

    A Board of Directors under the chairmanship of Mr. Mohan Gopal Khetan

    manages EIC. A management Committee under the chairmanship of Mr. Ratan

    Lal Shanghai has been formed to ensure smooth functioning of the company.

    Different management levels and other 60 dynamic teams are assisting the

    management team for the smooth performance.

    1.2.2 Objectives of EIC

    In this world of uncertainty a sense of security is not only needed but is an

    essential factor of life. EIC has been established with an objective of creating a

    sense of security in all its customers by providing international standardinsurance. Besides this its other objectives are:

    To develop and fulfill the shortage of technical manpower and also to

    create awareness among the general public regarding the importance of

    insurance.

    Nepal is moving ahead to open up the General Insurance sector. With

    many new players expected in this field, EIC focuses to explore and top

    the potential market and open up new portfolios.

    1.2.3 Services offered by EIC

    To meet the growing needs of todays world, EIC has been upgrading its range of

    products and policies. The services offered by EIC are:-

    Fire & Allied Perils Insurance

    Burglary & Housebreaking Insurance

    Aviation Insurance

    Trekkers Assistance Insurance

    Duty Insurance

    Cash in transit Insurance

    Bankers Blanket Insurance

    Contractors All Risks Insurance

    Erection All Risk Insurance

    Everest Travel Trip Insurance

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    Household Insurance

    Vehicle Comprehensive Insurance

    Group Personal Accident Insurance

    Group Medical Insurance

    Fidelity Guarantee Insurance

    Marine Transit Insurance (Import/Export)

    1.3 Statements of Problems

    Nepal is a small developing country. It is a landlocked country surrounded by

    land everywhere. Thus, here exists no sea marine insurance only inland marine

    insurance exist. Regarding inland marine insurance many problems are prevailingin Nepal such as:-

    Here lacks the reinsurance company, thus in huge amount of national

    income is going to foreign country insurance companies.

    Since 2058/59, the latest data as whole record of insurance companies of

    Nepal is not properly available.

    There is lack of legal provision to make the carriers binding for necessary

    compensation

    Lack of manpower having the specialized knowledge about marine

    insurance.

    Insurance companies have to face moral and morale hazards.

    Due to the political instability transportation at the time is problem, many

    goods get damaged on the way due to the stoppage of goods for many

    damage.

    1.4 Objectives of the study

    The main objective is to analyse management of marine insurance with special

    reference to EIC Ltd. Basically this study is done to fulfill following objectives:-

    To evaluate the financial performance of marine insurance department.

    To compare the marine insurance premium of EIC with total premium.

    To compare claim paid and claimed amount of marine insurance.

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    To evaluate profit portion of marine insurance with total profit.

    To study about the activities of marine insurance.

    1.5 Significance of the study

    This field study report is on A study on marine insurance with special reference

    to EIC Co. this report will help to have the knowledge of marine insurance. This

    study will also help to evaluate the contribution of marine insurance to the EIC

    Co total profit. Since this study is done by visiting EIC Co, Beema Samiti it helps

    to have the practical knowledge of insurance which is different from that of

    theory of books. This study also helps to distinguish between the theory written

    in books and prevailing conditions and activities of insurance companies.

    1.6 Organization of the report

    It is the concise contents of the report. In the first chapter i.e. introduction, here

    the information of marine insurance with the general information of EIC Co. has

    been provided. Also the problems regarding insurance (esp. marine insurance),

    objectives of field work and its significance have also been provided.

    Second chapter is about the findings in marine insurance by various authors,

    report writers and the reports and journals of Beema Samiti. Here the conclusions

    derived by them are copied same to same.

    Third chapter is about the methodology used during the collection of necessary

    data for this report.

    On the fourth chapter the financial data of EIC has been analyzed and presented

    in various diagrams and tables.

    At last on fifth chapter the conclusion has been drawn from the study.

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    CHAPTER:-2

    REVIEW OF THE LITERATURE

    2.1 Introduction to insurance

    Safety and security of life and property is the common need of every person. But

    life is uncertain when, where, what will happen is uncertain. Different accidents

    may occur in day to day life. The loss so occurred may bring disaster in the life

    of the victim physically or economically. Thus, to minimize the burden of risk,

    risk of one person is transfer to another so that after the loss also he could be able

    to re-establish himself as before. From here the meaning of insurance arises.

