Submitted To:

Miss. Nadia Nazeer.

Submitted By:
Rehan Ejaz.
Huma Andleeb.
H M Bilal.
Atif Rafique.
Dilshad Ahmed.
Unair Safeer.
Fariya Asghar.

MBA ll 2014 - 06
MBA ll 2014 - 14
MBA ll 2014 - 16
MBA ll 2014 - 26
MBA ll 2014 -30
MBA ll 2014 - 34
MBA ll 2014 - 42

Bahauddin Zakariya University, Multan

2/27/2015

Table of Contents
1. What is Insurance?............................................................................................................................03
2. Origin of Insurance. 04
3. Types of Insurance..04

4.
5.
6.

7.
8.

9.
10.
11.
12.

13.
14.

3.1 General Insurance.04

3.2 Life Insurance....04
Insurance in Pakistan....05
Company profile05
Jubilee General Insurance Products...08
6.1
Property Insurance.08
6.2
Engineering Insurance..08
6.3
Marine Insurance....09
6.4
Business Fleet.09
6.5
Oil and Energy09
6.6
Health Insurance..10
6.7
Crop and Livestock..10
6.8
Liability Insurance ..10
6.9
Bonds11
6.10 Financial Line..11
6.11 Specialized Insurance...11
6.12 Miscellaneous Insurance.12
Rate Making.13
Selection of Agents....14
8.1 Requirements..14
8.2 Training Courses....14
8.3 Job Description...14
Targeting of Customers15
Further Investment.16
Reinsurance..17
Performance Analysis18
12.1 Jubilee General Insurance Company Limited...18
12.2 Market share in Pakistan20
12.3 Comparison with others Asians Countries...21
Conclusion and Recommendations.22
References...23

Executive Summery
Jubilee General Insurance Company Limited, established in 1953, is one of the most reputed and
brightest names in the insurance sector. Jubilee General is listed on Karachi as well as Lahore
stock exchanges. Major shareholders include, Aga Khan Hospital and Medical College
Foundation, Habib Bank Limited, Aga Khan Fund for Economic Development and Hashoo
Group.
Sustained growth over sixty years has secured Jubilee General a place among the Big Three
Pakistani insurer in the term of gross direct premium and finance base. Jubilee General is the
highest rated general insurance company in Pakistan with an Insurer Financial Strength Rating of
AA+ with Stable Outlook assigned by both the rating agencies of Pakistan i-e JCR-VIS and
PACRA. The AA+ with Stable Outlook takes into account financial strength of the company
as demonstrated by its strong capitalizing and liquidity indicators. It also denotes a very capacity
of the company to meet policyholder and contract obligations.

Insurance industry in Pakistan is growing with the passage of time and Jubilee is also growing as
compare to its competitors because in 2005 Jubilee was 3rd largest private insurance company in
Pakistan and in 2013 it became 2nd largest private insurance company in Pakistan.

1. What is Insurance?
A promise of compensation of specific future losses in exchange for a
p e r i o d i c payment. Insurance is designed to protect the financial well-being of an individual,
company or other entity in the case of up expected loss. Some forms of insurance are required by
law, w h i l e o t h e r i s o p t i o n a l . A g r e e i n g t o t h e t e r m s o f a n i n s u r a n c e p o l i c y
c r e a t e s c o n t r a c t 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 o f a s p e c i f i c e v e n t . I n m o s t c a s e s , t h e p o l i c y h o l d e r
p a ys p a r t o f t h e l o s s ( c a l l e d t h e deductible) and the insurer pays the rest.
Insurance is a system by which a risk is transferred by a person,
b u s i n e s s , o r organization to an insurance company, which reimburses the insured for
covered losses and provides for sharing the costs of losses among all insured. Risk,
transfer, and sharing are vital elements of insurance.
Insurance people are no longer in the business of forming fire bridges to put out fires at
members homes, as they did centuries ago. But the idea of combining resources to protect
against loss is still basic to the insurance business.
Insurance companies are new financial institutions. They sell insurance policies
to p r o t e c t

