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PREMIUM COLLECTION OF PREMIER INSURANCE

COMPANY (NEPAL) LTD., BUTWAL

BY
DipakAryal
P.U. Reg No.
Exam Roll No.

A Project Work Report

Submitted to
Axis College
Faculty of Management
Pokhara University

In partial fulfillment of the requirement for the degree of


Bachelor of Business Administration and Banking Insurance
BBA-BI

Butwal
Ashad, 2075
Faculty of Management

Pokhara University

RECOMMENDATION

This is to certify that the project work assignment report

Submitted by

DipakAryal

P.U. Reg No:

Exam Roll No:

Entitled

AN ANALYSIS OF PREMIUM COLLECTION PROCESS IN


PREMIER INSURANCE COMPANY LTD., BUTWAL

has been prepared as approved by this company.

This fieldwork assignment report is forwarded for examination.

Mr.ArjunKafle Mr. Ram Prasad Aryal


(Supervisor) (Campus chief)

Date: ……………….. Date :………………

I
ACKONWLEDGEMENT

It is the matter of great pleasure for me to acknowledge all the people who helped for the
successful completion of this report as per the requirement of the 4th semester syllabus
provided by the Bachelor of Business Administrative, Pokhara University. I would like to
express my sincere gratitude to Pokhara University along with our Respected Sir, Mr.
Arjunkafle for allowing me to submit this report.
As we know that practical knowledge is more fruitful than theoretical knowledge. Pokhara
University has been providing such a practical subject that enhances the personal skill of
the students by exposing them to real life situation. It was more helpful than the theoretical
study of the subject.
I am grateful to many others who took time to advice and counsel us. Finally, I would like
to make personal acknowledgement to our colleagues who have helped directly or
indirectly in the completion of this report.

DipakAryal
BBA-BI, 6thsemester
Axis collegeButwal

II
TABLE OF CONTENTS
Recommendation
Acknowledgement
Table of contents
List of tables
List of figure

CHAPTER- I Page No

1. INTRODUCTION 1
1.1 Introduction of Premier Insurance Company........................................................………..1
1.2 Definition of premium Insurance company………………….……………………………………………..1
1.3 Objectives of the study ………………………………………………………………………………………………3
1.4 Limitation of the study ……………………………………………………………………………………………….3
1.5 Organization of the study…………………………………….……………………………………………………..3
1.6 Review of Literature…………………………………………………………………………………………………..4
1.7 Methodology of the study…………………………………………………………………………………………..5
CHAPTER- II
2. DATA PRESENTATION AND ANALYSIS OF DATA 6
2.1 Data Presentation and Analysis …………………………………………………………………..6-13

CHAPTER- III
3. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 14
3.1 Summary……………………………………………………………………………………………………….14
3.2 Conclusion…………………………………………………………………………………………………….14
3.3 Recommendation……………………….………………………………………………………………….15
Bibliography
III
LIST OF TABLES
Tables Page No
1. Premium collection by premier insurance company ltd 7
2. Fire insurance premium collection by the company 9
3. Marine insurance by premium insurance company ltd 10
4. Motor insurance by premium insurance company ltd 11
5. Engineering insurance by premium insurance company ltd 12
6. Miscellaneous insurance by premium insurance company ltd 13

LIST OF FIGURES
Figures Page No
1. Premium collection by premier insurance company ltd 8
2. Fire insurance by premium insurance company ltd 9
3. Marine insurance by premium insurance company ltd 10
4. Motor insurance by premium insurance company ltd 11
5. Engineering insurance by premium insurance company ltd 12
6. Miscellaneous insurance by premium insurance company ltd 13

