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A Report On: Insurance Company

Prepared For: Sir Mumtaz Hassan

Prepared By: Muhammad Waseem

Roll No: 1204136

DATED: 9th Nov, 2015

A CKNOWLEDGEMENT
At first instant, humbly we bow our head with all the
feeling of our heart and soul before the Almighty Allah,
the beneficent, the omniscient who bestowed us with all
the mental abilities to work out this project.
The report being submitted today is a result of collective
effort. There are innumerous helping hands behind who
have guided us on our way. Writing this report appeared
to be a great experience to us. It added a lot to our
knowledge. This report is one of our memorable
experiences in student life. Though words are inadequate
in offering thanks to our teacher but we owe our profound
gratitude to Sir Mumtaz for stimulating our creative
abilities by assigning this project to us and for his able
guidance and useful suggestions, which helped us in
completing the project in time. Whatever we have learnt
from him and this report has put indelible impression on
our minds and it is our conviction that this learning
experience will always be a source of help in our practical
life and professional career.
Finally, yet importantly, we would like to express our
heartfelt thanks to our beloved parents, for cooperation,
help, kindness and blessings, our family and friends for

their help and wishes for the successful completion of the

work.

Contents
WHAT INSURANCE IS................................................................................................... 5
CLASSES OF INSURANCE............................................................................................ 5
GENERAL INSURANCE............................................................................................. 6
LIFE ASSURANCE.................................................................................................... 6
HISTORY OF EFU......................................................................................................... 7
INTRODUCTION OF EFU GENERAL...............................................................................8
VISION STATEMENT..................................................................................................... 9
MISSION STATEMENT.................................................................................................. 9
OBJECTIVES................................................................................................................ 9
FINANCIAL STATEMENT............................................................................................. 10
ACCOUNTS DEPARTMENT......................................................................................... 11
FUNCTIONS OF ACCOUNTING DEPARTMENT........................................................11
Making Payments.................................................................................................. 11
Payroll................................................................................................................. 11
Receiving Payments............................................................................................... 11
SERVICES OF INSURANCE......................................................................................... 13
MARINE INSURANCE............................................................................................. 13
AVIATION INSURANCE.......................................................................................... 13
HOME INSURANCE................................................................................................ 14
SHOP INSURANCE................................................................................................. 14
FIRE INSURANCE................................................................................................... 15
TYPES OF POLICIES................................................................................................... 15
RECOMMENDATION................................................................................................... 17
REFRENCES.............................................................................................................. 17

WHAT INSURANCE IS
A promise of compensation for specific potential future losses in exchange for a
periodic payment. Insurance is designed to protect the financial well-being of an
individual, company or other entity in the case of unexpected loss. Some forms of
insurance are required by law, while others are optional. Agreeing to the terms of an
insurance policy creates a contract 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 of a specific event. In
most cases, the policy holder pays part of the loss (called the deductible), and the
insurer pays the rest. Examples include car insurance, health insurance, disability
insurance, life insurance, and business insurance.

The 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 case of a financial (personal) loss. The
insured receives a contract, called the insurance policy, which details the conditions
and circumstances under which the insured will be financially compensated.

CLASSES OF INSURANCE
The insurance is mainly divided in following two major classes of business.

General
Insuranc
e
Life
Assuranc
e

Insuranc
e

GENERAL INSURANCE
General insurance or non-life insurance policies, including automobile and
homeowners policies, provide payments depending on the loss from a particular
financial event. General insurance typically comprises any insurance that is not
determined to be life insurance
General insurance means managing risk against financial loss arising due to fire,
marine or miscellaneous events as a result of contingencies, which may or may not
occur. General Insurance means to Cover the risk of the financial loss from any
natural calamities viz. Flood, Fire, Earthquake, Burglary, etc.. i.e. the events which
are beyond the control of the owner of the goods for the things having insurable
interest with the utmost good faith by declaring the facts about the circumstances
and the products by paying the stipulated sum , a premium and not having a motive
of making profit from the insurance contract.
Some of the General Rules:
1. Mis-description: The insurance policy shall be void and all the premiums
paid by insured may be forfeited by the insurance company in the event of
mis-presentation or mis-declaration and/or non-disclosure of any material
facts.
2. Reasonable care: The insured shall take all reasonable steps to safeguard
the property insured against any loss or damage. Insured shall exercise
reasonable care that only competent employees are employed and shall take
all reasonable precautions to prevent all accidents and shall comply with all
statuary or other regulations .

