Prime life insurance


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Assignment, Risk Management, BBA-BI 4th semester, Ace Institute of Management

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Prime life insurance

  1. 1. Risk, Risk Management and InsuranceGroup Report on Prime Life Insurance
  2. 2. Group Members• Chhitiz Shrestha• Niraj Taujale• Raj Shrestha• Sheeba Maskay• Zhang Peng
  3. 3. Insurance in the Nepalese Context• In the current scenario insurance business is playing vital role of financing losses• Over the last decade, Nepalese insurance industry has undergone a substantial change, from being the domain of nationalized players to attracting private sector companies• As the industry has changed, so too has the important aspects like customer- provider relationship
  4. 4. Insurance in the Nepalese Context• In the last fiscal year, different insurance companies registered a total transaction of Rs 14.4 billion• Non-life insurance saw a transaction of Rs 6.5 billion• Life insurance saw a transaction of Rs 8.9 billion• 16 companies are providing non-life insurance service while eight companies are providing life insurance service
  5. 5. Insurance in the Nepalese Context• Transactions in billions 10 8.9 8 6.5 6 Life 4 4.4 Non- Life 2 0 2009 2010
  6. 6. Insurance in the Nepalese Context• Yet only as much as 8% of people are insured.• The remaining 92% of people still do not have access to insurance• It is mainly due to unexplored rural areas which lack access to the likes of insurance 8% Insured Uninsured 92%
  7. 7. Prime Life Insurance at a Glance• Came into existence in June 2007• Share holding constitutes of 70 percent promoters holding and 30 percent general public• Laxmi Bank Limited, is one of the major promoters with 15 percent stake• Unprecedented achievement in the Nepalese Life Insurance Industry by recording net profit of NPR 56.75 million in the first full year operation• Recorded more than 370,566 policies in just 3 years of operation
  8. 8. Prime Life Insurance at a Glance• Collected premium amounting to NPR 1,262 Million• Increased its distribution network by opening 85 network points of representations all over Nepal
  9. 9. Products offered by Prime Life• PrimeLife Pension Plan (Bhawisya Britti Bhuktani Jeevan Beema)• PrimeLife Saral Jivan (Endowment Plan with profits)• PrimeLife Dhan Sagar (Money Back Policy with profits)• PrimeLife Nari Jeewan Beema
  10. 10. Products offered by Prime Life• PrimeLife Swarnim(Child Endowment with profits)• PrimeLife Jivan Surakshya (Whole Life Endowment with profits)• PrimeLife Karja Surakshyan (Mortgage Redemption Insurance)• PrimeLife Baideshek Rozgar (Foreign Employment Policy)
  11. 11. Insurance Marketing System• Mainly dependent upon mass advertising – The likes of Kollywood Superstar Mr. Rajesh Hamal is used to market the insurance product• Vast use of Call centers as well• Major corporations insure all their staffs at once
  12. 12. Insurance Marketing System• Besides that, the normal use of Insurance Agents as well• Others come to the insurance office themselves, for specific kind of insurance
  13. 13. Insurance Process
  14. 14. Insurance Imperfections• The Principle of utmost good faith – It is generally applied, yet in case of minute necessities, it is avoided. – Eg. The place form where the man who is insured is not examined with much vigor as what caused his accident.• Agent/Staff Manipulation – Although the company claims that the customers of another company is off limits, however, if it is in the companys interest it could attract staffs and agents from another companies
  15. 15. Insurance Imperfections• Difference in risk calculation – Although not an imperfection, risk is calculated separately for separate individual – Eg. A person with AIDS yet good financial backing and healthy habits may have to pay less premium then a person with AIDS but insecure finance and unhealthy habits. – Thus, risk for each person is calculated uniquely.
  16. 16. Claim Settlement Process• A claim is the payment made by the insurer to the insured or claimant on the occurrence of the event specified in the contract, in return for the premiums paid for the insured.• Based on information, Assessment and Decision• While asking for requirements the company considers – The Sum at risk – Cause – Circumstances of claim
  17. 17. Claim Settlement Process• Eg. For accidental death, specific proofs such as Post Mortem and Police Report are required whereas for death due to illness, the Company calls for records from hospital, test reports, etc.• The nominee (in case of minor nominee) last recorded under the Policy in case of Policy on own life.• The proposer in case the Policy is not on own life.• Assignee in case the Policy was assigned.• Life Assured himself in case of policy on own life for living benefit claims (Eg Critical Illness rider)
  18. 18. Calculation of Premium• Based on Occupation – People with riskier jobs pay more amount of premium• Based on Financial hazard – Risk also depends upon jobs a person undertakes and his commission• Based on Moral Hazard – Primarily based on morals and motives of people – People in various regions have to face various risks thus, risk also changes
  19. 19. Calculation of Premium
  20. 20. Scope of Re-insurance• Re-insurance still lacks a proper scope in Nepal• It is mainly due to: – Poor Economy of our country – Unstable political condition – Lack of developmental activities – Lack of investment• Hence a re-insurance company cannot sustain in Nepal.• Finally, an economy like ours would not be able to sustain a collapse of a re-insurance company• So, all re-insurance is done abroad
  21. 21. The Role of the Underwriter• Studying various insurance proposals;• Gathering and assessing background information;• Calculating possible risk and deciding how much individuals or organizations should pay for insurance (the premium);• Deciding whether the risk should be shared with a re-insurer;
  22. 22. The Role of the Underwriter• Computing results for appropriate premiums using actuarial information, other statistics and own judgment;• Visiting brokers or potential customers and preparing quotes;• Writing policies;• Keeping detailed records of policies underwritten and decisions made.
  23. 23. The Role of the Underwriter• Liaising with specialists, such as surveyors or doctors, for risk assessment;• Gathering information and various types of reports (e.g. medical records) from specialists;• Specifying conditions to be imposed on different types of policies, for example, asking that a property owner install a security alarm;• Negotiating with brokers and drawing up contracts;
  24. 24. The End
  25. 25. Special Thanks• Mr. Subin Shrestha (RRMI Instructor)• Mr. Kishor Lamichane (Underwriter - PLI)