IV
Chapter I

1 Introduction

1.1 Introduction of Premier Insurance Company


Incorporated on 12th may 1994, Premier Insurance Company(Nepal) Limited has emerged
as a renowned general insurance company of the second generation. The company has
earned a reputation in the local and international insurance and reinsurance sectors as well
for its professionalism and services. Comprised of prominent entrepreneurs, the promoters
of the company have brought their experiences, entrepreneurial talent and leadership skills
to add to the company’s growth.
Premier’s greatest strength is its people. In a business that begins and ends with people,
premier’s human resources has huge responsibilities on it’s shoulders. Regularly trained on
the latest technology, premier’s staff provides efficient service to its customers. They are
also trained on developing innovative and custom-made products, better risk management
solutions and quality service for maximum security to customers. The company’s
dedication to provide better customer service also reflects through its associations with
leading insurance and reinsurance securities of the world rated, highly for claim payment
capabilities by reputed agencies like Standard and poor (S&P). Today premier has the best
and the most secure reinsurance arrangements to cover all types of claim settlements. As
part of the company’s efforts to serve people countrywide. It has established four regional
offices. The Birgunj office covers southern part of the country. The Butwal, Narayangarh
and Pokhara offices cover the western part of the country while the Biratnagar office covers
the eastern region of Nepal. New offices in other parts of the country are secheduled to be
opened soon.
Premier Insurance Co. (Nepal) Ltd. Is a public limited company incorporated in
1994 promoted by prominent as trading and business group as well as industrialists who
have diversified their activities in area such as Banking, Hotels, Rolling Mills, Real Estate,
electronics and representation of multinational companies. The company has earned a
reputation in the local and international insurance and reinsurance sectors for its
professionalsm and service premier greatest strength is it’s people. They are committed to
provide efficient service to it’s customers and are also trained on developing innovative and
tailorMade products with better risk management solutions and providing quality services
for maximum security customer and prompt claim settlement. The company’s dedication to
provide better customer service is also reflected through its associations with leading
insurance and reinsurance securities of the world, rated highly for their financial stability
and claim payment capabilities by reputed agencies like standard and poor and A.M. BEST.
Today premier has the best and the most secure reinsurance arrangements to cover all types
of risk and capable of claim settlements with the reinsurance program led by Tokio Marine
Global Re, which is ranked AA- by standard and poors.
Risk management goes beyond just advising. It includes giving the right advice
at the right time. Premier expertise, long experience and insight into risk management helps
give its customer the right and appropriate advice. To make sure the advice suitable, it
employees experience insurance analyst and also draws suggestions from International
experience of its insurance and reinsurance patterns worldwide. This combine with
innovative solutions for better risk management capabilities has boosted the customer's
confidence in the company which made it a company to be reckoned with providing greater
security to customer.

1.2 Definition of premium in insurance

An insurance premium is the amount of money that an individual or business must pay for
an insurance policy. The insurance premium is considered income by the insurance
company once it is earned, and also represents a liability in that the insurer must provide
coverage for claims being made against the policy.
The amount of insurance premium that is required for insurance coverage depends on a
variety of factors. Insurance companies examine the type of coverage, the likelihood of a
claim being made, the area where the policyholder lives or operates a business, the behavior
of the person or business being covered, and the amount of competition that the insurer
faces.Actuaries employed by an insurance company can determine, for example, the
likelihood of a claim being made against a teenage driver living in an urban area compared
to one in a suburban area. In general, the greater the risk associated with a policy the more
expensive the insurance policy will be.Policyholders are often given a number of options
when it comes to paying an insurance premium. Some insurers allow the policyholder to
pay the insurance premium in installments, for example monthly or semi-annual payments,
or may require the policyholder to pay the total amount before coverage starts.
Insurance premiums may increase after the policy period ends. The insurer may increase
the premium if claims were made during the previous period, if the risk associated with
offering a particular type of insurance increases, or if the cost of providing coverage
increases.Insurers use the insurance premium to cover the liabilities associated with the
policies that they underwrite, as well as to invest the premium in order to generate higher
returns. Insurers will invest the premiums in assets with varying levels of liquidity and
return, with the amount of liquid assets often set by state insurance regulators. Regulators
want to make sure that policyholders will be able to have their claims paid for, and thus
require insurers to retain adequate reserves.

1.3 Objectives of the study

1. To analyze various insurance policy.

2. To analyze the premium collection of the company.

1.4 Limitations of the study

1. The study has been completed with limited information.


2. The study few major financial ratios only for analyzing Bank.
3. The study is based on secondary data.
4. Only 5 years data has been taken to study.

1.5 Organization of the study

This report is organized under 3 broad categoriesviz;


Chapter-I: Introduction
Introduction is the first chapter of this report. It includes brief general background of the
study, objective of the study, limitation of the study, review of literature, different methods
used for data presentation and analysis and lastly the organization of the study.

