Jubilee General Insurance Company Limited Pakistan

Submitted To: Miss. Nadia Nazeer.

Submitted By:

Rehan Ejaz. MBA ll 2014 - 06

Huma Andleeb. MBA ll 2014 - 14

H M Bilal. MBA ll 2014 - 16

Atif Rafique. MBA ll 2014 - 26

Dilshad Ahmed. MBA ll 2014 -30

Unair Safeer. MBA ll 2014 - 34

Fariya Asghar. MBA ll 2014 - 42

Bahauddin Zakariya University, Multan 2/27/2015

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Table of Contents 1. What is Insurance?............................................................................................................................03

2. Origin of Insurance. 04

3. Types of Insurance..04

3.1 General Insurance.04

3.2 Life Insurance....04

4. Insurance in Pakistan....05

5. Company profile05

6. Jubilee General Insurance Products...08

6.1 Property Insurance.08

6.2 Engineering Insurance..08

6.3 Marine Insurance....09

6.4 Business Fleet.09

6.5 Oil and Energy09

6.6 Health Insurance..10

6.7 Crop and Livestock..10

6.8 Liability Insurance ..10

6.9 Bonds11

6.10 Financial Line..11

6.11 Specialized Insurance...11

6.12 Miscellaneous Insurance.12

7. Rate Making.13

8. Selection of Agents....14

8.1 Requirements..14

8.2 Training Courses....14

8.3 Job Description...14

9. Targeting of Customers15

10. Further Investment.16

11. Reinsurance..17

12. Performance Analysis18

12.1 Jubilee General Insurance Company Limited...18

12.2 Market share in Pakistan20

12.3 Comparison with others Asians Countries...21

13. Conclusion and Recommendations.22

14. References...23

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Executive Summery

Jubilee General Insurance Company Limited, established in 1953, is one of the most reputed and

brightest names in the insurance sector. Jubilee General is listed on Karachi as well as Lahore

stock exchanges. Major shareholders include, Aga Khan Hospital and Medical College

Foundation, Habib Bank Limited, Aga Khan Fund for Economic Development and Hashoo

Group.

Sustained growth over sixty years has secured Jubilee General a place among the Big Three

Pakistani insurer in the term of gross direct premium and finance base. Jubilee General is the

highest rated general insurance company in Pakistan with an Insurer Financial Strength Rating of

AA+ with Stable Outlook assigned by both the rating agencies of Pakistan i-e JCR-VIS and

PACRA. The AA+ with Stable Outlook takes into account financial strength of the company

as demonstrated by its strong capitalizing and liquidity indicators. It also denotes a very capacity

of the company to meet policyholder and contract obligations.

Insurance industry in Pakistan is growing with the passage of time and Jubilee is also growing as

compare to its competitors because in 2005 Jubilee was 3rd largest private insurance company in

Pakistan and in 2013 it became 2nd

largest private insurance company in Pakistan.

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1. What is Insurance?

A p r om is e o f co mp ens a t io n o f s p ec i f i c f u t u r e l o s s e s i n ex ch an g e fo r a

p e r i od i c payment. Insurance is designed to protect the financial well-being of an individual,

company or other entity in the case of up expected loss. Some forms of insurance are required by

law, w h i l e o t h e r i s o p t io na l . A g r ee in g t o t h e t e rm s o f a n i n su r an ce po l i cy

c r ea t es con t r ac t between the insured and the insurer. In exchange for payments

from the insured (called premiums), the insurer agrees to pay the policy holder a sum of

money upon the occurrence o f a sp e c i f i c even t . In m os t c as e s , t he po l i cy h o l d e r

p a ys p a r t o f t h e l o s s ( c a l l ed t h e deductible) and the insurer pays the rest.

I n s u r a n c e i s a s y s t e m b y w h i c h a r i s k i s t r a n s f e r r e d b y a p e r s o n ,

b u s i n e s s , o r organization to an insurance company, which reimburses the insured for

covered losses and provides for sharing the costs of losses among all insured. Risk,

transfer, and sharing are vital elements of insurance.

