Insurance Market in Pakistan

8/9/2019 Insurance Market in Pakistan

1/36

Insurance MarketInsurance Market

InInPakistanPakistan


2/36

Introduction ToIntroduction To

InsuranceInsurance


3/36

A co-operative mechanism to

spread the loss caused by aparticular risk over a number of

persons who are exposed to it and

who agree to ensure themselvesagainst that risk .

Definition of Insurance:Definition of Insurance:--


4/36

MarketMarket

A market is a social structure that

has emerged more or less

spontaneously or has beenconstructed deliberately by human

interaction to enable the exchange

of rights of services and goods.

Markets enable services, firms andproducts to be evaluated and

priced.


5/36

History Of InsuranceHistory Of Insurance


6/36

History is important for the study of anysubject. Fortunately, insurance has a richand interesting history. Its history reflectsseveral periods of human civilization. Its

beginning was simple and developedgradual. As the trade and industrydeveloped, the need of insurance was alsofelt and the institution of insurance wasinvented, as the adage goes: Necessity isthe mother of invention.


7/36



8/36


When one talks about a market place , a visionof a Saturday market in a country town , or acattle market , or some similar meeting placesprings to mind .

In the market of insurance , however , there is

no single place in the country or in the townwhere the buyers and sellers and middlemenmeet to transact insurance . there is oneexception of this general statement and that isthe transact of insurance business in Lloydsmarket . Thats the only market unique in theworld . For the first time that was the onlymarket for Marine Insurance .

The insurers may fall under three head:Insurance companies , Lloyds and H.M.Government .


9/36

Structure of the InsuranceStructure of the Insurance

MarketMarketThe insurance market comprises:

INSURERS: the insurance companies andLloyds underwriting syndicates who carry therisk;

BUYERS :the general public, industry andcommerce, and public authorities who seek totransfer their risk to others, such as insurers;and

INTERMEDIARIES: such as agents and brokers.

AGENT : Individual who is licensed by a state tosell Insurance for one or more specific insurancecompanies

BROKER :An independent agent who representsthe buyer, rather than the insurance company,and tries to find the buyer the best policy by

comparison shopping.


10/36

MarketingMarketing

Marketing was initially treated as just aperipheral function performed by management.It took some time for it to be accepted as oneof the four major functions of organizationalmanagement along with production finance

and personnel .With in the marketing function itself serviceindustries are lagging far behind themanufacturing industries in adoptingmarketing concept. And within the serviceindustries the insurance sector has beenamongst the last to switch to the marketingconcept from its sales orientation. Thereforefor a student pursuing a course in insuranceindustry in order to promote sale of insuranceproducts .


11/36

Insurance CompaniesInsurance Companies

Insurance companies may be classified into two groups:

Life insurance companies, which sell life insurance,

annuities and pensions products.

Non-life, General, or Property/Casualty insurance

companies, which sell other types of insurance.

In most countries, life and non-life insurers are subject

to different regulatory regimes and different tax and

accounting rules. The main reason for the distinction

between the two types of company is that life, annuity,and pension business is very long-term in nature

coverage for life assurance or a pension can cover risks

over many decades. By contrast, non-life insurance

cover usually covers a shorter period, such as one year.


12/36

InsuranceInsuranceMarketMarket

InInPakistanPakistan

( IAP , NICL , PRCL )( IAP , NICL , PRCL )


13/36

The insurance industry plays an important role inthe financial system by providing indemnification

of financial risk in the economy and serves as aninstitutional investor for both capital and moneymarket instruments.

Like many other countries the size of Pakistan'sinsurance industry is relatively small in proportionto its GDP.

The total size of insurance business in variouscountries depends on the nature of insurancemarkets, regulatory envirnment,accountingprocedures and financial development. Moreover,the demand of insurance depends on realdisposable income of the prospective policyholder,

the individuals preference about the need forfinancial security, economic environment, interestrates, inflation and insurance premium rates.Further more, cultural and religious aspects of acountry may also affect the development of theinsurance business.


14/36

Insurance Companies in PakistanInsurance Companies in Pakistan

The insurance Market have got

Joint Stock Companies , Mutual

Insurance Companies and Mutual

Insurance Association .


15/36


16/36

IAPIAP

INSURANCE ASSOCIATION OFINSURANCE ASSOCIATION OF

PAKISTANPAKISTAN

Before 1947, there were three InsuranceAssociations in the subcontinent at Calcutta,Bombay and Madras; Bombay Association hada branch in Karachi. After the establishment ofPakistan, the Insurance Association ofPakistan was formed and inaugurated on 9thFebruary,1948.

The Insurance Association of Pakistan is a

forum for the exchange of information,knowledge, experience and statistics amongits members. IAP, unlike other trade bodiesprovides a professional platform to guide themembers in technical matters related toindustry.