    Insurance means the transfer of risk of one person to another. In the insurance

    there are two parties- insurer and insured. Insurer is the one who undertake the

    risk of other persons. Insured is the one who transfer own head risk to other for

    which it pay certain amount to insurer called premium. So we can say that

    insurance is the spread of risk of insured to insurer by paying certain amount to

    the insurer; who (insurer) promises to reimburse the insured if any loss occurs

    accidentally.

    Insurance is a contract between an insured and an insurer, in which insured pays

    some amount (premium) to the insurer and in return the insurer indemnifies the

    loss caused by the contingencies as mentioned in the contract.

    Insurance is a social device which spread the loss caused by certain risk over the

    number of peoples, who are exposed to it and agree to insure themselves against

    the risk. Insurance had been not only able to minimize the risk but also to recover

    the loss of victim and re-established him as he was before. So insurance has been

    the necessity of the secured society.

    2.2 History and Development of Insurance in Nepal

    The history of insurance in Nepal emerges from the Guthi system, Joint family

    system, Parma and Dhikuti. The official record was made from the

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    establishment of Mal Chalani and Insurance Company in 2004 B.S. under the

    ownership of Nepal Bank Ltd. Later in 2016 B.S. it was renamed as Nepal

    Insurance and Transport Co.. It was again renamed as Nepal Insurance Co.

    Ltd in 2048 B.S. it is the oldest insurance company of Nepal.

    After the establishment of democracy in 2007, different development works like

    transportation, establishment of industries, factories, and business started rapidly.

    To take benefit of this, some Indian Insurance companies like Ruby General

    Insurance Company, Oriental and Fire Insurance Co. Ltd, the Sterling General

    Insurance Company Ltd and Life Insurance Company started insurance business

    in Nepal. The national capital was gone out to the foreign country due to the lack

    of the insurance services. Realizing the necessity of insurance company in 2024,

    Rastriya Beema Sansthan Pvt. Ltd was established. Insurance company Act was

    also enacted in 2025 B.S. called Insurance Act 2025 to run the insurance

    business effectively inside the country. Under the Insurance Act 2025, the

    National Life and General Insurance was established in 2044 which has right to

    make life and non-life insurance business. In 2030 National Insurance Company

    Ltd was established which has only right to make non-life insurance business.

    After the period of 2047, HMG replaced Insurance Act 2025 with Insurance Act

    2049 and amended it in 2052 B.S. Insurance regulations enacted in 2049 were

    also reformed in 2053 B.S. Thus HMG has encouraged private sectors to enhance

    insurance business in Nepal. After the introduction of these Acts, Rules and

    regulations following companies are operating in Nepal.

    S.N. Name of Insurance

    Company

    Regd.Date Ownership Service Provides

    1 Nepal Insurance Co. Ltd 2004 Private Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous

    2 Rastriya Beema Sansthan

    (RBS)

    2024 Government Life, Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous

    3 National Life & General

    Insurance Co.

    2043 Joint Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous4 Himalayan General 2050 Private Fire, marine, motor, aviation,

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    Insurance Co. Ltd. contractors risk and

    engineering and miscellaneous

    5 United Insurance Co. Ltd. 2050 Private Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous6 Everest Insurance Co. Ltd. 2051 Private Fire, marine, motor, aviation,

    contractors risk and

    engineering and miscellaneous

    7 Premier Insurance Co. Ltd. 2051 Private Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous

    8 Neco Insurance Co. Ltd. 2053 Private Fire, marine, motor, aviation,

    contractors risk and

    engineering and miscellaneous9 Alliance Insurance Co.

    Ltd.

    2053 Private General insurance

    10 Sagarmatha Insurance Co.

    Ltd.

    2053 Joint Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous

    11 Credit Guarantee

    Corporation

    1993 Private Cattle Insurance & Credit

    Insurance

    12 Oriental Insurance Co. Ltd. 2024 Foreign Fire, marine, motor,

    contractors risk and

    engineering and miscellaneous

    13 National Insurance Co.

    Ltd.

    2031 Foreign General Insurance

    14 Nepal Life Insurance Co.

    Ltd.

    2058 Private Life Insurance

    15 NB Insurance Co. Ltd. 2058 Private Non-life Insurance

    16 American life insurance

    Co. Ltd.

    2058 Joint Life Insurance

    17 Life Insurance Corporation 2058 Life Insurance

    18 Prudential Insurance Co.Ltd.

    2059 Non-life Insurance

    19 Shikhar Insurance Co. Ltd. 2061 Private Non-life Insurance

    20 Lumbini Insurance Co.

    Ltd.