people

against

financial

hardship

caused

by

accidental

l o s s e s . T h e i n s u r a n c e company is an insurer. A person, business, or organization that is

covered, or insured by an insurance policy is referred to as an insured.
The purchase an insurance policy and become an insured, an insurance buyer pays a
fee, call an insurance premium, to the insurance company. To keep the insurance
policy in effect, the insured pays more premiums at periodic intervals.
The insurance company pools these premiums to form a fund from which
t h o s e insured who suffer losses, unfortunate victims of fire, vehicle accidents, earthquakes, and
so on can be reimbursed. Each insured pays a relatively small amount (the premium) into
the pool. These relatively small premiums, added together, develop a sizeable fund from
which payments are made to compensate the insured who have losses. In this way,
for responsible cost, each insured can be sure that a loss will not cause undue financial hardship.

2. Origin of Insurance
The first methods of transferring or distributing risk in a monetary economy, were practiced
by Chinese and Babylonian traders in the 3rd and 2nd millennia BC, respectively. Chinese
merchants travelling treacherous river rapids would redistribute their wares across many vessels
to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which
was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early
Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would
pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should
the shipment be stolen or lost at sea.
At some point in the 1st millennium BC, the inhabitants of Rhodes created the 'general average'.
This allowed groups of merchants to pay to insure their goods being shipped together. The
collected premiums would be used to reimburse any merchant whose goods were jettisoned
during transport, whether to storm or sinkage.
3. Types of Insurance
Different Insurance Companies offer many types of insurance policies according to
the market demand and according to the companys financial situation as well. So here some of
the most known insurance policies are discussed as follows: General Insurance (Non-Life)
Life Insurance
3.1 General Insurance
General insurance is also called property and casualty insurance, property
a n d liability insurance or Non-Life insurance. In purchasing non-life insurance,
the

customer

is buying financial

protection against a specific

insurable

event,

such as industrial injury. Policies are typically short term (one year) indemnity (i.e. the
customer will be compensated in an agreed manner) contracts. Normally, there is no investment
element or expectation of financial return.
3.2 Life insurance
Life insurance is a contract between an insured (insurance policy holder) and an insurer or
assurer, where the insurer promises to pay a designated beneficiary a sum of money (the
benefits) in exchange for a premium, upon the death of the insured person. Depending on the
contract, other events such as terminal illness or critical illness can also trigger payment.
4

4. Insurance in Pakistan
At the time of independence, the country had 5 domestic and 77 foreign insurance
c o m p a n i e s . Insurance in Pakistan is regulated under the Insurance Ordinance, 2000. In the
past few years, it has transformed into a developing and fastly growing market that is generally
divided into three components, Life Insurance, General Insurance and Health Insurance.
The Government of Pakistan established the Department of Insurance in April 1948 as a
department of the Ministry of Commerce, the aim of this department is to take care of affairs
related to the insurance industry. Out of the 54% that Pakistan's service sector contributes to the
national GDP, insurance, along with transport, storage, communications and finance occupy 24%
of the sector.

5. Company Profile
Jubilee General Insurance Company Limited, established in 1953, is one of the most reputed and
brightest names in the insurance sector. Sustained growth over sixty years has secured Jubilee
General a place among the Big Three Pakistani insurer in the term of gross direct premium and
finance base.
Jubilee General is listed on Karachi as well as Lahore stock exchanges. Major shareholders
include, Aga Khan Hospital and Medical College Foundation, Habib Bank Limited, Aga Khan
Fund for Economic Development and Hashoo Group. Jubilee General, with its Head Office in
Karachi, has an extensive and dynamic branch network in all major cities and towns of Pakistan
that guarantees prompt service at the customers doorstep.
Jubilee General is the highest rated general insurance company in Pakistan with an Insurer
Financial Strength Rating of AA+ with Stable Outlook assigned by both the rating agencies
of Pakistan i-e JCR-VIS and PACRA. The AA+ with Stable Outlook takes into account
financial strength of the company as demonstrated by its strong capitalizing and liquidity
indicators. It also denotes a very capacity of the company to meet policyholder and contract
obligations.
Jubilee General has also been accorded the Financial Strength Rating of B++ (good) and
insures credit rating of BBB by A.M. Best which is highest rating assigned by an International
Rating Agency to General Insurance Company in Pakistan. According to A.M. Best the rating
reflects Jubilee Generals strong risk adjusted capitalization, solid business profile with in
Pakistan and good track record of operating performance and has developed good procedures in
5