17/36

The Membership of the Insurance Association ofPakistan consists of 32 companies transacting GeneralInsurance business (30 Pakistani & 2 Foreign) and 4 LifeInsurance Companies transacting life business (3Pakistani & 1 Foreign) in Pakistan. Total membership of

the Association as on 12th February 2008 is 36.The gross premium for 2006 was a little over Rs. 27.4billion for General Insurance business & Rs. 1.12 billionfor life business. The premium income of the companiesvary, some are large, some small. Larger companies paymore towards the Associations expenses, but eachcompany big or small have only one vote.


18/36

MA

RKETMA

RKETOVERVIEWOVERVIEW

OFOF

NON LIFENON LIFEINSURANCEINSURANCE

INDUSTRYINDUSTRYIN PAKISTANIN PAKISTAN


19/36

Overall Insurance IndustryOverall Insurance Industry

Balance SheetBalance Sheet

As at

December31st20062006 20052005 20042004 20032003

Rs in million

Total EquityTotal Equity

andand

LiabilitiesLiabilities54877.41 35208.75 42490.04 36542.05

TotalTotal

AssetsAssets54877.41 35208.75 42490.04 36542.05


20/36

Note : The amount on y-axis's represent Rs in million

0

20000

40000

60000

2003 2004 2005 2006


21/36


22/36

The largest Insurance Company of Pakistan with a paidup capital of Rs. 2 billion. An exclusive insurer to thepublic sector, NICL has assets of over Rs. 12 billion andreserves amounting to over Rs. 10 billion.

National Insurance Corporation was established in 1976with an initial paid up capital of Rs 5 million for the solepurpose of insuring public properties.

The National Insurance Corporation conducted its

business on commercial principles similar to privateinsurance companies transacting general insurancebusiness. The Corporation made considerable efforts todevelop economical premium rates for various types ofinsurance covers generally needed by the public sectororganizations. A major objective of the Corporation wasto reduce the outflow of foreign exchange in the form of

reinsurance premium. The Corporation was successfulin curtailing dependence on reinsurance from foreigncompanies from approximately 80% in 1976 to less than10% in 1998 (except in case ofAviation Hull and MarineHull).


23/36

National Insurance CompanyNational Insurance Company

LimitedLimited


As at

December

31st

20062006 20052005 20042004 20032003

Rs in million


andandLiabilitiesLiabilities

18174.54 16976.00 15093.30 14003.04

TotalTotal

AssetsAssets18174.54 16976.00 15093.30 14003.04


24/36


0

5000

10000

15000

20000

2003 2004 2005 2006


25/36

MARKETMARKETOVERVIEWOVERVIEW

OFOF

LIFELIFEINSURANCEINSURANCE

INDUSTRYINDUSTRY

IN PAKISTANIN PAKISTAN


26/36

Life Insurance Private Sector


As at

December

31st

20062006 20052005 20042004 20032003

Rs in million



13,382.82 10,309.72 7,329.31 5,590.49

TotalTotal

AssetsAssets13,382.82 10,309.72 7,329.31 5,590.49


27/36


0

5000

10000

15000

2003 2004 2005 2006


28/36


29/36

State Life Insurance CorporationState Life Insurance Corporation

State Life Insurance Corporation of

Pakistan was established in 1972

under the life insurancenationalization order. It is the

largest life insurance institution in

Pakistan which provides life andgroup insurance protection to

about 6 million persons.


30/36

State Life Insurance CorporationState Life Insurance Corporation


As at

December31st20062006 20052005 20042004 20032003

Rs in million



149,448.65 132,017.00 116,570.00 102,443.00

TotalTotal

AssetsAssets

149,448.65 132,017.00 116,570.00 102,443.00


31/36


32/36

Pakistan ReinsurancePakistan Reinsurance

Company Limited (PRCL)Company Limited (PRCL)


33/36

Pakistan Reinsurance Company

Limited (PRCL)

PRCL is a public sector company . The roleof PRCL in economic development ofPakistan is significant. In the process ofeconomic development the local industry

both in public and private sectors hassuccessfully been provided the requiredinsurance protection with the reinsurancesupport of PRCL. PRCL is aware of theincreasing requirement of insurance andreinsurance of a progressive economy andis thus making great efforts in coming upto national expectations. The progress sofar made signifies consolidation of itsposition, both at home and abroad andencourages further expansion.


34/36

Pakistan Reinsurance Company

Limited (PRCL)


As at

December31st March 31,2008March 31,2008 20072007

Rupees


andand

LiabilitiesLiabilities10,284,294,879 10,446,599,125

TotalTotal

AssetsAssets10,284,294,879 10,446,599,125


35/36

CONCLUSIONCONCLUSION

The insurance market in developing

countries are characterized as suppliers

of insurance services as supply usually

exceeds demand in these economies. Incase of Pakistan where 67.5% of the

population lives in rural areas and given

the low per capita income, the

insurance industry has not been able tocreate sizeable demand for its services .


36/36

Thats all .Thats all .

Thanks a lotThanks a lot

for yourfor yourpatiencepatience

Insurance Market in Pakistan

Documents

Transcript of Insurance Market in Pakistan