LIFE ASSURANCE
Life assurance is a contract between the policy holder and the insurer, where the
insurer promises to pay a designated beneficiary a sum of money (the "benefits")
upon the death of the insured person. Depending on the contract, other events such
as terminal illness or critical illness may also trigger payment. In return, the policy
holder agrees to pay a stipulated amount (the "premium") at regular intervals or in
lump sums. In some countries, death expenses such as funerals are included in the
premium; however, in the United States the predominant form simply specifies a
lump sum to be paid on the insured's demise.
The value for the policy owner is the 'peace of mind' in knowing that the death of
the insured person or if he lives too long, or if he becomes disabled, will not result in
financial hardship.
Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into the
contract to limit the liability of the insurer; common examples are claims relating to
suicide, fraud, war, riot and civil commotion.

HISTORY OF EFU
In the early 30s of the 20th century, under the inspiration of the Quaid-e-Azam
Mohammad Ali Jinnah, there began to appear signs of economic renaissance of the
Muslims of India. Shipping, Airline, Banking and Insurance companies made their
debut.
In 1932, Mr. Ghulam Mohammad, a far sighted man, established Eastern Federal
Union Insurance Company (EFU) with financial assistance from the Aga Khan III and
the Nawab of Bhopal. Mr. Abdur Rehman Siddiqui became the founder chairman.
The company was originally registered at Kolkata and operated in India (undivided)
and Burma.
In 1947, on the birth of Pakistan, EFU found a new home in a new country. In
Pakistan, EFU rapidly established itself as a progressive and innovative insurer. It
gave the emerging insurance industry the leadership, the manpower and the drive
needed to grow in a situation where at one time, three-fourths of insurance was
held by foreign companies.
By 1961, EFU had become the flag bearer of Pakistan's insurance industry on the
world stage, and the largest life company in Afro-Asian countries (excluding Japan)
under the leadership of Mr. Roshen Ali Bhimjee. It remained so until 1972 when Life
Assurance business in Pakistan was nationalized. Thereafter EFU operated solely as
a General Insurance Company, and was subsequently renamed EFU General
Insurance Limited. Now EFU General is the second largest non-life insurance
company in the country and the mother company of other insurance organizations
of EFU Group.
In June 1990 the Government of Pakistan decided to allow Life Assurance business
in private sector also. On 18 November 1992, EFU Life was granted a license to
carry on life assurance business. It started operations immediately with Group Life
products and in March 1994 launched its Individual Life products. EFU entered the
field of life assurance with the focus on the changing needs of the population. The
company is committed to provide its policyholders with solutions to the problems of
today's complex and rapidly changing financial environment by introducing
innovative, and modern products.
In March 2000, Allianz Aktiengesellschaft (Allianz AG), a global leader in the
insurance industry with an active presence in 70 markets across 5 continents and
EFU Group signed a joint venture to form a new company for providing health
insurance cover to the people of Pakistan. Allianz EFU Health Insurance Limited,
approved by the Government of Pakistan, is the first specialized health insurance
provider in the country and aims to play a pivotal role in developing the health
insurance market in Pakistan.
EFU is the leading insurance group in Pakistan providing a full range of insurance
services. This includes life, health and general insurance. A pillar of EFU's strength
lies in its close and long-term (over 50 years) relationship with its main reinsurer,
Munich Re of Germany, one of the largest reinsurance companies in the world.

