NAME: FAIZAN AHMED

FATHER NAME: SIRAJ UDDIN

CLASS: M.COM (INSURANCE)
COUSRE: ORGANIZATION OF INSURANCE BUSINESS

ORGANIZATIONAL STRUCTURE
An organizational structure defines the scope of acceptable behavior within an organization, its
lines of authority and accountability, and to some extent the organization's relationship with
its external environment. More specifically, it shows the pattern or arrangement of jobs and
groups of jobs within an organization and yet it is more than an organizational chart. The
organizational structure pertains to both reporting and operational relationships, provided
they have some degree of permanence. The individual elements of an organizational
structure typically include a variety of components that one may usefully see as building
blocks:

FUNCTIONAL
A functional organizational structure, also called a bureaucratic organizational structure, divides
the company based on specialty. For example, under this type of organizational structure, you
would assign separate divisions for marketing, accounting and sales.

On the one hand, this type of organizational structure benefits from having individuals entirely
dedicated to one function. In some cases, there can be cost savings and efficiency gains in
combining functions in this way. However, this type of organizational structure is prone to
conflict. It can be difficult to facilitate strong lines of communication between functional
departments; if departments are in separate locations, actual communication can be difficult, as
can understanding the needs of the other department.

DIVISIONAL

Companies also may be structured according to projects or products. This type of organizational
structure is called divisional structure and is common in environments where projects, products
or product lines are governed independently of each other.

A divisional structure can make it easier for a company to respond to market changes. Also,
within the division, communication is easier and team identification is encouraged. On the
downside, work can become inefficient as some efforts are duplicated. There also can be conflict
between divisions, especially if one is more successful than another.

MATRIX
The matrix organizational structure combines the functional and additional organizational
structure types. There are project teams, bringing skilled individuals together from across the
organization, but there are still divisions. As such, a person has two bosses: the division manager
and the project manager.

In this organizational structure, projects benefit from having cooperation across the company in
that the best and the brightest in the company can weigh in on projects they otherwise may not
have access to. Further, all departments can have a voice in the production process, from the
actual fabrication of the product to its marketing and sales.

CLAIM DEPARTMENT
It is when the policyholder needs to make a claim that he value of the cover and the claims
service is put to the test. It is, therefore, no surprise that the claims department has been
describing as the shop window of an insurance company.
Whilst motor insurance, particularly private motor is old largely by price, nonetheless and does
effect a policyholders decision as to whether they renew with their current insurance following
submission of a claim. The claims department must balance the necessity to provide a high
degree of service with the requirement to be satisfied that the claims presented are valid. Once
their validity is proven, then the next stage is to quantify accurately each claim. The role of the
claims department is to:

Indemnity the policyholder in accordance with cover purchased.

Ensure that only valid claims are paid.

Provide a fast, fair, and efficient claims service.

Deal with third party claims whilst protecting the policy holders interests and

Protect the fund of premiums against overpayments, fraud and expenses incurred due to
inefficient claims handling processes.

CLAIM PROCESS
Claim process varies according to the:

Class of business

The type of cover

The amount of the claim

Whether it is a personal or commercial risk insured

CLAIM REVIEW
This involves the analysis of the claim by the insurer in the light of such things as:

The appropriateness of the amount claimed

The personal form e.g., whether the claim contradicts earlier statements

The exact terms of the policy, which are often, open the interpretation.

Legal requirements.

Market practice

Corporate claims philosophy

RESPONSE TO CLAIMANT
The initial response from the insurer to the insured may be only an acknowledgment or
a request for further information. Depending upon this further information the
insurer must then convey their claim decision which can be one of three choices.
The initial response from the insurer to the insured may be only an acknowledgment or
a request for further information. Depending upon this further information the
insurer must then convey their claim decision which can be one of three choices.

Payment: i.e. acceptance of the claim in broad terms.

Negotiation: i.e. the offer of a lower amount than that claimed or an offer to enter into
negotiation with the insured with no amount initially named. In this situation liability is
accepted by the insurer and the quantum of the claim is the only point in dispute, or

Rejection: i.e. liability is not accepted by the insurer; the full reasons for the decision
should be state.