    2062 Private Non-life Insurance

    2.3 Market structure of Insurance Companies of Nepal at glance

    Ownership Nature of the company Total

    General Life Composite

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    Government

    Owned

    - - 1 1

    Private

    sector

    12 1 - 13

    Foreign 2 1 - 3

    Joint

    Venture

    1 1 1 3

    Total 15 3 2 20

    ( Source: Beema Samiti)

    In the above table we can see that there is only one insurance company owned by

    government and it provide both general and life-insurance facility. There are total

    13 private sector companies, out of which 12 provide general life insurance

    facility and only 1 provide life-insurance facility. 3 companies are foreign

    companies among which 2 provide general insurance and 1 provide life insurance

    facility. 3 insurance companies are established in the joint-venture out of which 1

    provide general insurance, 1 provide life-insurance and 1 provide the facility of

    both general and life-insurance.

    2.4 Introduction to marine insurance

    Marine insurance is the contract of indemnity under which the insurance

    company promises to compensate the loss caused by the marine risks under

    certain period, in return for certain premium. In old days marine insurance used

    to be contract of merchant navy, ship, goods and the rent. But with the time phase

    the objectives of marine insurance is widening. In this modern age marine

    insurance include not only sea risks but also the land risks too. Total loss or

    damage to the cargo by fire,si9nking and stranding or the vessel, short delivery,

    non-delivery, theft, pilferage, leakage, breakage, shortage due to tearing,

    chipping, water damage and damage by extraneous substances can be covered by

    marine policy depending upon the nature of commodity and as mutually agreed

    by the insurer and the insured.

    Due to the growth of the population, development of education and other reasons

    import & export of things is cheaper through marine may and riskier also.

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    Financial and physical loss can be created by the marine risk sea storm, sea

    pirates and the natural crisis. If the ship sinks, goods get damaged, goods owner

    and merchant, navy company that provide ship in rent had to bear the loss of

    great amount. Marine insurance helps out to get relief from the burden of such

    risk by providing compensation at the time of so occurred loss. Marine insurance

    has made foreign trade easy. Also it has helped to establish relationship with

    peoples of different countries. Air transport is very high, transportation expenses

    in marine transport is lower so, its importance has grown up.

    In context of Nepal, 16 insurance companies provides marine insurance policy.

    Since export and import business is growing on in context of Nepal, the market

    of marine transit insurance is also in increasing trend. As the banks have made

    marine insurance compulsory to issue LC which has also helped to boost up

    marine transit insurance business. The awareness regarding the insurance itself is

    gradually increasing in Nepal and marine transit insurance is also not apart from

    it.

    2.5 Definition

    "A marine insurance policy is very after defined as a contract of indemnity

    whereby the insurer undertakes to indemnify insured against perils of the sea"

    - Ghosh & Agrawal

    Marine insurance has been defined as a contract between insurer and insured

    whereby the insurer undertakes to indemnify the insured in a manner and to the

    interest thereby agreed, against marine losses incident to marine adventure

    - M.N. Mishra

    Marine insurance is a contract whereby the insurer undertakes to indemnify the

    insured in a manner and to the extent whereby agreed, against marine losses, that

    is to say the losses incidental to marine adventure.

    - Indian Marine Insurance Act 1963

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    Marine insurance is a contract whereby one party, for an agreed consideration,

    undertakes to indemnify the other against loss arising from certain perils and sea

    risks to which a shipment and other interest in a marine adventure may be

    exposed during a certain voyage or certain time.

    - Mr. Arnold

    2.6 Classification of Marine Insurance

    Marine Insurance is the insurance of goods in transit. Since it covers goods in

    transit against most pure risks connected with transportation, it is also known as

    transportation insurance. Marine Insurance can be classified into two categories:-

    2.6.1 Inland marine insurance

    Inland marine insurance provides financial security of goods being shipped on

    land. When goods are imported, exported or domestically shipped, land marine

    insurance covers all types of risks on good in transit. This coverage includes the

    loss by accident, theft, robbery, fire, etc.

    2.6.1.1 Risks covered by inland marine insurance

    Risks covered by inland marine insurance are specified in the Inland transit

    Clause-A, B& C which are attached to the policy. These are as under:

    I.T.C.--C I.T.C.--B I.T.C.--A

    Fire and lightning. Fire, lightning,

    breakage of bridges,

    collision with or by the

    carrying vehicle,

    derailment or

    overturning of the

    carrying vehicle,

    accidents of like nature

    to the carrying railway

    All physical loss or

    damage to the insured

    goods except as per

    exclusions, it covers all

    risks but not all losses

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    wagon or vehicle.