INTRODUCTION OF EFU GENERAL

We are in the business of providing a full range of non-life insurance products and
services customized to meet the varied needs of a wide spectrum of businesses and
industrial clients as well as individuals, providing Property, Marine/Aviation, Motor
and other Miscellaneous products. The most important aspect of our operation is
that we have created a separate Risk Management Team and an Engineering Group
who work closely with clients to identify various risk exposures and then provide
specific insurance. This helps in loss prevention and reducing the cost of premium.
Our market-driven team of inspired and technically qualified insurance personnel,
specializing in civil, mechanical, metallurgy, electronics and having overseas
linkages, is on-call for necessary professional advice at all times. It is our policy not
only to provide protection and risk reduction but help clients develop preventive
capabilities to avert major perils and calamities. Over the years we have developed
a full range of insurance services for large infrastructure projects including the areas
of oil/gas exploration field.
We are fully equipped with technical, marketing and managerial skills supported by
reinsurance arrangements with a number of European firms of international repute
to cater for all classes of specialized insurance and provide customer service of the
highest quality. Our clients include both large and medium sized organizations in all
sectors of the economy. We are committed to new product development and
innovation, legendary customer service and a promise that everything we do, we do
from the hear
The Company was incorporated on September 2, 1932 and is engaged in non-life
insurance business comprising of Property, Marine/Aviation, Motor and other
Miscellaneous products.
The shares of the company are quoted on Karachi and Lahore Stock Exchanges of
Pakistan.
The Principal place of business is located at EFU House, M.A. Jinnah Road, Karachi,
Pakistan.
EFU is one of the few Pakistani organizations run totally by professional
management and highly motivated field force.
Policies accepted by all institutions in the country.
Client-base comprises of many leading business houses and multinational
companies.
EFU gave the emerging insurance industry the leadership, the manpower and the
drive needed to grow in a situation where at one time, three-fourths of insurance
was held by foreign companies.
The company has also taken the initiative to transform its Enterprise Information
System with an end to end solution comprising Oracle's latest technological
software and hardware as part of the infrastructure solution to meet Company's
projected Online Transaction Processing needs, keeping in view both the present

requirements and future needs such as Data Warehouse, business intelligence and
Customer Relationship Management System.

VISION STATEMENT
Our vision is to be the first choice company for our customers, shareholders and
employees. To achieve this we will be driven by an obsession to be better than the
best in a continuous journey, not a destination.
At EFU first choice means a sustained commitment to meet and exceed stakeholder
expectations. A will to go the Extra Mile to delight our customers with products
and services that exceed their expectations

MISSION STATEMENT
We will manage our affairs through modern technology, collective wisdom and
institutionalized leadership. We will be a respected, cultured and an educated
company with a strong market position. Together with our customers, reinsurers and
employees we will achieve world class quality standards through continuous quality
improvement. Achieve zero defects in everything we do.
We will do good business, with good clients and of the highest integrity. We will not
compromise our principles and we will like to be known as a responsible corporate
citizen aware of our obligation to the Government and the society we serve.

OBJECTIVES
Retain leadership position in the market
Explore opportunities by introducing new products and diversifying current product
portfolio
Pursue continuous improvement and technological advancement
Enhance corporate capabilities and motivation through skill enhancement,
management development and reward programs

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Profit and Loss Account

For the year ended 31 December 2014

Sustained Success

Rupees
000

Note

Fire &
property
damage

Marine,
aviation &
transport

Motor

Others

20

1 869 012

1 447 100

2 812
952

403 288

21

( 555 884 ) ( 615 644 ) ( 1 560 770 ) ( 244 151 )

( 701
( 392 499 ) ( 303 896 )
328 )
( 84 692 )
( 248
( 356 854 ) ( 235 510 )
684 )
80 538

Revenue account
Net premium revenue
Net claims

Treaty

Aggregate
2014

Aggregate
2013

6 532 352

6 341 517

3 424

( 2 973 025 ) ( 3 406 415 )

( 1 482 415 ) ( 1 374 718 )

( 760 510 )

3 424

1 316 402

771 848

Investment income

914 981

771 958

Rental income

118 699

101 037

Profit on deposits

114 692

113 299

Management expenses
Net commission
Underwriting result

563 775

Other income

23

Share of profit of an associate

General and administration
expenses

13.1.1

292 050

302 170

154 983

24

( 788 536 )

30 981

22 876

404 436

398 562

( 591 783 )
( 46 168 )
945 838

( 524 246 )
( 32
458 )
851 028

2 262 240
( 433 189 )

1 622 876
( 230 644 )