Insurance people are no longer in the business of forming fire bridges to put out fires at

members homes, as they did centuries ago. But the idea of combining resources to protect

against loss is still basic to the insurance business.

Insurance companies are new financial institutions. They sell insurance policies

to p r o t ec t p eo p l e ag a in s t f i n an c i a l h a rd sh i p caus ed b y a c c i d e n t a l

l o s s es . Th e i ns u r ance company is an insurer. A person, business, or organization that is

covered, or insured by an insurance policy is referred to as an insured.

The purchase an insurance policy and become an insured, an insurance buyer pays a

fee, call an insurance premium, to the insurance company. To keep the insurance

policy in effect, the insured pays more premiums at periodic intervals.

T h e in su r an ce comp an y p o o l s t h e se p r emi ums t o fo r m a f u n d f ro m whi ch

t ho s e insured who suffer losses, unfortunate victims of fire, vehicle accidents, earthquakes, and

so on can be reimbursed. Each insured pays a relatively small amount (the premium) into

the pool. These relatively small premiums, added together, develop a sizeable fund from

which payments are made to compensate the insured who have losses. In this way,

for responsible cost, each insured can be sure that a loss will not cause undue financial hardship.

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2. Origin of Insurance

The first methods of transferring or distributing risk in a monetary economy, were practiced

by Chinese and Babylonian traders in the 3rd and 2nd millennia BC, respectively. Chinese

merchants travelling treacherous river rapids would redistribute their wares across many vessels

to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which

was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early

Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would

pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should

the shipment be stolen or lost at sea.

At some point in the 1st millennium BC, the inhabitants of Rhodes created the 'general average'.

This allowed groups of merchants to pay to insure their goods being shipped together. The

collected premiums would be used to reimburse any merchant whose goods were jettisoned

during transport, whether to storm or sinkage.

3. Types of Insurance

Different Insurance Companies offer many types of insurance policies according to

the market demand and according to the companys financial situation as well. So here some of

the most known insurance policies are discussed as follows:-

General Insurance (Non-Life)

Life Insurance

3.1 General Insurance

G en e r a l i n su r an ce i s a l so c a l l ed p r op er t y an d ca su a l t y i n s u r an ce , p r op e r t y

and liability insurance or Non-Life insurance. In purchasing non-life insurance,

the customer is buying financial protection against a specific insurable event,

such as industrial injury. Policies are typically short term (one year) indemnity (i.e. the

customer will be compensated in an agreed manner) contracts. Normally, there is no investment

element or expectation of financial return.

3.2 Life insurance

Life insurance is a contract between an insured (insurance policy holder) and an insurer or

assurer, where the insurer promises to pay a designated beneficiary a sum of money (the

benefits) in exchange for a premium, upon the death of the insured person. Depending on the

contract, other events such as terminal illness or critical illness can also trigger payment.

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4. Insurance in Pakistan

At the time of independence, the country had 5 domestic and 77 foreign insurance

co mp an i es . Insurance in Pakistan is regulated under the Insurance Ordinance, 2000. In the

past few years, it has transformed into a developing and fastly growing market that is generally

divided into three components, Life Insurance, General Insurance and Health Insurance.

The Government of Pakistan established the Department of Insurance in April 1948 as a

department of the Ministry of Commerce, the aim of this department is to take care of affairs

related to the insurance industry. Out of the 54% that Pakistan's service sector contributes to the

national GDP, insurance, along with transport, storage, communications and finance occupy 24%

of the sector.

5. Company Profile

Jubilee General Insurance Company Limited, established in 1953, is one of the most reputed and

brightest names in the insurance sector. Sustained growth over sixty years has secured Jubilee

General a place among the Big Three Pakistani insurer in the term of gross direct premium and

finance base.

Jubilee General is listed on Karachi as well as Lahore stock exchanges. Major shareholders

include, Aga Khan Hospital and Medical College Foundation, Habib Bank Limited, Aga Khan

Fund for Economic Development and Hashoo Group. Jubilee General, with its Head Office in

Karachi, has an extensive and dynamic branch network in all major cities and towns of Pakistan

that guarantees prompt service at the customers doorstep.