    2.6.1.2 Risks excluded by inland marine insurance

    In no case shall this insurance cover loss, damage or expense attributable to orcaused by:-

    1. Wilful misconduct of the assured.

    2. Ordinary leakage, loss in weight or volume, wear and tear.

    3. Insufficiency or unsuitability of packing or preparation of the subject

    matter insured.

    4. Inherent vice or nature of subject matter.

    5. Delay even though the delay caused by insured peril.6. Insolvency or financial default of anyone connected with the transit and

    relevant trade transaction.

    7. Misuse or loss of carriers receipt.

    8. Malicious damage.

    9. War and war like risks.

    10.Strikes, riots and civil commotion risks.

    11.Capture seizure arrest restraint or detainment, and the consequence thereof

    or any attempt thereat.

    12.Derelicts mines, bombs or derelict weapons of war.

    13.Caused by terrorist or any person acting from a political motive.

    2.6.1.3 Duration

    Under clause C:

    Attaches from the time the insured goods loaded into the WAAGON/TRUCK for

    the commencement of transit and continues during the ordinary course of transit

    including transshipment, if any and ceases immediately on the unloading form

    wagon at the final destination Railway station or arrival of vehicle at the

    destination named in the Policy.

    Under clause B & A:

    Attaches from the time the insured goods leave the Warehouse/store for thecommencement of transit including Customary transship, if any,

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    1. Until delivery to the final Warehouse at destination station or

    2. Until expiry of 7 days after arrival of the vehicle Railway wagon at the

    final destination Railway station or the vehicle at the destination town,

    whichever shall first occur.

    2.6.2 Ocean marine insurance

    Ocean marine insurance provides protection of all types of risks of goods in

    transit in ship. All legal liabilities of the owners and shippers can also be covered

    in ocean marine insurance. There are four main types of ocean marine insurance:-

    I. Hull insuranceHull insurance covers damage to a ship itself. The hull policy offers

    an unusal coverage under its collision clause, which provides

    liability insurance for loss or damage to the other vessel involved in

    a collision, as well as to its cargo.

    II. Cargo insurance

    Cargo insurance covers losses to a ships physical cargo. This

    insurance is available for shippers of goods moving by sea or air in

    international trade.

    III. Freight insurance

    Freight insurance covers shippers against a loss of freight.

    IV. Marine liability insurance

    Marine liability covers damages to people and property from

    collisions and other incidents. The marine insurance policy may

    include liability hazards such as collision or running down.

    2.6.2.1 Risks covered by ocean marine insurance

    Risks covered by ocean marine insurance are specified in the Institute Cargo

    Clause-A, B& C which are attached to the policy. These are as under:

    I.C.C.--C I.C.C.--B I.C.C.--A

    Fire or explosion, 'C' cover plus All risks of loss or

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    stranding, sinking

    etc., Overturning,

    Derailment (of

    Land Conveyance),Collision,

    Discharge of cargo

    at Port of Distress,

    Jettison, General

    Average Sacrifice,

    Salvage Charges.

    Earthquake, Lightening,

    Washing Overboard,

    Entry of Sea, Lake or

    River water into vessel,craft, Total loss of

    Package in Loading or

    Unloading.

    damage except those,

    which are specifically

    excluded plus Malicious

    Damage Piracy.

    2.6.2.2 Risks excluded by ocean marine insurance

    Except for the risks of Piracy and Malicious Damage which are covered in the

    I.C.C.A clauses but not in B & C clauses, the excluded risks are common to all

    3 clauses. These are:

    1. Willful misconduct of the insured.

    2. Ordinary leakage, ordinary loss in weight of volume of ordinary wear and

    tear of cargo.

    3. Insufficiency or unsuitability of packing or preparation of cargo.

    4. Inherent vice or nature of cargo.

    5. Delay, even if delay is caused by insured against.

    6. Insolvency of financial default of the owners, managers, charterers or

    operators of the vessel.

    7. Unseaworthiness of vessel or craft and unfitness of vessel, craft,

    conveyance container of lift van.

    8. Use of any weapon of war employing atomic or nuclear fission. In

    addition, the following are excluded:

    i. War risks.

    ii. Strike risks (including damage caused by terrorists)

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    It is however, normal to include War and Strike Risks in insurance of ocean

    shipments. For this purpose, the Institute War Clauses (Cargo) and Institute

    Strike Clauses (Cargo) are used.