Profit after tax

Profit and loss appropriation
account
Balance at commencement of the
year

1 829 051

1 392 232

1 645 027

1 518 262

Profit after tax for the year

1 829 051

1 392 232

34 119

9 533

Workers welfare fund

Profit before tax

Provision for taxation

25

Other comprehensive income

Final dividend for the year 2013 Rs. 4.00 per share (2012: Rs. 4.00 per
share)
Issuance of bonus shares for the year 2013 Rs. 2.8 (28 %) per share (2012:
Nil)
Interim dividend for the year 2014 Re. 1.00 per share (2013: Re. 1.00 per
share)

( 500 000 )
( 350 000 )

Transfer to general reserve

Balance unappropriated profit at end of the
year

( 500 000 )

( 160 000 )

( 125 000 )

( 500 000 )

( 650 000 )

1 998 197

1 645 027
Restated

Earnings per share - basic and

diluted

26

(Rupees)

11

11.43

8.70

FINANCIAL STATEMENT
ACCOUNTS DEPARTMENT
It is all the more necessary for an organization or a concern to keep proper
accounts. At the end of the year the true result of the economic activities of a
concern must be made available otherwise it will not be possible to run the concern.
In case of a business concern the profit or loss at the end of a year must be
ascertained, because, the amount of profit must be adequate in relation to that of
investment made in the business. If it is not so or if there is a loss, it is an indication
of some defects existing somewhere in the management of the business. All such
defects need to be detected and analyzed and appropriate measures taken for their
rectification. But it is only possible, if proper books of accounts are maintained in
the business concern. So, the importance of bookkeeping to a business is the same
as that of fresh air to a man to exist. Without bookkeeping records a business would
meet death, though not instantly, but in a short time.

FUNCTIONS OF ACCOUNTING DEPARTMENT

The function of an accounting department is to look after the finances of a company.
This can be anything from paying bills to making sure that the employees that work
for the company get paid.

Making Payments
Making sure that all bills and claims are paid by the company, on time and also at
the least cost possible .If there is a discount for paying quickly, the accounts
department will usually pay the bills as soon as possible so that the company
spends as little money as they possibly can. They are responsible for all outgoing
payments and making sure that what they are paying is correct.

Payroll
The accounts department have to ensure that the employees are all paid correctly
and on time. They also have to make sure that all of the employees are paying the
right amount of tax and that they have not made any mistakes with tax brackets
and government payments on behalf of the employees.

Receiving Payments
The accounting department must also receive payments and make sure that these
are all processed correctly. These will all be payments for the services or products
the company has provided and they must ensure that they have paid all relevant
tax. There will also be an element of chasing up payments and making sure that all
of the payments are received when they should be.

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SERVICES OF INSURANCE
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. Thats why
"Marine Insurance is said to be Mother of all Insurances.
At EFU General Insurance two major types of Marine Insurances are issued.

MARINE CARGO
In Marine Insurance coverage is provided for goods in transit for both Import and
Export and the mode of conveyances on waterways, air and land routes Marine
Cargo Insurance is divided mainly into three segments

Import
The goods are covered from warehouse to warehouse the contract is usually on C&F
and CIF basis.

Export
The goods are covered from warehouse to warehouse. The contracts can be CIF and
FOB basis.

Inland Transit
The goods are covered from anywhere in Pakistan to anywhere in Pakistan.
The covers with respect to above segments are granted as per London Institute
Cargo Clauses A, B & C.
Whereas clause A provides widest and most comprehensive cover while clause C
provides the narrowest scope of cover.

AVIATION INSURANCE
No one will ever know when mankind first tried to fly, but it is clear that man envied
the gift given by nature to the animal kingdom, that is, the ability to fly. Very large
sums are invested in modern aircraft and their operation. The largest modern
airliners cost up to Pak Rupees 14 billion each and may carry over 500 passengers
whose collective worth, if compensation for death or injury has to assessed, may
run to a further Pak Rupees 50 billion. Even a small private aircraft may be the
cause of a mid-air collision with similar financial consequences. The failure of a
component manufactured by a small company may result in the loss of a fully
loaded airliner. Because such catastrophic loss may arise it is normal for aviation
risks to be excluded from many kinds of general insurance policy.