Jubilee General is the highest rated general insurance company in Pakistan with an Insurer

Financial Strength Rating of AA+ with Stable Outlook assigned by both the rating agencies

of Pakistan i-e JCR-VIS and PACRA. The AA+ with Stable Outlook takes into account

financial strength of the company as demonstrated by its strong capitalizing and liquidity

indicators. It also denotes a very capacity of the company to meet policyholder and contract

obligations.

Jubilee General has also been accorded the Financial Strength Rating of B++ (good) and

insures credit rating of BBB by A.M. Best which is highest rating assigned by an International

Rating Agency to General Insurance Company in Pakistan. According to A.M. Best the rating

reflects Jubilee Generals strong risk adjusted capitalization, solid business profile with in

Pakistan and good track record of operating performance and has developed good procedures in

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assessing, measuring and mitigating the key risk associated with the Companys business. A.M.

Best Company is the worlds oldest and most authoritative insurance rating and information

source.

During the last eight years Jubilee General has grown at double the industry average growth rate.

In 2003, Jubilee General became the first Pakistani insurance company to acquire a foreign

company when it took over the Pakistan operations of Commercial general Union.

The company pride itself in its long-standing reinsurance arrangements and relationships with

internationally renowned reinsures such as Swiss Re, Lloyds, Hannover Re, Asia Capital Re and

Korean re. The company is also supported by internationally acclaimed reinsurance brokers

including AON Group, Willis, Marsh, Howden and UIB.

With a broad spectrum of service available, Jubilee Generals client-base comprises prominent

national and multinational corporations operating in Pharmaceutical, Chemical, Textile, Cement,

Services (Hospitals & Hotels), Oil & energy, Manufacturing, FMCG, Engineering, Banking and

Financial sectors.

At Jubilee General, diversity is maintained through underwriting all classes of general insurance

including Fire, Marine, Motor, Engineering, Health and General Accident. Jubilee General not

only offer wide risk coverage, but also provides related risk management services delivered by

highly qualified and experienced risk managers. Jubilee General has developed unique and

innovative insurance solution to meet the growing consumer financing trend of the economy.

From auto financing to personal loans, mortgages to plastic cards, and trade finance to capital

investment finance, Jubilee general has the customized solutions to secure entire operations,

product range and transections of all financial institutions. With the stream of upcoming power,

engineering and infrastructure development projects on the national level, Our Engineering and

Bonds Department, comprising of the most experienced engineers in the industry, is geared to

provide technical and financial security to this vital sector.

As pioneers in Group Health Insurance, Jubilee General continues to develop new, flexible and

customized plans to suit the diverse needs of our many blue chip Pakistani companies and

multinational clients. Jubilee General has recently modified its health insurance products with

better coverage and scalable limits.

Jubilee General continues to innovate in terms of product development and distribution channels,

as well as customer service which are the corner stone of our business philosophy. In this regards

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the company has recently ventured to put up its personal lines products on the internet by virtue

of which, Jubilee General has become the first insurer in Pakistan to offer its products online.

Already Jubilee Generals online portal boats of a variety of travel, Home, Personal Accident and

Health insurance products. More innovations in this area are expected in the near future.

The true test of the soundness of insurance coverage is the duration of client relationships. This

is proven by the fact that many valued clients have been with us for over 40 years. Clients are

satisfied knowing that Jubilee General is their best security.

Jubilee Generas business philosophy can be summed up as Customer protection, Customer

Satisfaction and Customer Trust. This is acquired largely by the ability to handle claims

effectively. The customer focus and pro-active management approach in all areas of business,

allows Jubilee General to underwrite and handle claims in an expeditious and efficient manner.

Vision

To enable people overcome uncertainty

Mission

Provide solutions to protect the future of our customers.

Core Values

Teamwork

Integrity

Excellence

Passion

Strategic Objective

To grow by excellence in service to over clients and quality of our security.

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6. Insurance Products

Jubilee General Insurance Limited Offer following categories of products to their customers.