    2.6.2.3 Duration of the policy

    Attaches from the time goods leave the warehouse named herein for the

    commencement of the transit, continues during the ordinary course of transit and

    terminates either on delivery to the consignees final warehouse or on delivery to

    any other warehouse whether prior to or at the destination named herein, which

    the assured elect to use either for storage other than in the ordinary course of

    transit or for allocation or distribution or on the expiry of 60 days after thecompletion of discharge at the final port of discharge whichever shall first occur.

    The insurance shall remain in force during delay beyond the control of the

    assured, any deviation, forced discharge. Reshipment or transshipment and

    during variation of the adventure arising from the exercise of a liberty granted to

    the shipowners or charterers under the contract of affreightment.

    2.7 Principles of Marine Insurance

    The marine insurance has the following fundamental principles:-

    1. Principle of Insurable Interest

    The principal of insurable interest is very important in marine insurance.

    Since the ownership and other interest og the properties often changes

    from hands to hands, the requirement of the insurable interest to be present

    only at the time of loss makes a marine insurance policy freely assignable.

    2. Utmost Good Faith

    The principle of utmost good faith is applied to both insurer and insured.

    But the duty of disclosure of material facts rests highly on the insured,

    because he is aware of the material facts. Any non-disclosure of a material

    fact enables the insurer to avoid the contract.

    3. Principle of Indemnity

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    The marine insurance is based on the principle of indemnity. Under no

    circumstances an insured is allowed to make a profit out of claim. The

    basis of indemnity is always a cash basis as the insurer cannot replace the

    lost ship and cargoes.

    4. Principle of Subrogation

    If the loss or damage is occurred due to the third party the insurer has the

    right to claim against the third party after the payment is made to the

    insured.

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    CHAPTER: - 3

    METHODOLOGY

    3.1 Field work design

    Here, the research has shown available data in descriptive & analytical form. The

    report has been designed on the basis of the financial aspects of EIC Ltd of

    marine department which consist of 5 year data.

    3.2 Study area

    This field work is the study on marine insurance with reference to EIC. This

    study is also about the total share of marine insurance in total profit of EIC

    Company, Income and Outflow of marine insurance.

    3.3 Field work procedures

    Once I select my subject matter of report writing as "Marine Insurance" I went to

    the office of EIC in Hattisar. It was a big office that deals with non-life insurancepolicy. There I was introduced to Mr., Sudeep Subedi of claim department who

    gave me the information about the marine insurance and its comparison with

    other national marine insurance companies.

    3.4 Methods of data collection

    Data's are collected using both sources- Primary & Secondary sources.

    i. Primary sourceThis data is original in character. For the study purpose the required

    information was collected through various primarary sources like

    interviews, questionnaires & informal discussions.

    ii. Secondary source

    Besides primary source, additional required information were collected

    from various secondary sources like published official document of the

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    company, booklets, brochures, Annual Report and books. Also the

    unpublished information provided by Beema Samiti.

    3.4.1 Tools used for the study

    Statistical & financial tools are used to facilitate this study. Tools used are as

    follows:

    a. Tables

    b. Bar Diagrams

    c. Pie Charts

    3.4.2 Limitation of the study

    To collect data during the study period is difficult task. During the period of this

    study I faced following problems:-

    1. Time, there was a lack of time while preparing

    this report. Preparing report based mostly on primary sources required

    sufficient time which lacked while preparing this report.2. Since 2058/59 the latest data as a whole record of

    insurance companies are not available.

    3. Lack of availability of industry average values to

    compare with company values.

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    Comparison of Marine premium with Total

    premium

    -

    50,000.00

    100,000.00

    150,000.00

    200,000.00

    250,000.00

    300,000.00

    350,000.00

    2057/58 2058/59 2059/60 2060/61 2061/61Fiscal Year

    PremiumA

    m

    Total premium

    in Rs'000Marine

    Premium

    CHAPTER:-4

    PRESENTATION AND ANALYSIS OF DATA

    4.1 Description of the study area

    This field work report evaluates the financial aspects of Marine Insurance

    Department of EIC. In this report the financial activities of marine insurance is

    compared to the total financial act of the company. For this different data's are

    collected and processed & presented in suitable diagram, chart and in other forms

    using different suitable statistical tools & techniques for the appropriate

    interpretation and to draw the reliable conclusions.