Chapter-II: Data Analysis and Presentation


Data analysis and presentation is the second chapter of this report. In this chapter different
figure, tables are done as per the objective of the study.

Chapter-III: Summary, Conclusion and Recommendation


This is the last chapter of this report. It includes the summary of the study, conclusion
drawn by the researcher and also researcher provides some valuable recommendation

1.6 Review of Literature


According to the financial statement of fiscal year 2072/73 of premier insurance company ltd there
is continuous increase in premium collection of all non life insurance from 2068 to 2073.
The premium collection of motor insurance is high in comparison to other non life
insurance. The lowest premium collection is of marine insurance

The trend analysis of different insurance of 5 fiscal year suggests us that growth percentage
of fire insurance has been decreases. The growth % decreases in 070/071 from 79.62% to
23.37% and continue decrease up to 071/072 but it again increases in 072/073 and reach
36.13%.The growth % is in decreasing order of marine insuranceIn 069/070 it was 70.79%,
37.15% was in 070/071, 20.92% in 071/072 and 16.82% in 072/073. Motor insurance was
23.75% in 069/070 and then decreases and reach upto 15.2% in 070/071. And again it start
to increases from 36.76% to 81.45% in 072/073. In 069/070 the growth % of engineering is
high it is 88.35%. It decreases in 070/071 36.70% and it continuously decreases and reach it
negative figure -2.77%. In final year 072/073 it was 61.22%.The growth percentage of
miscellaneous is 40.67% in 069/070, 50.24% was in 070/071 and it decreases and reach
16.18% in 071/072 and again increases in 072/073 to 19.82%.
1.7Methodology of study

1.7.1 Population and Sample:


To get a practical knowledge and data about premium collection of premier insurance
company ltd is taken as sample.
1.7.2 Data collection method: There are two types of collection of data. They are primary
data and secondary data in order to collect data both the primary as well as secondary
sources of data information is used as data by the researcher.
a. Primary Sources:
The data which is directly collected from the origin or any place for the first time is
known as primary data. In this case information related to the organizational
structure, departments and objectives of the company were collected from direct
interview and field observation.
b. Secondary Sources:
The data which is collected indirectly from other sources and data which is already
collected by others and used for second time is known as secondary data. In this
case secondary data concerning the actual premium collection of the company was
collected from networks of records and annual report of the company.

CHAPTER- II
DATA PRESENTATION AND ANALYSIS
Each and every company has its own terms and condition for premium flow. In the same
way premier insurance company it has its own terms and condition. While collecting
premium in different topics, different rules,regulation and accounts to its nature must be
published. Some different types of insurance are:

Fire insurance:Fire insurance covers damage or loss to a property because of fire. It is


a specific form of insurance in addition to homeowner's or property insurance, and it
covers the cost of replacement and repair or reconstruction above what the
property insurance policy covers

Marine insurance: Marine insurance covers the loss or damage of ships, cargo,
terminals, and any transport or cargo by which property is transferred, acquired, or held
between the points of origin and final destination.
Motor insurance: A motor insurance policy is a mandatory policy issued by
an insurancecompany as part of prevention of public liability to protect the general
public from any accident that might take place on the road. The law mandates that every
owner of a motor vehicle must have one motor insurance policy.

Engineering insurance: Engineering insurance refers to the insurance that provides


economic safeguard to the risks faced by the ongoing construction project, installation
project, and machines and equipment in project operation

Miscellaneous insurance: Miscellaneous Insurance refers to contracts of insurance other


than those of Life, Fire and Marine insurance. It covers a variety of risks, the chief of which
are:- Personal Accident insurance. Personal Accident insurance is insurance for individuals
or groups of persons against any personal accident or illness.

