BRM

PROJECT
PRESENTED TO: SIR AHMAD ZIA

PRESENTED BY: MIAN HAROON TAHIR & GROUP MEMBERS

CLASS : M.COM 2ND SEMESTER

UNIVERSITY : IBMS CAMPAS OF UNIVERSITY OF AGRICULTURE

 GROUP MEMBERS

 Sr.# NAME AG NO. Sr.# NAME AG NO.

 1. Mian Haroon Tahir (Leader) 2018-AG-3481 12. Muhammad Shahid 2018-AG-3374
 2. Muhammad Muzammal Tufail 2018-AG-3219 13. Muhammad Faizan 2018-AG-3397
 3. Muhammad Hamza Hussain 2018-AG-3244 14. Muhammad Shahzaib 2018-AG-3403
 4. Muhammad Fiaz 2018-AG-3255 15. Muhammad Mudassar Hussain 2018-AG-3405
 5. Muhammad Ehtsham Saeed 2018-AG-3306 16. Muhammad Shahid 2018-AG-3409
 6. Muhammad Faizan 2018-AG-3310 17. Muhammad Kashif 2018-AG-3470
 7. Muhammad Naveed Ashiq 2018-AG-3319 18. Muhammad Jahangir 2018-AG-3479
 8. Muhammad Shahroz 2018-AG-3320 19. Muhammad Mujtaba 2018-AG-4689
 9. Muhammad Bilawal Liaqat 2018-AG-3343 20. Muhammad Javed2018-AG-5542
 10. Muhammad Khurram 2018-AG-3359 21. Muhammad Nasir 2013-AG-6383
 11. Rana Razzaq Khan 2018-AG-3373
  
TOPIC
Potential in
Insurance Sector
in Pakistan
 Five Questions

 1. What is insurance and what are its types?

 2. On what principles insurance works?
 3. How Insurance provide protection to individuals and businesses?
 4. Why Insurance Sector is important in economic development?
 5. Why insurance is compulsory in some States?
 Five Objectives

 1. To give awareness about insurance.

 2. To know the insurance rules and procedure.
 3. To know the insurance benefits at individual level.
 4. To know the insurance importance in economic development.
 5. To know the insurance potential to increase of GDP as
compare to other regional countries.
 HISTORY
 
 Invention of Marine Insurance
In the second half of 17th Century, in the absence of mass
media, coffee houses especially situated near sea ports
emerged as the primary source of news and rumors.
Information such as estimate sailing times between
destinations, weather patterns and risks attached to sea
routs were usually discussed on these coffee shops.
Contn…...
Adward Lloyd’s a prominent coffee house on Tower
Street near Thames, recognized the needs of his
customers (including captains of ships) and to satisfy
them he published “Lloyd’s List” in 1696 containing
information on the arrivals and departures of ships and
intelligence conditions at sea. He used to gather this
information from a network of correspondents in major
ports of Continent and England.

Contn……..
Among others, there were risk takers “Underwriters”
who were ready to take risks for a specified sum of
money “Premium”. Whenever a deal with the risk
taker is finalized, he used to confirm the same by
writing his name under the terms of the contract. This
gave birth to the word “Underwriter”

Contn………
In 1771 seventy nine of the underwriters who did
business at Lloyd’s subscribed pattern, joined together in
the Society of Lloyd’s. These were the original members
of Lloyd’s which were later known as “Names”. These
Names committed their capital and possessions to secure
their promise to help their customer’s in times of need.
This gave birth to the famous underwriting place known
as “Lloyd’s”.

Reference: PO5 Insurance Law CII-UK

Invention of Fire Insurance
 
The real idea to establish fire insurance came in 1667,
after the Great Fire of London in 1666. This fire lasted for
four days and nights burning over 436 acres of ground
and destroyed over 13000 buildings and was the most
disastrous fire in the history and forcibly awakened the
people to the necessity for a form of protection against
such disasters.
Contn…….
Some early documents provide evidence of the existence
of fire insurance in 1667, but the “Fire Office” is
generally regarded as being the first fire insurance
company set up in 1680. In 1705, the Fire Office changed
its name to the “Phenix” as this was the symbol
represented on the company’s Fire Mark. The company
started these Fire Marks (made of metal) nailed to the
outside wall of insured building. They performed two
important functions.
Contn……..
 

 First was a cheap and prominent form of advertising

and
 Second and important was to guide the fire brigade
(owned and controlled by insurance companies) that
this building is covered with their company.
 
Thus the insurance sector has been gradually
developing and shaped according to protection
demands in all fields of business and personal life.

Reference: PO5 Insurance Law CII-UK

INTRODUCTION
What is insurance?
 
Insurance is a contract that transfers the risk of
financial loss from an individual or business to an
insurance company. The company collects small
amounts of money from its clients and pools that
money together to pay for losses.
Contn…….
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 or uncertain
loss. An entity which provides insurance is known as
an insurer, insurance company, insurance carrier or
underwriter.
How Insurance Works

Insurance is available to help you pay for damage to your

property or to pay others on your behalf when you injure
someone or damage their property. Insurance is a
contract that transfers the risk of financial loss from an
individual or business to an insurance company. The
company collects small amounts of money from its
clients and pools that money together to pay for losses.
Reference: Internet
Insurance is divided into two major types:

 Property and Casualty insurance

 Life and Health insurance.
Property and casualty insurance provides
protection to businesses and individuals for losses
related to their belongings or assets, both physical
and financial.