    4.1.1 Comparison of Marine Insurance Premium with Total Premium

    Table 4.1.1 Total premium and Marine premium

    FY Total premium in Rs'000 Marine Premium in Rs 000 In %

    2057/58 209,210.00 19,514.00 9.3

    2058/59 297,840.00 14,477.00 4.9

    2059/60 267,777.00 16,744.00 6.32060/61 274,313.00 22,653.00 8.3

    2061/61 207,039.00 22,169.00 11

    Fig:-4.1.1 Comparison of Marine Premium with Total Premium

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    The above table and figure shows the total premium collected by EIC in different

    fiscal years and the total premium collected through marine claim. It shows that

    in last five years nearly 8% (in average) of total premium is collected by marine

    insurance.

    4.1.2 Total claim, marine insurance claim and paid

    Table 4.1.2 Total claim, marine insurance claim and paid

    Fig:-4.1.2 Total claim, marine insurance claim and paid

    21

    FY Total claim

    In Rs.

    Marine Claim

    In Rs.

    Outstanding Claim

    In Rs.

    Marine Claim paid

    In Rs.

    2057/58 25,859,532.00 3,033,427.00 636,090.00 2,397,337.00

    2058/59 36,848,460.00 2,286,266.00 1,188,609.00 1,097,657.00

    2059/60 34,015,163.00 2,263,228.00 1,806,825.00 456,403.00

    2060/61 30,172,543.00 2,653,939.00 988,565.00 1,665,374.00

    2061/62 33,186,624.00 2,683,406.00 823,416.00 1,859,990.00

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    Total claim, marine insurance claim and paid

    -5,000,000.00

    10,000,000.0015,000,000.0020,000,000.00

    25,000,000.0030,000,000.0035,000,000.0040,000,000.00

    2057

    /58

    2058

    /59

    2059

    /60

    2060

    /61

    2061

    /62

    Fiscal year

    Claima

    mt. Total claim

    Marine Claim

    Outstanding Claim

    Marine Claim paid

    In the above table or figure the total amount of claim of Everest Insurance

    Company and the amount of marine claim and claim paid is represented.

    4.1.3 Gross Profit/ (Loss) of Marine Insurance

    Table 4.1.3 Gross Profit / (Loss) of Marine Insurance in different fiscal years

    FY Profit / (Loss) in Rs.

    2057/58 3,380,349.00

    2058/59 2,868,159.00

    2059/60 3,331,965.00

    2060/61 3,652,837.00

    2061/62 2,522,821.00

    Fig: - 4.1.3 Gross Profit/ (Loss) of Marine Insurance

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    -

    500,000.00

    1,000,000.00

    1,500,000.00

    2,000,000.00

    2,500,000.003,000,000.00

    3,500,000.00

    4,000,000.00

    Profit/(Loss) amt.

    2057/58 2058/59 2059/60 2060/61 2061/62

    Fiscal Year

    Profit / (Loss)

    Profit / (Loss)

    Above table and pyramid shows the total profit earned by the marine insurance

    department of Everest Insurance Company during different fiscal years. We can

    see that in year 2060/61 the marine department earned highest profit than other

    fiscal years.

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    National marine premium & EIC marine premium

    -

    20,000.00

    40,000.00

    60,000.00

    80,000.00

    100,000.00

    120,000.00

    140,000.00

    160,000.00

    180,000.00

    2056/57 2057/58 2058/59

    Fiscal Years

    Premiuma

    mNational marine premium

    in Rs'000

    EIC marine premium in

    Rs'000

    4.1.4 Comparison of National marine premium and EIC marine premium

    Table 4.1.4 National Marine premium and EIC Marine premium

    FY

    National marine premium

    in Rs'000

    EIC marine premium in

    Rs'000 In %

    2056/57 145,313.00 15,414.00 10.61

    2057/58 160,534.00 19,514.00 12.16

    2058/59 167,949.00 14,477.00 8.62

    Fig: - 4.1.4 National Marine premium and EIC Marine premium

    In the above Table and Bar Diagram the total National marine premium collected

    during different years is given. In year 2058/59 highest premium is collected

    throughout the nation. In case of EIC in year 2057/58 highest premium is

    collected.

