Topics to be Covered

• Definition
• Types of Insurance
• History of Insurance
• Insurance Industry in Pakistan
• Present Scenario
• Key players
 Insurance

Insurance is a form of risk management used

primarily as a cover against any contingent
loss.
 Types of Insurance

• It can be divided into two categories

• Life Insurance

• General Insurance
 Life insurance

It is a contract where insurer undertakes to

pay the amount of policy to the insured on the
attainment of certain age or death of the
insured which ever comes first.
 Life insurance

Life insurance policy has two types

• Whole Life Policy:

In this insured amount is paid at the death of
the insured and policy holder pays premium
throughout his life.
 Life insurance

• Endowment Policy:
It is policy which sums for a fixed period. After
that specified period, policy becomes a claim.
 General Insurance
• Undertakes to indemnify the loss suffered by
the insured for a fixed premium

• Important forms are: fire, accident, marine

insurance and theft insurance

• Recently added forms are: party insurance,

unemployment insurance, crop insurance,
health insurance etc.
 History of Insurance
• Modern insurance was first practiced by
Chinese & Babylonians

• Achaemanian Monarchs were first to insure

their people

• A thousand years later inhabitant of RHODES

introduced general average concept
 History of Insurance
• Greeks and Romans introduced “health and
life insurance” in 600 A.D

• Separate insurance contracts were invented in

GENOA in 14th century

• 1680’s Mr. Edward Lloyd opened a coffee

house for ship merchants, here parties insured
their cargos and ship
 History of Insurance
• In 1680, Mr. Nicholas opened fire insurance
company.

• 19th century saw a great developments in the

field of insurance

• The practice of reinsurance also came in this

era.
 History of Insurance
• In 1897 the British government passed the
Workmen Compensation Act

• In this employee insurance against industrial

accident was made mandatory

• In India it was first practiced by Aryan’s in

1000 B.C
 History of Insurance
• Bombay Mutual Assurance society was formed in
1870 it was the first Indian Company

• Other companies at that time were: Oriental,

Bharat and Empire of India set up in 1870-90’s

• The Swadeshi Movement in 20th century brought

a boom in insurance industry of India
 History of Insurance

• First Insurance Act was passed in 1912

• Health insurance has been around for five

centuries
 Insurance Industry of Pakistan
• In 1947 there were 77 insurance companies.

• All of these were foreign companies

• Only 7 were incorporated in the Pakistani area

• The share of Muslim companies was very low

 Insurance Industry of Pakistan
• In 1948 the govt. established the department
within domain of ministry of commerce

• The object was to supervise the industry and

safeguard the interests of insured

• Pakistan insurance company was established in

1952
 Insurance Industry of Pakistan
• The object was to promote new insurance
companies both financially and technically

• Provide Reinsurance facilities to insurance

industry.

• In 1955 National Coinsurance scheme was

initiated to promote insurance culture, assist
small insurance companies
 Insurance Industry of Pakistan
• NCS yielded favorable results

• In 1960’s the number of insurance companies

in Pak increased to26 and till 1971 it reached
47

• Foreign companies were reduced to 25 till

1971 due to political issues and separation of
East Pak
 Insurance Industry of Pakistan
• The sum assured increased from 130 million
to 51.7 billion in 1972

• Life insurance was nationalized in 1972

• The business of 41 nationalized insurance

companies was consolidated in 1973
 Insurance Industry of Pakistan
• State life insurance enjoyed the corporate
monopoly till 1990

• 1973 govt. replaced NCS with NIF to manage

the govt. & semi govt. property

• For cost reduction NIC was established in 1976

• In 1980’s no significant progress in this sector

 Insurance Industry of Pakistan
• Two local and two foreign companies started
operating besides SLIC

• EFU commenced operation in1992

• Metropolitan in Feb 1993

• Alico in May 1995

• CU in July 1996
 Insurance Industry of Pakistan
• Domestic insurance companies were 62 in
1995 while foreign participation was reduced
to 9

• The new ordinance in Aug 2000 by SECP

increased the minimum paid up capital of
non-life insurance comp. to Rs. 80 million &
150 million for life insurance comp.’s
 Insurance Industry of Pakistan
• At present 55 insurance companies

• 5 are foreign out of 55

• The public sector consist of NICL, SLIC, & PRCL

• NICL provide coverage to public sector

• PRCL is alone in the business of Reinsurance

 Present Scenario
• Concept of “Takaful” is introduced

• It took 5 years to draft Takaful rules

• 5 Takaful comp’s are operating in Pak, 2 family

& 3 general Takaful

• In Takaful participants share the risk

 Present Scenario
• The growth of insurance industry has been
low

• Its GDP contribution is of 0.8% in Pak as

compared to 4.8% in India, 8% in Malaysia,
7.6% in Singapore and 15.3% in South Africa