Reference: Internet
Life and health insurance protects people from
financial loss due to premature death, sickness or
disease. Insurance uses probability and the law of large
numbers to determine the cost of insurance premiums
it charges its clients based on various risk factors. The
rate must be sufficient for the company to pay claims
in the future, pay its expenses, and make a reasonable
profit, but not so much it turns away customers.

Contn………
The more likely an event will occur for a given client (ie a
house near the water flooding when the area has a high
history of flooding), the more insurance companies will
need to collect to pay the anticipated claims.
Insurance companies market their products and services
to consumers in different ways. The price companies
charge for insurance coverage is subject to government
regulation. Insurance companies may not discriminate
against applicants or insureds based on a factor that does
not directly relate to the chance of a loss occurring.
Reference: Internet
Principles of Insurance

Insurance contract works on under mentioned Six

Principles/Rules equally enforced by all insurance
companies worldwide. The breach of any of these
principles can authorize the insurance company to
declare the claim as “No Loss”.
1: UTMOST GOOD FAITH

Definition: “A positive duty voluntarily disclose,

accurately and fully, all facts meterial to the risk
being proposed, whether requested or not”
“ Every circumstance is material which would
influence the judgment of a prudent insurer in fixing
the premium or determining whether he will take
that risk”
Reference: PO5 Insurance Law CII-UK
2: INSURABLE INTEREST

Definition
“The legal right to insure arising out of a financial
relationship recognised at law, between the insured
and the subject matter of insurance”
Reference: PO5 Insurance Law CII-UK
3: PROXIMATE CAUSE

Definition
“An active, efficient cause that sets in motion a
train of event which brings about a result,
without the intervention of any force started and
working actively from a new and independent
source”
Reference: PO5 Insurance Law CII-UK
4: INDEMNITY

Definition
“Financial compensation sufficient to place the
insured in the same financial position after a
loss as they enjoyed immediately before the
loss occurred”
Reference: PO5 Insurance Law CII-UK
5: SUBROGATION

Definition
“The right of an insurer, following payment of a
claim, to take over the insured’s rights to
recover payment from a third party responsible
for the loss. It is limited to the amount paid out
under the policy”
Reference: PO5 Insurance Law CII-UK
6: CONTRIBUTION

Definition
“The right of an insurer to call upon others
similarly, but not necessarily equally, liable to
the same insured to share the cost of an
indemnity payment”

Reference: PO5 Insurance Law CII-UK

DIFFERENT
OPINIONS OF
INSURANCE
Shailesh Kumar
Consultant - Trained Over 1000 Insurance Agent. at Insurance Samadhan -
a Grievance Redressal Platform.
Public opinion about insurance would remain the same. No one wakes up
the morning and think to buy insurance. No one discusses death as
possibility.
100 years ago also no one believed that they may die, nor people believe
today. It is the same story everywhere whether in India, Europe or USA.
Insurance is always sold never bought. Because the day some one decide
to buy insurance, insurance companies will not give them. Because either
he has developed some medical problem or he is contemplating death.
But Agent make maximum money because you sell something which is not
in priority list. So go ahead, take agency. Meet 2 person daily and 50 a
month.

Reference: Internet
Stephen Godek: Ph.D. Public Policy & Political Science, University of Illinois
at Chicago (1983)
I cannot speak for public opinion about insurance policies not having seen
polling data on the issues involved, but I can give you my own take on the
industry in the United States.
First, do you mean by “policies” the plans offered by insurance companies
to individuals and groups to cover various risks people and organizations
face? If so, I would say that they range from reasonably adequate to
atrociously exploitive. My advice to anyone seeking a policy to cover their
health, automobile, home, or any other risk in their life or business is to be
very careful about examining coverages as well as premiums charged. There
are, no doubt, some good policies offered by honest companies. However,
the complicated nature of risks covered by insurance policies suggests that
there are also some companies that take advantage of people’s aversion to
risks to maximize their (the company’s) revenues while minimizing the
benefits they expect to pay out on claims.
Reference: Internet
If you are interested in the broader question of companies’ policies for
marketing their services and serving policyholders, I can only suggest that
the legitimate concept of insurance is to attempt to attract the broadest risk
pool (i.e., group of customers that face the full range of risks) thus allowing
the premiums paid by lower risk policyholders to subsidize the
compensation to those who experience higher risks. As the industry in the
U.S. is structured, this concept is sometimes honored but also sometimes
disregarded by executives of companies that know two things: 1. many
people are risk averse and willing to pay high costs to offset potential losses;
and, 2. a stream of revenue from premiums can be a “cash cow” that can
allow the company to increase its profits in a number of ways. These include
the practices that lead to complaints about high premiums and
unwillingness to pay out benefits but also business policies that allow
insurance companies to act like banks by making profitable investments.
Reference: Internet
Tushar Jain:
Philospher, Insurer, Thinker, Astrologer
Most of the people still don't want to buy an insurance
they either want to invest or they buy policy to save tax. It
is very difficult to get success in this field lot of unfair
practices are prevalent in this sector. It is difficult but not
impossible, you can go ahead and if you will learn the traits
of this business then you will get success sooner or later.