    4.1.5 Comparison of National marine claim and EIC marine claim

    Table 4.1.5 National Marine Claim and EIC Marine Claim

    FYNational marine claim in

    Rs'000 EIC marine claim in Rs'000 In %

    2056/57 33,769.00 898.00 2.66

    2057/58 27,244.00 3,033.00 11.13

    2058/59 22,433.00 2,286.00 10.19

    Fig: - 4.1.5 Comparison of National Marine Claim and EIC Marine Claim

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    National marine claim & EIC marine claim

    -

    5,000.00

    10,000.00

    15,000.00

    20,000.0025,000.00

    30,000.00

    35,000.00

    40,000.00

    2056/57 2057/58 2058/59

    Fiscal Years

    Claim

    am National marine claim in

    Rs'000

    EIC marine claim in

    Rs'000

    National Reinsurance & EIC Reinsurance

    -

    10,000.00

    20,000.00

    30,000.00

    40,000.00

    50,000.00

    60,000.00

    70,000.00

    80,000.00

    2056/57 2057/58 2058/59

    Fiscal Years

    Claima

    m National Reinsurance in

    Rs'000

    EIC Reinsurance in Rs'000

    Comparison of total marine claim amount of EIC with National marine claim

    amount is done in the above table and figure. In the year 2056/57 EIC marineclaim shares 2.66% of total National marine claim. Similarly, in 2057/58 EIC

    marine claim shares 11.13% of total National marine claim. Likewise in 2058/59

    EIC marine claim shares 10.19% of total National marine claim.

    4.1.6 Comparison of National Reinsurance and EIC Reinsurance

    Table 4.1.6 National Reinsurance and EIC Reinsurance

    FY

    National Reinsurance in

    Rs'000

    EIC Reinsurance in

    Rs'000 In %

    2056/57 67,154.00 13,638.00 20.31

    2057/58 69,950.00 16,979.00 24.27

    2058/59 61,004.00 12,555.00 20.58

    Fig 4.1.6 Comparison of National Reinsurance and EIC Reinsurance

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    Premium Collection

    25%

    11%

    4%

    16%

    21%

    23%Fire Insurance

    Marine Insurance

    Engineering Insurance

    Aviation Insurance

    Miscellaneous Insurance

    Motor Insurance

    In the above figure and table we can see that reinsurance amount of marine

    insurance in 2056/57 is 20.31 % of National reinsurance. In 2057/58 it is 24.27 %

    and similarly in 2058/59 it is 20.38 %.

    4.1.7 Sector wise premium collection of fiscal year 2061/62

    Table 4.1.7 Sector wise premium collection of fiscal year 2061/62

    Insurance Business Premium Collection in Rs In %

    Fire Insurance 52,704,058.00 25.46

    Marine Insurance 22,169,512.00 10.71

    Engineering Insurance 8,658,091.00 4.182

    Aviation Insurance 32,933,527.00 15.91

    Miscellaneous Insurance 42,886,549.00 20.71

    Motor Insurance 47,687,590.00 23.03

    Total 207,039,327.00 100

    Fig 4.1.7 Sector wise premium collection of fiscal year 2061/62

    From the above Pie-chart we can say that fire insurance is able to collect highest

    premium than others i.e. it consist of 25% of total premium collected. Motor

    insurance premium consist of 23% of total premium and miscellaneous consist of

    21%. Also Aviation premium is 16% of total premium; marine premium is 11%

    of total premium and 4% of total premium is consisting of engineering insurance.

    4.1.8 Sector wise management expenses in fiscal year 2061/62

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    Management expenses

    25%

    11%

    4%

    16%

    21%

    23%Fire Insurance

    Marine Insurance

    Engineering Insurance

    Aviation Insurance

    Miscellaneous Insurance

    Motor Insurance

    Table 4.1.8 Sector wise management collection in fiscal year 2061/62

    Insurance Business Management expenses in Rs In %

    Fire Insurance 7,187,858.00 25.46

    Marine Insurance 3,023,511.00 10.71

    Engineering Insurance 1,180,804.00 4.182

    Aviation Insurance 4,491,524.00 15.91

    Miscellaneous Insurance 5,848,932.00 20.71

    Motor Insurance 6,503,705.00 23.03

    Total 28,236,334.00 100

    Fig 4.1.8 Sector wise management expenses in fiscal year 2061/62

    From the above Pie-chart we can observe that management expenses of fire

    insurance is the highest and followed by motor insurance, miscellaneous,

    aviation, marine and engineering insurance.