6.1 Property Insurance

Commercial property is exposed to various risks and can face losses worth millions. Jubilee

General provides its commercial clients with covers against a wide range of risks.

Coverage available against:

Fire and Allied Perils

Consequential Loss

Property All Risk

Comprehensive Machinery Insurance

Hotel Owners All Risk

Terrorism

6.2 Engineering Insurance

Jubilee General Insurance strives to provide its valued clients with the most apt array of covers

against probable adversities that can affect construction work or erection processes


Contractors All Risk

Contractors Plant & Machinery

Erection All Risk

Machinery Breakdown

Advance Loss of Profit

Electronic Equipment

Detereoration of Stock

Boiler & Pressure Vessel

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6.3 Marine Insurance

With Jubilee General Insurance, its calm sailing. Recognizing the risks involved in marine

transits, we offers extensive range of covers for marine risks, including coverage for vessels and

its machinery.


Marine Cargo

Inland Transit

Marine Hull

Marine Port Package

6.4 Business Fleet

Jubilee General Insurance covers your business motor vehicles and fleets with a comprehensive

cover policy along with the option of third party liability covers, aiming to provide you with

optimum coverage best suited to your needs.


Comprehensive

Third Party

6.5 Oil and Energy

Jubilee General's long standing experience of the oil & energy sector means that both established

& new companies can take advantage of this specialist knowledge & capability.


Offshore Construction project

Onshore Construction project

Control of Well

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6.6 Health Insurance

Being the pioneer of health insurance in Pakistan, Jubilee General Insurance provides unique

blend of health insurance covers to provide a peace of mind to our valued clients.


Group Health

Managed Care

6.7 Crop and Livestock

We at Jubilee General realize that agriculture is an integral part of our country's economy and

accordingly we have prepared a range of cover to suit our agriculture based business clients.


Kashtkar

Live Stock

6.8 Liability Insurance

Your insurance needs are unique to your line of profession, product or business, Based on it, we

provide you with the most suitable range of liability insurance tailor-made for your needs.


Public Liability

Commercial General Liability

Professional Indemnity

Medical Malpractice

Employer Liability

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6.9 Bonds

We stays ahead in providing best covers for your risks, the same way we strive for client

satisfaction with the variety of Bond insurances, covering all your commitments.


Bid Bond

Mobilization Advance Bond

Performance Bond

Supply Bond

6.10 Financial Lines

A variety of insurance plans made to match the needs of financial lines, Jubilee General

Insurance aims on providing its corporate clients with the best of services and risk coverage.


Bankers Blanket

Safe Deposit Box Insurance

Electronic & Computer Crime

Plastic Card

Foreign Currency Exchange Policy

Directors & Officers Liability

Professional Indemnity

6.11 Specialized Insurance

A wide range of specialized coverage's are provided, tailor made to fit our client's needs, Jubilee

General Insurance stays ahead of time in keeping our valued clients covered and at peace.


Residual Value Insurance

Event Cancellation

Stevedores Legal Liability

Marine Umbrella

Loss of License Pilots

Loss of License Air Traffic Controllers

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6.12 Miscellaneous Insurance

Jubilee General Insurance recognizes all the insurance needs of our corporate clients and

provides a wide range of coverage besides the specialized and categorized covers.


Fidelity Guarantee

Cash in Safe

Cash In Transit

Plate Glass

Group Travel Insurance

Neon Signs

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7. Rate Making

Rate making is the determination of what rates or premiums to charge for insurance.

Rate is the price per unit of insurance for each exposure unit, which is a unit of liability or

property with similar characteristics. The main business objective is to charge an adequate

premium to cover losses, expenses, and allow for a profit; otherwise the insurance company

would not be successful.

Pure Premium which is what is determined by actuarial studies consists of that part of the

premium that is necessary to pay for losses and loss related expenses.

Loading is the part of the premium necessary to cover other expenses, particularly sales

expenses, and to allow for a profit. Gross Rate is the pure premium and the loading per exposure

unit and the gross premium is the premium charged to the insurance applicant, and is equal to the

gross rate multiplied by the number of exposure units to be insured.