assessing, measuring and mitigating the key risk associated with the Companys business. A.M.
Best Company is the worlds oldest and most authoritative insurance rating and information
source.
During the last eight years Jubilee General has grown at double the industry average growth rate.
In 2003, Jubilee General became the first Pakistani insurance company to acquire a foreign
company when it took over the Pakistan operations of Commercial general Union.
The company pride itself in its long-standing reinsurance arrangements and relationships with
internationally renowned reinsures such as Swiss Re, Lloyds, Hannover Re, Asia Capital Re and
Korean re. The company is also supported by internationally acclaimed reinsurance brokers
including AON Group, Willis, Marsh, Howden and UIB.
With a broad spectrum of service available, Jubilee Generals client-base comprises prominent
national and multinational corporations operating in Pharmaceutical, Chemical, Textile, Cement,
Services (Hospitals & Hotels), Oil & energy, Manufacturing, FMCG, Engineering, Banking and
Financial sectors.
At Jubilee General, diversity is maintained through underwriting all classes of general insurance
including Fire, Marine, Motor, Engineering, Health and General Accident. Jubilee General not
only offer wide risk coverage, but also provides related risk management services delivered by
highly qualified and experienced risk managers. Jubilee General has developed unique and
innovative insurance solution to meet the growing consumer financing trend of the economy.
From auto financing to personal loans, mortgages to plastic cards, and trade finance to capital
investment finance, Jubilee general has the customized solutions to secure entire operations,
product range and transections of all financial institutions. With the stream of upcoming power,
engineering and infrastructure development projects on the national level, Our Engineering and
Bonds Department, comprising of the most experienced engineers in the industry, is geared to
provide technical and financial security to this vital sector.
As pioneers in Group Health Insurance, Jubilee General continues to develop new, flexible and
customized plans to suit the diverse needs of our many blue chip Pakistani companies and
multinational clients. Jubilee General has recently modified its health insurance products with
better coverage and scalable limits.
Jubilee General continues to innovate in terms of product development and distribution channels,
as well as customer service which are the corner stone of our business philosophy. In this regards
6

the company has recently ventured to put up its personal lines products on the internet by virtue
of which, Jubilee General has become the first insurer in Pakistan to offer its products online.
Already Jubilee Generals online portal boats of a variety of travel, Home, Personal Accident and
Health insurance products. More innovations in this area are expected in the near future.
The true test of the soundness of insurance coverage is the duration of client relationships. This
is proven by the fact that many valued clients have been with us for over 40 years. Clients are
satisfied knowing that Jubilee General is their best security.
Jubilee Generas business philosophy can be summed up as Customer protection, Customer
Satisfaction and Customer Trust. This is acquired largely by the ability to handle claims
effectively. The customer focus and pro-active management approach in all areas of business,
allows Jubilee General to underwrite and handle claims in an expeditious and efficient manner.

Vision
To enable people overcome uncertainty

Mission
Provide solutions to protect the future of our customers.

Core Values
Teamwork
Integrity
Excellence
Passion

Strategic Objective
To grow by excellence in service to over clients and quality of our security.