Reference: Internet
Subramaniya V.U
Health Insurance professional for the last eleven years.
Generally people consider insurance agents as normal
sales guy. This perception is fast changing in urban & semi
urban areas. Thanks to the media campaign by the Life &
General Insurance Companies. An agent who has good
communication skills, sound knowledge with good
contacts in social circles can become popular agent. The
agent who has good knowledge about medical & claim
procedures added with personalised services will score
more marks amongst the customers in terms of popularity
& reliability. Further, the incident of claims are more often
in medical claim than the life insurance.
Reference: Internet
Ramesh Rajagopalan:
25th Year In Insurance
Perception of the public has changed in phases. It was
hard selling first. Second phase was for tax breaks. This
phase is all about term assurance…young professionals
want that. The pension market is wide open. With falling
interest rates, there is a speculation as to what will
happen in the future. Therefore insurance companies are
now talking about assured returns.
It is difficult to combat service tax regime. Then some
where some one thinks about security!

Reference: Internet
M. Javed
24th Year in Insurance
Uncertainty is the root cause to bring human mind to think and live with
insurance protection. But majority especially in this region of subcontinent,
do not want to accept uncertainty and even do not ready to think about any
probability of loss of their valuables and in their lives. They assume that they
will remain away from such worst situations and try to keep themselves
certain about such thing will not be happened in their lives.
But the reality is entirely different. Uncertainty is prevailing everywhere in our
lives. Being an insurer I have observed that any unfortunate incident compels
people to run and go for insurance protection. But only a few do avail and
remaining stand with plans and quotations only. For instance, if a fire occurs
in a godown of textile factory, all other factory owners in that region
(operating their factories without insurance protection), immediately run to
insurance companies and get protection plans. But after some days of that
incident, a few of them (approximately 5%) get insurance protection and
remaining 95% forget and remain quiet till next incident.
CONCLUSION
Despite different minds of thinking, insurance
sector plays a vital role in the economy of any
country. Insurance sector is contributing
reasonably in GDP of all developed as well as
under developing countries. While in our country
it has very low penetration of 0.92% of the GDP
(compared to regional economies of India 3.5%
and Malaysia 4%). So insurance sector has a lot of
potential for its growth in Pakistan.

Reference: IAP Apeal

Role of Insurance
 
1. Insurance Keeps Commerce Moving
In the days after the 9/11 attacks, there were many worries about
insurance coverage. Acts of war are not covered by insurance.
Was terrorism an act of war? The big question was, How would the 9/11
attacks be classified? Fortunately, the insurance industry decided the
attacks were not an act of war.
However, after 9/11, some insurers began excluding terrorism. But the
federal government stepped in and required coverage in the name
of keeping commerce moving. In this case, insurance likely prevented
many businesses from avoiding terrorist-targeted operations, such as
refineries and chemical haulers.
Reference: Internet
2. Insurance Grants Peace of Mind

Insurance, an intangible, provides another intangible:

peace of mind. Business owners can take on certain
business ventures because they can shift the risk —
thanks to insurance. This reason is the counterpart to
No. 2 — lenders require insurance. Insurance is the
required (by lenders) safety net that lets
entrepreneurs explore opportunity.

Reference: Internet
3. Insurance Ensures Family and Business Stability

Insurance is a safety net for when risks go

wrong. Life insurance can support the life of a
family, should a member be lost. It’s similar for a
business. Should a key member or piece of
equipment go out of commission, the business can
carry on thanks to insurance.

Reference: Internet
4. Insurance Protects the Small Guys
When you look at your industry, you see the "big guys" and
the "small guys." If a risk goes wrong, the big guys will be
able to survive. They can take a hit. But the little guys can't
take a hit. As a result, they are more risk averse, and in some
cases, they sell out to the big guys. If enough little guys
leave the industry (and one big guy swallows them up),
you're left with a monopoly. With insurance, however, the
little guys have support if they want to take a risk, which
means they stick around longer. What it comes down to is
that insurance helps prevent monopolies from forming.
Reference: Internet
5. Lenders Require Insurance

This reason is tied to No. 1. Lenders require that you have

insurance. Think about it: Mortgage lenders want proof
of insurance before you buy or build a new building. In
short, to get the money your business needs to keep
going, it’s likely you enjoy the benefits of insurance.
Without insurance, your winning business model can't
get the funding it needs to take its first step, or
your established business model can't get the
funding to evolve and better compete.
Reference: Internet
6. Insurance is Compulsory in Some States

Insurance is important because sometimes it's the

law! A great example of this is auto insurance.
Auto insurance is compulsory in many countries.
Auto insurance helps mitigate the risk of life on
the road (of which there are many!). Workman
compensation is another form of compulsory
insurance that's required in most countries.

Reference: Internet
REFERENCES
Remaining References are
attached with hard copy