The ratio of the loading charge over the gross rate is the expense ratio.

Gross Premium = Gross Rate Number of Exposure Units

Gross Rate = Pure Premium + Load

Expense Ratio = Load / Gross Rate

In the pure premium method, the pure premium is 1st calculated by summing the losses and

Loss-adjusted expenses over a given period, and dividing that by the number of exposure units.

Then the loading charge is added to the pure premium to determine the gross premium that is

charged to the customer.

Pure Premium =

(Actual Losses + Loss-Adjusted Expenses)/Number of Exposure Units

Gross Rate = Pure Premium + Load

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8. Selection of Agents

Insurance drivers are mainly their agents who work hard and promote products and services to

keep organization functioning. Agents are hired through proper channel, an advertisement is

published in newspaper and interviews are taken. Minimum qualification of insurance agent in

Jubilee General Insurance is matriculation. An insurance agent works under his Development

Officer (DO). As many packages an agent will sell to same level he will get commission on

every package sold. So this is a performance type job.

8.1 Requirements

Dynamic young men and women of minimum 20 years of age holding National Identity Cards,

having Matriculation certificate and capable to accept the challenges, can be appointed as Sales

Representatives/agents.

8.2 Training courses

After hiring of agents they are trained through proper courses to work perfectly in market and to

represent Insurance Company. One of the most exercised training courses is:

8.2.1 Foundation Course (FC)

The Foundation Course is basic requirement in Insurance Ordinance 2000 in Pakistan. According

to this Ordinance, every field workers should be fully trained about the insurance products and

should be able to assess needs of customers. According to the Ordinance, Agents operating in

Insurance shall be required to complete a Foundation Course of three months duration. The

Foundation course contains following phases:

Total No. of days 90

Classroom Training 10 days

On Job Training 80 days

(Practical Field training under the supervision of Area Manager or Sector Head)

8.3 Job Description

Approaches potential clients.

Conducting Orientations.

Identifying the customers needs and want and then suggest a best policy according to

their needs and wants.

Obtains underwriting approval by completing application for coverage.

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Provides continuing service.

Updates job knowledge by participating in educational opportunities, reading

professional publications, maintaining personal networks; participating in professional

organizations.

Enhances insurance agency reputation by increasing the awareness.

9. Targeting the customers

First of all insurance companies must know their market. This means having a strong

understanding of their target audience.

Insurance companies are in a unique position when it comes to marketing. They have no

tangible products to sell, but must instead rely on strong relationships with loyal

customers and word of mouth to help them compete.

It is important for insurance companies to measure the effectiveness of their marketing

efforts based on the goals they have established. This may be as simple as comparing the

number of clients before and after a campaign.

Agent motivates the customer to take policy.

9.1 Selection of Applicants

The responsibility of the Underwriting Department is to examine, accept or reject the business

containing on day to day work. Underwriting is the process of selecting, classifying and pricing

applications for insurance. The underwriter is the person who decides to accept or reject an

application.

Selection process contains following Guidelines:

First of all sales rap motivate the customer to take policy.

Then sales rap fills proposal form for that customer.

Then sales rap takes underwriting fee from customer.

Then process of underwriting is done. If the customer fulfills the requirements of

underwriting then further process continues otherwise request is rejected.

If underwriter accepts the proposal then calculation for premium is done.

After the calculations of premium the policy number is allotted and policy issued to the

customer.

They charge premium more than 25% if condition is unfulfilled.

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10. Further Investments

Jubilee General Insurance Company Limited invests in long term securities, government bonds

and foreign bonds. They also invest in corporate securities which are one of the most important

assets of an the insurance company which includes a mix of medium and long term securities,

corporate debt makes up 48% investment in stocks is 24% and 12% government securities, 2%

in loan policy, 1% in real estate, 5% in mortgages and 7% in others.