6. Insurance Products
Jubilee General Insurance Limited Offer following categories of products to their customers.
6.1 Property Insurance
Commercial property is exposed to various risks and can face losses worth millions. Jubilee
General provides its commercial clients with covers against a wide range of risks.
Coverage available against:
Fire and Allied Perils
Consequential Loss
Property All Risk
Comprehensive Machinery Insurance
Hotel Owners All Risk
Terrorism

6.2 Engineering Insurance

Jubilee General Insurance strives to provide its valued clients with the most apt array of covers
against probable adversities that can affect construction work or erection processes
Coverage available against:
Contractors All Risk
Contractors Plant & Machinery
Erection All Risk
Machinery Breakdown
Advance Loss of Profit
Electronic Equipment
Detereoration of Stock
Boiler & Pressure Vessel

6.3 Marine Insurance

With Jubilee General Insurance, its calm sailing. Recognizing the risks involved in marine
transits, we offers extensive range of covers for marine risks, including coverage for vessels and
its machinery.
Coverage available against:
Marine Cargo
Inland Transit
Marine Hull
Marine Port Package

6.4 Business Fleet

Jubilee General Insurance covers your business motor vehicles and fleets with a comprehensive
cover policy along with the option of third party liability covers, aiming to provide you with
optimum coverage best suited to your needs.
Coverage available against:
Comprehensive
Third Party

6.5 Oil and Energy

Jubilee General's long standing experience of the oil & energy sector means that both established
& new companies can take advantage of this specialist knowledge & capability.
Coverage available against:
Offshore Construction project
Onshore Construction project
Control of Well

6.6 Health Insurance

Being the pioneer of health insurance in Pakistan, Jubilee General Insurance provides unique
blend of health insurance covers to provide a peace of mind to our valued clients.
Coverage available against:
Group Health
Managed Care

6.7 Crop and Livestock

We at Jubilee General realize that agriculture is an integral part of our country's economy and
accordingly we have prepared a range of cover to suit our agriculture based business clients.
Coverage available against:
Kashtkar
Live Stock

6.8 Liability Insurance

Your insurance needs are unique to your line of profession, product or business, Based on it, we
provide you with the most suitable range of liability insurance tailor-made for your needs.
Coverage available against:
Public Liability
Commercial General Liability
Professional Indemnity
Medical Malpractice
Employer Liability

10

6.9 Bonds
We stays ahead in providing best covers for your risks, the same way we strive for client
satisfaction with the variety of Bond insurances, covering all your commitments.
Coverage available against:
Bid Bond
Mobilization Advance Bond
Performance Bond
Supply Bond

6.10 Financial Lines

A variety of insurance plans made to match the needs of financial lines, Jubilee General
Insurance aims on providing its corporate clients with the best of services and risk coverage.
Coverage available against:
Bankers Blanket
Safe Deposit Box Insurance
Electronic & Computer Crime
Plastic Card
Foreign Currency Exchange Policy
Directors & Officers Liability
Professional Indemnity
6.11 Specialized Insurance
A wide range of specialized coverage's are provided, tailor made to fit our client's needs, Jubilee
General Insurance stays ahead of time in keeping our valued clients covered and at peace.
Coverage available against:
Residual Value Insurance
Event Cancellation
Stevedores Legal Liability
Marine Umbrella
Loss of License Pilots
Loss of License Air Traffic Controllers

11

6.12 Miscellaneous Insurance

Jubilee General Insurance recognizes all the insurance needs of our corporate clients and
provides a wide range of coverage besides the specialized and categorized covers.
Coverage available against:
Fidelity Guarantee
Cash in Safe
Cash In Transit
Plate Glass
Group Travel Insurance
Neon Signs

12

7. Rate Making
Rate making is the determination of what rates or premiums to charge for insurance.
Rate is the price per unit of insurance for each exposure unit, which is a unit of liability or
property with similar characteristics. The main business objective is to charge an adequate
premium to cover losses, expenses, and allow for a profit; otherwise the insurance company
would not be successful.
Pure Premium which is what is determined by actuarial studies consists of that part of the
premium that is necessary to pay for losses and loss related expenses.
Loading is the part of the premium necessary to cover other expenses, particularly sales
expenses, and to allow for a profit. Gross Rate is the pure premium and the loading per exposure
unit and the gross premium is the premium charged to the insurance applicant, and is equal to the
gross rate multiplied by the number of exposure units to be insured.
The ratio of the loading charge over the gross rate is the expense ratio.
Gross Premium = Gross Rate Number of Exposure Units
Gross Rate = Pure Premium + Load
Expense Ratio = Load / Gross Rate