BUYERS OF AVIATION INSURANCE

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Commercial Aircraft Operators

Corporate and Business Aircraft Operators
Aerial Work and Air Taxi Operators
Private Owners and Flying Clubs
Air-Craft Manufacturers
Owners and Operators of Air-Ports, Hangers
Aircrew
Passengers
Shippers Of Goods By Air
Lessors (Banks, Financial Institutions)
Hang Gliders
Conventional Gliders, Balloons and Hovercraft

HOME INSURANCE
Safety of home is a big challenge in the
present
circumstances
and if things go wrong, like burglary or
fire - it is important to
have right insurance. With EFUS HOME INSURANCE PLUS you can be sure that your
most important insurance needs are automatically covered without any hidden
notes.

PROPERTY IS INSURED AGAINST?

Home Insurance Plus protects against loss/damage caused by:
Fire, explosion (including explosion of domestic appliances like geyser and stoves)
lightning, thunderbolt, earthquake
Flood, typhoon but excluding rain damage except when occurring during or
immediately after typhoon
Impact by road vehicle
Personal accident cover

SHOP INSURANCE
EFU, being INNOVATORS of world class quality
introduce SHOP INSURANCE cover. Under this
building and contents or just building or
plate glass are protected against the following
Fire, lightning, thunderbolt and short circuit.
Malicious damage.
Explosion.
Terrorism.
Impact by any road vehicle.
Atmospheric disturbance (flood, cyclone and typhoon).
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insurance
products;
policy your shop (both
contents), neon sign &
perils:

Earthquake.
In addition to the above traditional risks, following are special features of our policy:

FIRE INSURANCE
EFU Insurance writes a portfolio
comprising a broad spread of quality
business relating to industrial, commercial and service activities, including
transportation, oil production, manufacturing, engineering, banking, and other
miscellaneous services. The business written ranges from simple commercial
property risks to the largest and most sophisticated industrial and energy risks.

CLIENT FOCUS
The team of EFU Insurance claims and business administration specialist ensure
that client's affairs receive immediate and responsive attention, using sophisticated
management systems based on the latest information and communication
technology. Providing expert advice on the interpretation and consequences of
contractual obligations, together with the efficient handling and prompt settlement
of claims, underlines the dedication of EFU Insurance to provide the utmost quality
of service to clients and a commitment to develop long-term and mutually beneficial
relationships with our clients. EFU takes a proactive role in developing innovative
solutions, which meet the specific requirements of its clients.

TYPES OF POLICIES
Property policies come in three basic types; package, combined and single.
Example of package policies is that of a household policy (domestic) and a
shopkeeper policy (commercial).
The package policy contains a number of different sections e.g. fire, accidental
damage, glass, theft, third party liability, employers liability, goods in transit,
money, and the insured usually buys the policy as a whole, although small
modifications can be made if required. The cover, limits, and sums insured are
standard for each policy issued to the same trade, or section of the market for
which it is designed.
A combined policy is one where separate sections are brought together to create a
policy which is specific to the needs of the organization insuring. These policies are
usually bound by a front and back cover.
The insured can elect to have particular sections included within the policy, which is
tailored specifically client by client; i.e. one insured may choose, fire, business
interruption, theft and glass coverage, whereas another client may choose fire,
theft, glass, money, goods in transit and frozen food coverage, because this would
be more particular to his need.

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The single policy on the other hand is one where only one type of cover is provided
such as fire policy or a theft policy; single policies are however, becoming rarer
since the combined policy can be adapted to suit most needs of an organization.

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RECOMMENDATION
Mostly insurance companies are endeavoring to bring to its customers new and
improved products and services that provide efficient and effective solutions such
as web-based e-insurance company allows its customers to access its insurance
services via internet. Corporate customers can efficiently conduct their day-to-day
insurance covers claim information, current status of the claim, rate of premium of
different risks and much other information as they required via an automated,
versatile and a straight through processing platform's would like to recommend
Askari insurance company to provide this facility to their customers as well.
There should be central complaint cell in company in order to reduce the peoples
complaints and foster the ratio of productivity.

REFRENCES
www.google.com

www.smedia.org
www.wikipedia.org
www.efuinsurance.com
http://www.investopedia.com

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