As showing in following Chart:

Corporate Debt 49%

Stock 24%

Government securities

12%

Loan policy

2%

Real Estate 1%

Mortgage 5%

Others 7%

Jubilee General Insurance Limitided Funds Investment

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11. Reinsurance

Practice where an insurance company (the insurer) transfers a portion of its risks to another (the

reinsurer). Legal rights of the policyholders (insureds) are in no way affected by reinsurance,

and the insurer remains liable to the insured for insurance policy benefits and claims.

Jubilee use reinsurance for following coverage:

Property

Energy

Personal Accident & Health

Motor

Casualty

Jubilee General Insurance Company Limited gets reinsurance from different companies of local

and foreign countries and it used all type of reinsurance on the basis of nature of insurance.

It use following types of reinsurance:

Quota share (% Base)

Surplus Share (Friction Base)

Excess of loss treaty (Excess of Retention level or Catastrophic)

Reinsurance Pool (Joint)

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12. Performance Analysis

Performance analysis of Jubilee General Insurance Company itself and comparison with others

Insurance Companies operating in Pakistan as well as with other Asians countries are follow.

12.1 Jubilee General Insurance Company Limited

Performance analysis of Jubilee General Insurance is under.

12.1.1 Gross Premium and Net Premium

The gross premium and net premium performance is increasing continuously from 2008 to 2013.

It means company performance is improving with the passage of time and company growing on

the basis of customers and premium.

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12.1.2 Net Premium and Underwriting Result

The net premium is increasing from 2008 to 2013 that is positive sign for the company but

underwriting result is increasing is increasing slowly as compare to net premium it means that

company have to improve its underwriting result in future to compete with competitors.

12.1.3 Investment Results

Investment results of jubilee are increasing that shows positive sign for the company and

investors. Now customers can trust on its financial performance and company growth is

increasing because of increase in investment performance.

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12.2 Market Share in Pakistan

The Market Share of top four companies in 2005 and 2013 are showing in following graph.

According to the 2005 data Jubilee was at 3rd

largest market share in Pakistan and after 2005 it

shows favorable performance as compare to its competitors.

According to the 2013 data Jubilee grow from 3rd

largest to 2nd

largest market share in private

insurance company in Pakistan that shows positive sign for investors.

Adam Jee 25%

EFU 25% Jubilee

10%

NICL 12%

Others 28%

Market Share 2005

Adam Jee 27%

EFU 25%

Jubilee 19%

NICL 15%

Others 14%

Market Share 2013

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12.3 Comparison with others Asian Countries

Pakistan insurance industry comparison with others Asians countries in the term of world

market share as well as insurance industry contribution in GDP are as under.

According to the above graph in which ranking of market share of Asian Companies shows,

Pakistan insurance industry having 0.03% share in the world market and contributing 0.3% in

GDP of Pakistan which is lower as compare to other Asian countries.

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13. Conclusion and Recommendations

Insurance industry in Pakistan is growing with the passage of time and Jubilee is also growing as

compare to its competitors because in 2005 Jubilee was 3rd largest private insurance company in

Pakistan and in 2013 it became 2nd

largest private insurance company in Pakistan.

Performance analysis of insurance industries of overall Asian countries shows that insurance

industry growth is increasing year by year and insurance industry of Pakistan have 0.03% in the

world market share and contributing 0.3% in GDP of Pakistan but its still very low as compare

to others Asian Countries and insurance industries have to grow in future to capture more world

market as compare to others Asian Countries.

Reason behind it is below:

People still customarily faith that "It is something haram", but what really happens in it

and how does it works, majority is unaware. This is the route cause of backwardness of

the insurance industry.

The population of Pakistan is illiterate they have no enough knowledge.

Majority of Pakistans population income below poverty level (Less than 2$) by which

they difficultly fulfilled their day to day needs. Their savings are not enough to pay

premium.

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15. References

- www.jubileegeneral.com.pk/

- www.iap.net.pk/

- www.secp.gov.pk/

- www.sbp.org.pk/

- Visit The Jubilee General Life Insurance Company Limited Regional office Chen-one

Tower Abdali Road Multan.

Jubilee General Insurance Company Limited Pakistan

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