In the pure premium method, the pure premium is 1st calculated by summing the losses and
Loss-adjusted expenses over a given period, and dividing that by the number of exposure units.
Then the loading charge is added to the pure premium to determine the gross premium that is
charged to the customer.
Pure Premium =
(Actual Losses + Loss-Adjusted Expenses)/Number of Exposure Units
Gross Rate = Pure Premium + Load

13

8. Selection of Agents
Insurance drivers are mainly their agents who work hard and promote products and services to
keep organization functioning. Agents are hired through proper channel, an advertisement is
published in newspaper and interviews are taken. Minimum qualification of insurance agent in
Jubilee General Insurance is matriculation. An insurance agent works under his Development
Officer (DO). As many packages an agent will sell to same level he will get commission on
every package sold. So this is a performance type job.
8.1 Requirements
Dynamic young men and women of minimum 20 years of age holding National Identity Cards,
having Matriculation certificate and capable to accept the challenges, can be appointed as Sales
Representatives/agents.
8.2 Training courses
After hiring of agents they are trained through proper courses to work perfectly in market and to
represent Insurance Company. One of the most exercised training courses is:
8.2.1 Foundation Course (FC)
The Foundation Course is basic requirement in Insurance Ordinance 2000 in Pakistan. According
to this Ordinance, every field workers should be fully trained about the insurance products and
should be able to assess needs of customers. According to the Ordinance, Agents operating in
Insurance shall be required to complete a Foundation Course of three months duration. The
Foundation course contains following phases:
Total No. of days 90
Classroom Training 10 days
On Job Training 80 days
(Practical Field training under the supervision of Area Manager or Sector Head)
8.3 Job Description
Approaches potential clients.
Conducting Orientations.
Identifying the customers needs and want and then suggest a best policy according to
their needs and wants.
Obtains underwriting approval by completing application for coverage.
14

Provides continuing service.

Updates job knowledge by participating in educational opportunities, reading
professional publications, maintaining personal networks; participating in professional
organizations.
Enhances insurance agency reputation by increasing the awareness.

9. Targeting the customers

First of all insurance companies must know their market. This means having a strong
understanding of their target audience.
Insurance companies are in a unique position when it comes to marketing. They have no
tangible products to sell, but must instead rely on strong relationships with loyal
customers and word of mouth to help them compete.
It is important for insurance companies to measure the effectiveness of their marketing
efforts based on the goals they have established. This may be as simple as comparing the
number of clients before and after a campaign.
Agent motivates the customer to take policy.
9.1 Selection of Applicants
The responsibility of the Underwriting Department is to examine, accept or reject the business
containing on day to day work. Underwriting is the process of selecting, classifying and pricing
applications for insurance. The underwriter is the person who decides to accept or reject an
application.
Selection process contains following Guidelines:
First of all sales rap motivate the customer to take policy.
Then sales rap fills proposal form for that customer.
Then sales rap takes underwriting fee from customer.
Then process of underwriting is done. If the customer fulfills the requirements of
underwriting then further process continues otherwise request is rejected.
If underwriter accepts the proposal then calculation for premium is done.
After the calculations of premium the policy number is allotted and policy issued to the
customer.
They charge premium more than 25% if condition is unfulfilled.
15

10. Further Investments

Jubilee General Insurance Company Limited invests in long term securities, government bonds
and foreign bonds. They also invest in corporate securities which are one of the most important
assets of an the insurance company which includes a mix of medium and long term securities,
corporate debt makes up 48% investment in stocks is 24% and 12% government securities, 2%
in loan policy, 1% in real estate, 5% in mortgages and 7% in others.
As showing in following Chart:

Jubilee General Insurance Limitided

Funds Investment
Real Estate
Mortgage Others
1% Loan
7%
5%
policy
2%
Government
securities
12%