    4.1.9 Gross profit / (Loss) of different departments of the company for fiscal

    year 2061/62

    Table 4.1.9 Gross profit / (Loss) of different departments of the company for

    fiscal year 2061/62

    Insurance Business Profit /(loss) amt. in Rs.Fire Insurance 8,230,768.00Marine Insurance 2,522,821.00Engineering Insurance 211,237.00

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    Gross /(Loss) of different departments

    -

    1,000,000.00

    2,000,000.00

    3,000,000.004,000,000.00

    5,000,000.00

    6,000,000.00

    7,000,000.00

    8,000,000.00

    9,000,000.00

    Insurance Business

    Profit/(Loss)am

    Fire Insurance

    Marine Insurance

    Engineering Insurance

    Aviation Insurance

    Miscellaneous

    InsuranceMotor Insurance

    Aviation Insurance -Miscellaneous Insurance 7,846,475.00Motor Insurance -

    Fig: - 4.1.9 Gross profit / (Loss) of different departments of the company

    Above figure shows the gross profit of different departments of the company for

    the fiscal year 2061/62. The fire insurance department has high profit than other

    i.e. Rs. 82,30,768. Similarly miscellaneous department has high profit after firei.e. Rs. 7,846,475. Then marine department profit is higher i.e. Rs. 2,522,821 and

    of engineering of Rs. 2,11,237. Neither profit is earned nor is loss beard by

    aviation and motor departments.

    4.1.10 Details of profit earned in different fiscal years of Everest Insurance

    Company

    Table 4.1.10 Profit earned in different fiscal years of Everest Insurance Company

    FY

    Profit before tax

    &bonus (Rs.)

    Tax amount

    (Rs.)

    Bonus

    amount (Rs.)

    Profit before tax

    & bonus (Rs.)

    2057/58 25,492,839.00 4,860,136.00 2317531 18,315,172.00

    2058/59 29,020,725.00 6,801,594.00 2658859 19,560,272.00

    2059/60 27,816,757.00 6,704,724.00 2589748 18,522,285.00

    2060/61 25,778,605.00 6,435,674.00 2177893 17,165,038.00

    2061/62 14,970,761.00 3,666,122.00 1182712 10,121,927.00

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    Profit earned in different fiscal years

    -

    10,000,000.00

    20,000,000.00

    30,000,000.00

    40,000,000.00

    50,000,000.00

    60,000,000.0070,000,000.00

    205

    7/58

    205

    8/59

    205

    9/60

    206

    0/61

    206

    1/62

    Fiscal Years

    Profitamt

    Profit before tax &

    bonus (Rs)

    Bonus amount (Rs)

    Tax amount (Rs)

    Profit before tax

    &bonus (Rs)

    Fig: - 4.1.10 Profit earned in different fiscal years

    Above table and trend lines shows the profit after tax and bonus earned by EIC in

    different fiscal years. EIC has earned Highest profit in the year 2058/59 i.e. Rs.

    19,560,272.

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    CHAPTER:-5

    5. SUMMARY, CONCLUSION AND RECOMMENDATION

    5.1 Summary and conclusion

    Insurance business is increasing rapidly in Nepal. Most of the insurance

    business provide both life and non- life insurance facilities. The market of

    marine transit insurance is also increasing. As the Banks have made Marine

    Insurance compulsory to issue LC which has also boost up marine transit

    insurance business. The awareness regarding marine insurance is increasing

    among the Nepalese Business houses.

    In context of Nepal, here exists inland marine insurance and aviation insurance

    business. The awareness of marine insurance is increasing but due to the

    political instability different problems arises in the business from time to time.

    Insurance companies have to face different problems in marine insurance

    business like moral and morale hazards, lack of manpower having thespecialized knowledge about marine insurance, etc. even of various existing

    problems EIC has been able to overcome all problems and is no. 1 insurance

    company in Nepal. Since it has reinsurance provision with various foreign

    companies it can take large amount business also.

    Marine Insurance business of EIC is always in profit. It is never operating in

    loss. In last fiscal year 2061/62, it has earned profit of Rs. 25,22,821. Marine

    insurance has lot of contribution to the total premium of EIC. In the year

    2061/62, 11% of total premium is the contribution of marine insurance.

    5.2 Recommendation

    In Nepal there is lack of reinsurance company, thus large amount of nation

    is going to foreign companies so, provision of reinsurance companies

    should be maintained within the country so that to prevent outflow of

    national income to outside.

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    The political situation should be well maintained because it is the main

    factor affecting the business.

    Since insurance business has to face moral and morale hazards different

    preventive measure should be taken to control it.

    Different awareness programme should be conducted to make people

    aware of insurance.

    Provision of proper maintenance of yearly data as a whole record of

    insurance companies of Nepal should be made.