UNDERWRITING DEPARTMENT
The accurate rating of risk can make the difference between profit and loss for an insurer. Setting
too low a rate for particular type of motor insurance risk will result in loss for each policy written
and particularly with the advent of computer quotation systems, such bargains will be
unearthed, thus leading to a flood of similar non-profit-making business.
Conversely, a higher rate than is warranted will lead to potentially profitable business going to
a cheaper competitor. The process whereby the mar ket place will seek out and
exploit weaknesses in rating structures is known as selection and can destroy an account.
Rating is based upon experience. Firstly, there is the experience of the mark et as
a whole and secondly, and perhaps more importantly, the experience of the particular insurer.
In order to maximize the accuracy and therefore, the benefits of the latter it is essential that data
is held electronically in a format that will allow sophisticated analysis. This facilitates the use of
statistics to the rating of motor insurance risk and as a result, insurer have been more willing to
employ actuaries either in the underwriting department or, at the very least, have an actuary who
can provide input in the risk assessment process.

The underwriting department issues the policies after careful evaluation of associated risks which
comes for coverage; it is the duty of the Underwriting Department to examine the risk and take
all precautionary steps for evaluation before issuing policies / cover notes which the companys
management has determined.
The top level management has established overall underwriting plans and strategies, and the
underwriting department is responsible to follow and develop specific guidelines to cope with
the policy and strategy formed and implemented by the top level management of the
company. With board strategy and specific directives aligned, the department executes the risk
selection and risk pricing process. The department also keeps in mind all of the underwriting
elements before designing and pricing an insurance cover note.

OBJECTIVES OF UNDERWRITING DEPARTMENT

To evaluate and reduce the risk, specifically in respect of expected claims.

To provide maximum protection and better services to our clients.

To provide complete information and guidelines about the insurance to our

clients when ever required.

To ensure optimization of cost.

To develop a sound relationship with all other functioning departments of the company.

MAIN FUNCTIONS OF UNDER WRITING DEPARTMENT

The responsibility of the Underwriting Department is to examine, accept or reject the business
containing on day to day work.

First of all when any client who wants insurance policy to protect his stokes or any property, the
staff of the Underwriting Department is involved in this matter to feel the hazards which are
associated with the risks come for insured. There are two main hazards physical and moral
hazard that the underwriting department keeps in mind when issuing any property. In physical
hazards, it is important to remember that the structural condition for the insured property. If a
severe moral hazard exist, then no rate is adequate to compensate for such hazards. Decisions of
the under writing department are of two types which are as follows:

Decision on applying an insureds existing policy for a specific request for coverage.

Decision on new risk coverage.

Once the Underwriting Department has decided that a risk is acceptable, it finally
undertakes solid steps to evaluate all risks.

Then it examines the authenticity of cover notes issued by marketers. It carefully

examines the interest rates written on the cover notes according to the tariff
rates provided by the Insurance Association of Pakistan. Then identify risks associated in
each cover note and then classify as hazards or non-hazards. It also ensures all warranties
and clauses included in the cover note / policy. After this its responsibility is to examine
the parties involved in insurance (preferences is given to those cover notes and policies
where banks or financial institutions are involved.

Finally after the completion of the assessment of risks, rating procedure and warranties,
the authorized insurance policies documents are issued to the particular clients.

ACTURIAL DEPARTMENT
An actuary is a business professional who analyzes the financial consequences of risk. Actuaries
use mathematics, statistics and financial theory to study uncertain future events, especially those
of concern to insurance and pension programs. Their work requires a combination of strong
analytical skills, business knowledge and understanding of human behavior to design and
manage programs that control risks.
The Actuarial department has several divisions whose functions are to gather information,
analyze and calculate statistics, make recommendations for creation and management of new and
existing insurance products, and administer financial requirements. Rotations give associates the
opportunity to move among the different divisions and see all aspects of the department and its
functions.

Financial: Prepares monthly, quarterly and annual financial reporting on various bases
Produces long-term financial plan/forecasts and helps evaluate potential acquisition targets.

Product Development: Evaluates the profitability of new and currently marketed

products, provides supporting documentation for state filings, coordinates the implementation of
new products and features, prepares and analyzes key experience measures on a monthly basis
and communicates interest rate changes.

Testing Unit: Verifies values on admininistrative and illustration systems, implements

new products, tests production fixes and system conversions, supports policy print production,
produces manual quotes and fields requests for policy verification and/or questions regarding
calculations as supported by the various systems.