Corporate Debt
49%

Stock
24%

16

11. Reinsurance
Practice where an insurance company (the insurer) transfers a portion of its risks to another (the
reinsurer). Legal rights of the policyholders (insureds) are in no way affected by reinsurance,
and the insurer remains liable to the insured for insurance policy benefits and claims.
Jubilee use reinsurance for following coverage:
Property
Energy
Personal Accident & Health
Motor
Casualty

Jubilee General Insurance Company Limited gets reinsurance from different companies of local
and foreign countries and it used all type of reinsurance on the basis of nature of insurance.
It use following types of reinsurance:

Quota share (% Base)

Surplus Share (Friction Base)
Excess of loss treaty (Excess of Retention level or Catastrophic)
Reinsurance Pool (Joint)

17

12. Performance Analysis

Performance analysis of Jubilee General Insurance Company itself and comparison with others
Insurance Companies operating in Pakistan as well as with other Asians countries are follow.

12.1 Jubilee General Insurance Company Limited

Performance analysis of Jubilee General Insurance is under.

12.1.1 Gross Premium and Net Premium

The gross premium and net premium performance is increasing continuously from 2008 to 2013.
It means company performance is improving with the passage of time and company growing on
the basis of customers and premium.

18

12.1.2 Net Premium and Underwriting Result

The net premium is increasing from 2008 to 2013 that is positive sign for the company but
underwriting result is increasing is increasing slowly as compare to net premium it means that
company have to improve its underwriting result in future to compete with competitors.

12.1.3 Investment Results

Investment results of jubilee are increasing that shows positive sign for the company and
investors. Now customers can trust on its financial performance and company growth is
increasing because of increase in investment performance.

19

12.2 Market Share in Pakistan

The Market Share of top four companies in 2005 and 2013 are showing in following graph.

Market Share 2005

Others
28%

NICL
12%

Adam Jee
25%

EFU
25%

Jubilee
10%

According to the 2005 data Jubilee was at 3rd largest market share in Pakistan and after 2005 it
shows favorable performance as compare to its competitors.

Market Share 2013

Others
14%

NICL
15%

Jubilee
19%

Adam Jee
27%

EFU
25%

According to the 2013 data Jubilee grow from 3rd largest to 2nd largest market share in private
insurance company in Pakistan that shows positive sign for investors.
20

12.3 Comparison with others Asian Countries

Pakistan insurance industry comparison with others Asians countries in the term of world
market share as well as insurance industry contribution in GDP are as under.

According to the above graph in which ranking of market share of Asian Companies shows,
Pakistan insurance industry having 0.03% share in the world market and contributing 0.3% in
GDP of Pakistan which is lower as compare to other Asian countries.

21

13. Conclusion and Recommendations

Insurance industry in Pakistan is growing with the passage of time and Jubilee is also growing as
compare to its competitors because in 2005 Jubilee was 3rd largest private insurance company in
Pakistan and in 2013 it became 2nd largest private insurance company in Pakistan.
Performance analysis of insurance industries of overall Asian countries shows that insurance
industry growth is increasing year by year and insurance industry of Pakistan have 0.03% in the
world market share and contributing 0.3% in GDP of Pakistan but its still very low as compare
to others Asian Countries and insurance industries have to grow in future to capture more world
market as compare to others Asian Countries.

Reason behind it is below:

People still customarily faith that "It is something haram", but what really happens in it
and how does it works, majority is unaware. This is the route cause of backwardness of
the insurance industry.
The population of Pakistan is illiterate they have no enough knowledge.
Majority of Pakistans population income below poverty level (Less than 2$) by which
they difficultly fulfilled their day to day needs. Their savings are not enough to pay
premium.

22

15. References
-

www.jubileegeneral.com.pk/

www.iap.net.pk/

www.secp.gov.pk/

www.sbp.org.pk/

Visit The Jubilee General Life Insurance Company Limited Regional office Chen-one
Tower Abdali Road Multan.

23