• Out of 0.8% 0.3 comes from life insurance

while rest 0.5 from non life insurance
 Present Scenario
• The insurance business has been under stress
during 2003-05

• Sector posted strong gains in 2008

• Private sector comp’s out performed public

sector comp’s
 Present Scenario
• Competition has gone stiff and premium
collection has gone down

• In 2006 ADB allowed $260 million to restructure

the insurance sector

• Min. paid up capital for life insurance comp’s was

increased from Rs.150 million to Rs. 500 million
 Present Scenario

• For non-life-insurance comp’s paid up capital

limit is increased from Rs.80 million to Rs.250
million till 2010

• This will lead towards mergers

• Only Hailey college offering a course to

develop insurance professionals
 Present Scenario

• Insurance penetration in India is 3% while in Pak is

0.3%

• Insurance sector witnessed crisis due to

assassination B.B and other political issues

• Still the future of this industry is bright

 Key players
State Life Insurance Corporation:

• Life insurance business of 32 insurance comp’s

was merged and management was
consolidated and named State Life Insurance
of Pak

• It has 4 regional offices & 26 zonal office,111

sector offices and network of 461 area offices
 Key players

State Life Insurance Corporation:

• For group and pension there are 4 zonal, 6

sectors & 20 sector head offices

• Main office in Karachi deals in investments,

real estate, actuarial and over seas operation
 Key players
State Life Insurance Corporation:

• It has a large investment portfolio

• Offers both Whole life and Endowment plans

• Payments to policy holders in 2008 was Rs.

12.779 million vs. Rs.10783 million in 2007
with an increase of 18.25%
 Key players
• EFU (Eastern Federal Union)

• Established in 1932 with financial assistance

from Agha Khan 3 & Nawab of Bhopal Mr.
Abdur Rehman

• In 1947 it was leading Muslim insurance

company
 Key players
• EFU (Eastern Federal Union)

• In 1961 it was declared largest life company in

Afro Asia

• It was nationalized in 1972

• Thereafter it operated as General Insurance

Company.
 Key players
• EFU (Eastern Federal Union)

• 2nd largest non life insurance comp of the

country

• 1992 started life insurance business

• In 2002 Allianz AG signed a govt. venture with

EFU to form a new comp. Allianz EFU Health
Insurance Ltd.
 Key players
• EFU (Eastern Federal Union)

• It paid premium of Rs.7,797 million in Sept.

2009

• In 2008 the company operated through 67

branches
 Key players
• NIJ (New Jubilee Insurance)

• Established in1953 & ranked third largest

• First Pak Insurance Company to acquire share

in foreign insurance company of commercial
union
 Key players
• NIJ (New Jubilee Insurance)

• It acquired the major control of CU life

insurance

• NJI is pioneer in health insurance

• It has flexible and customized plans

• AA rating by PACRA & JCR_VIS

 Key players
• Universal Insurance Company

• Entered the market in 1960 & is among top ten in

Pak presently

• Premium portfolio of Rs.550 million in 07

• UIC underwrites marine, fire, motor, personal,

accident, travel insurance, workmen, compensation,
health insurance etc
 Key players
• Universal Insurance Company

• It has a sound reinsurance arrangements with

world renowned Hanover Reinsurance Company
West Germany & more

• Due to this it is able to underwrite risks of heavy

magnitude.
 Key players
Adam Jee Insurance Company

• Incorporated as public listed company on Sept.

28, 1980

• Registered with CDC of Pak LTD

• Started with paid up capital of Rs. 2.5 million &

current paid up capital is of Rs. 1.022 billion
 Key players
Adam Jee Insurance Company

• Declared as 2nd best Insurance Comp in Asia by

Euro money

• Best export award from FPCCI 18 times

• Top comp. award by KSE 17 times

 Key players

Adam Jee Insurance Company

• MCB acquired management rights in 2004

• Recognized as one of the best managed

Insurance Company between Vienna & Taipei
 Key players

AdamJee Insurance Company

• Company covers personal insurance, motor

insurance, travel insurance, corporate
insurance, home insurance etc
 Key players
Pak Kuwait Takaful Company

• it is the first Islamic Takaful Co in Pak

• Initial paid up capital of Rs. 250 million and an

authorized capital of Rs 500 million

• Pak Kuwait investment comp, Meezan Bank and

Saudi Pak are local share holders.
 ALICO Pakistan
• Incorporated in Wilmington

• Started its operations in Pakistan in 1995

• It’s the first foreign life insurance company to enter

in Pakistan

• Initial paid up capital of Rs. 130 million

 ALICO Pakistan

• Largest capitalized with paid up capital of Rs.

325 million

• It is the only Multi National life Insurance

Company in Pakistan.