Product Drafting and State Filing: Drafts all policy and contract forms related to new
product initiatives, corporate projects and regulatory changes. Facilitates filings with state
Departments of Insurance for approval and mediates issues as necessary. Produces policy page
output and maintains changes to product specifications on currently marketed products.

Reinsurance: Administers the reinsurance of policies including payment of premium to

the reinsurer and return of death claims. Processes financial accounting, negotiates treaties with
reinsurers, produces monthly, quarterly and year-end financial reporting, prepares schedules for
annual report, fields questions from reinsurers, processes daily policy changes and monitors
system audits of reinsurance data.

AUDIT DEPARTMENT
Audit department do internal audit of transactions which occur on daily basis. Management of
any organization is responsible for ensuring that proper accounting records are kept and its assets
are safeguard. To best discharge this responsibility instituting a system of internal control is
essential to ensure that work is properly carried out by the employees. The organization then
relay on its system for the production of reliable management information and the financial
accounts , and to prevent ERROR,FRAUD AND LOSS OF ORGANIZATIONS ASSETS
actually internal audit is a part of internal control.

Internal Control:
Internal control may be defined as whole system of control, financial and otherwise, established
by the management in order to carry out the business of the organization in an ordinary manner,
safeguard its assets and secure, as far as possible .the accuracy & reliability of its records. It may
be noted that the concept of internal control goes beyond financial and accounting matters and
the custody of organization assets to include controls designed to improve operational efficiency
and adherence to organization policies.

Objects of Internal Audit

Internal audit is an independent appraisal function established within an organization to examine
and evaluate its activities as service to the organization. The object of internal audit is to assist
member of the organization is effective discharge of their responsibilities. To this end internal
auditing furnishing those with analyses, appraisal, recommendations, counsel, and information
concerning the activities are viewed.

FINANCE AND ACCOUNTS

DEPARTMENT
This department maintains the record of all the cash transactions. It prepares payroll for the
regular employees and disburses the amount. It also takes care of the fringe benefit such as
medical facilities provided to the office staff. Commission that is paid to sales representatives,
sales officers and sales managers are also calculated and paid through this department.
To keep the corporation on financial track balance sheets and income statement also prepared on
annually, monthly and weekly basis. The principal office sends annual budget to the department
and department is responsible for proper utilization of cash disbursements. The department also
send budget forecast for new budget proposal.

POLICYHOLDER & SERVICE

DEPARTMENT:
PHS department performs following functions.

Renewal or revival of policies

Alteration in the policy

Payments of death claims

Payment of maturity claims

Payment of injury claims

PERSONNEL & GENERAL SERVICE

DEPARTMENT
This division has dual functions
1. Personnel management
2. General services
This department performs following functions;

FUNCTIONS:
Personal Management

Personnel policies, motivation, incentive and implementation of service regulations

Office management development

Personnel management

Liaison with government labor relations and maintenance or office discipline including
investigation against officers and staff

MARKETING DEPARTMENT
Marketing department plays a vital role within the insurance industry. It is used to increase sales
and sustain marketplace positions for major companies and by smaller companies to build and
grow their businesses. The use of marketing can be as far-reaching as a national television
campaign to grow and sustain a major insurance company, and as localized as a business cards

and fliers used by a local insurance agent. Regardless of size, marketing tactics and strategies are
developed by all in the industry to target consumers and prospects to cover their insurance needs
for home, health, life and commercial coverage. The Marketing Department is made up of
communications professionals who specialize in creating effective, community-centered
marketing programs. Because one size doesn't fit all when it comes to marketing, the department
takes a customized approach to serving each unique client.

SALES DEPARTMENT
Sales management team is dedicated to discovering each clients needs and proposing proven
and effective solutions that work. Managers are experienced in recruiting and training dynamic
sales teams, implementing effective marketing initiatives, and developing successful and thriving
preneed programs.

HUMAN RESOURCES DEPARTMENT

Human Resources Department ensures that the company finds the right people for the job.
Human Resources helps the company hire, train, and develop employees, becoming a source of
motivation and encouragement to employees in both their professional and personal lives.

MIS DEPARTMENT
The MIS Department is dedicated to providing cutting-edge technology solutions for our staff
and our funeral home clients. Because the uses of technology are more prevalent and necessary
in business today, the MIS team works to build high-traffic, profitable Web sites for clients,

time-saving software programs and in-house upgrades to systems so that we are continually
improving our level of service. MIS also provides extraordinary service and support to
employees in the various areas of technology services.