Table No.1: Premium Collection by premier insurance company

The given table shows the premium collection of 2069 to 2074.This data is of non life
insurance which includes fire, marine, motor, engineering and miscellaneous
insurance.There is continuous increase in premium collection of all insurance
portfoliosfrom 2069 to 2074.In the table first column shows the years of premium
collection. Column 2nd,3rd,4th,5th,6th shows the non life insurance. In the table premium
collection of fire insurance in year 069-070 44492000 and so on. The premium collection
of motor insurance is high in comparison to other non life insurance. In the year 2073-2074
the premium collection of motor insurance is 484750000.The given table shows the
premium collection of 5 years from 2069-2074.The premium collection of fire insurance in
the year 2073-2074 is high which is 162415000.The lowest premium collection is of
marine insurance in the year 2069-2070 which is 11894000.The premium collection of
motor insurance is highly increasing. Engineering insurance is high in the year 2073-2074.

Portfolio F.Y 2069/070 F.Y 2070/071 F.Y 2071/072 F.Y 2072/073 F.Y 2073/074
Fire 44492000 79917000 98598000 119308000 162415000
Marine 11894000 20314000 27862000 33692000 39359000
Motor 95224000 117842000 135769000 267148000 484750000
Engineering 26387000 49702000 97764000 95051000 153242000
Miscellaneous 43992000 61886000 92978000 108022000 129435000
Fig-1:Component bar diag

ram of premium collection in five fiscal year.

600000000

500000000

400000000 Fire
Marine
300000000 Motor
Engineering
200000000
Miscellaneous

100000000

0
F.Y 2070/071 F.Y 2071/072 F.Y 2072/073

Amount in NPR

Above bar diagram showsthe premium collection of non life insurance. Right side of the
bar diagram represents the premium collection in amount. On the left side of the bar
diagram there are five different colors square box which represent the different portfolios of
the company. The bottom of bar diagram showsthe fiscal years. Green bar represent motor
insurance which is very high in the year 072-073.The lowest collection is of marine
insurance which is represent by red color bar in the year 069-070.Purple color represents
engineering insurance where as blue color represent fire insurance. Sky blue color
represents miscellaneous insurance.

2.1 Analysis of portfolio wise premium collected

2.1.1 Fire Insurance of premier insurance company


Table No.2: Fire Insurance of premier insurance company

Date Fire Insurance Growth rate Growth percentage


069/070 44492000 -
070/071 79917000 35425000 79.62%
071/072 98598000 18681000 23.37%
072/073 119308000 20710000 21.00%
073/074 162415000 43107000 36.13%

Fig-2 (Trend Line)Fire Insuranceof premier insurance company

90.00%

80.00%

70.00%

60.00%

50.00%

40.00% Series1

30.00%

20.00%

10.00%

0.00%
F.Y 2069/070 F.Y 2070/071 F.Y 2071/072 F.Y 2072/073

Interpretation:

According to trend line the growth percentage of fire insurance has been decreases. The
growth percentage of fire insurance in 069/070 is 79.62%, 23.37% is in 070/071, 21.00% is
in 071/072 and 36.13% is in 072/073. The growth % decreases in 070/071 from 79.62% to
23.37% and continues decrease upto 071/072 but it again increases in 072/073 and reach
36.13%.

2.1.2 Marine Insurance of premier insurance company

Table No.3: Marine Insurance of premier insurance company


Fig No.3 Marine insurance of premier insurance company

Date Marine Insurance Growth rate Growth percentage

069/070 11894000 -

070/071 20314000 8420000 70.79%

071/072 27862000 7548000 37.15%

072/073 33692000 5830000 20.92%

073/074 39359000 5667000 16.82%

80.00%

70.00%

60.00%

50.00%

40.00%
Series1
30.00%

20.00%

10.00%

0.00%
069/070 070/071 071/072 072/073

Interpretation:
After calculating growth rate and growth percentage of marine insurance it is found that it
is continuously decreasing. In 069/070 it was 70.79%, 37.15% was in 070/071, 20.92% in
071/072 and 16.82% in 072/073. The growth % is in decreasing order.
2.1.3 Motor Insurance of premier insurance company

Table No.4: Motor Insuranceof premier insurance company

Date Motor insurance Growth rate Growth percentage


069/070 95224000 -
070/071 117842000 22618000 23.75%
071/072 135769000 17927000 15.21%
072/073 267148000 131379000 36.76%
073/074 484750000 217602000 81.45%

Fig No.4 Motor Insurance of premier insurance company

90.00%

80.00%

70.00%

60.00%

50.00%

40.00% Series1

30.00%

20.00%

10.00%

0.00%
069/070 070/071 071/072 072/073

Interpretation:

Similarly, for the first time it was 23.75% in 069/070 and then decreases and reach upto
15.2% in 070/071. And again it start to increases from 36.76% to 81.45% in 072/073.
2.1.4 Engineering Insurance of premier insurance company

Table No.5: Engineering Insurance of premier insurance company

Date Engineering Growth rate Growth percentage


insurance
069/070 26387000
070/071 49702000 23315000 88.35%
071/072 97764000 48062000 36.70%
072/073 95051000 2713000 -2.77%
073/074 153242000 58191000 61.22%

Fig No. 5 Engineering Insurance of premier insurance company

100.00%

80.00%

60.00%

40.00% Series1

20.00%

0.00%
069/070 070/071 071/072 072/073
-20.00%

Interpretation:

In 069/070 the growth % of engineering is high it is 88.35%. It decreases in 070/071


36.70% and it continuously decreases and reach it negative figure -2.77%. In final year
072/073 it was 61.22%.
2.1.5 Miscellaneous Insurance of premier insurance company

Table No.6: Miscellaneous Insurance of premier insurance company

Date Miscellaneous Growth rate Growth percentage


insurance
069/070 43992000 -
070/071 61886000 17894000 40.67%
071/072 92978000 31092000 50.24%
072/073 108022000 15044000 16.18%
073/074 129435000 21413000 19.82%

Fig No. 5 Miscellaneous Insurance of premier insurance company

60.00%

50.00%

40.00%

30.00%
Series1

20.00%

10.00%

0.00%
069/070 070/071 071/072 072/073

Interpretation:

The growth percentage of miscellaneous is 40.67% in 069/070, 50.24% was in 070/071 and
it decreases and reach 16.18% in 071/072 and again increases in 072/073 to 19.82%.
CHAPTER-III
SUMMARY, CONCLUSION AND RECOMMENDATION
3.1 Summary
Insurance is a means of protection from financial loss. It is a form of risk management
primarily used to hedge against the risk of a contingent, uncertain loss. An entity which
provides insurance is known as insurer, insurance company, or insurance carrier. A person
or entity who buys insurance is known as an insured or policyholder. The insurance
transaction involves the insured assuming a guaranteed and known relatively small loss in
the form of payment to the insurer in exchange for the insurer’s promise to compensate the
insured in the event of a covered loss. Premium approval process is an art in the sense that
one has to take decision either favor or not with the available information. The company
has it’s own terms and conditions. The study of premium approval process is the process
identifying companys key of collect premium in different sectors. Premier insurance
company issues policy to their clients according to the own rules and regulations due to
which the company provides fire insurance, motor insurance, engineering insurance,
miscellaneous insurance. The company takes premium in different level classified at
different rate.
Through the above information researcher finds that there is increase in premium approval
in every years.

3.2 Conclusions
According to the data presentation and analysis premium collection process of premier
insurance company is strict and tight. The company collect premium from different types of
insurance like fire, motor, marine, engineering, miscellaneous insurance. The company has
its own terms and condition while collecting premium. After analyzing the data of 5 years
of premier insurance, the conclusion has been made that the premium collection of motor
insurance is higher than other insurance from 069 to 074 continuously increasing premium
of motor insurance. Hence this company takes tight and strict premium approval process
and has good result at every fiscal year.

3.3 Recommendations
While making this report the reporter analyzed some problems on premium approval
process of the company. So some recommendations for the company are to bring real
change and in the insurance business sector in Nepal the company should consider the rules
and regulations for the non-life insurance companies in Nepal under the insurance act 2016
before and during setting any future plan regarding operation and expansion of it’s
business, so that there doesn’t arise any conflicting situation. It willmakr their way of
business operations much smoother as well as easier and less problematic.
Bibliography

Breighner, M., W. Payton and J. Drewes. Risk and Insurance Management Manual for
Libraries. Chicago: Library Administration and Management Association, 2005.

Jawaharlal V (2005) Insurance industry ICFAI university press.

Kothari C.R. (2004) Research Methodology New Age Publications.

Mathew M J (1998) Insurance (theory and practices), RBSA Publishers.

http://premier-insurance.com.np

www.investopedia.com

www.wikipedia.com