Efu General Insurance

EFU GENERAL INSURANCE | SUMMER INTERNSHIP | 15TH AUG----12TH AUG 2013 | | PREPARED BY : MUZNA MANZOOR | 8/23/2013 |

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TABLE OF CONTENT: S.NO | DESCRIPTION: | PG: | 1 | ACKNOWLEDGMENT | 3 | 2 | EXECTIVE SUMMARY | 4 | 3 | BACKGROUND | 5 | 4 | INTRODUCTION TO EFU | 6 | 5 | VISION , MISSION | 7 | 6 | SWOT ANALYSIS | 8 | 7 | INSURANCE | 9 | 8 | PRODUCTS OF EFU | 10 | 9 | PRINCIPLES OF INSURANCE | 11 | 10 | MOTOR INSURANCE | 14 | 11 | * TERMS AND CONDITIONS | 15 | 12 | * PROPOSAL | 16 | 13 | * SUBROGATION RIGHT | 17 | 14 | * COVERAGES | 18 | 15 | * PREMIUM CALCULATION | 19 | 16 | PROPERTY INSURANCE | 20 | 17 | * FIRE MATERIAL DAMAGE | 21 | 18 | * COVERAGES OG FIRE | 22 | 19 | * ENGENEERING | 23 | 20 | MARINE INSURANCE | 25 | 21 | * COVERAGES | 26 | 22 | MISCILENEOUS INSURANCE | 27 | 23 | LEASING | 30 | 24 | CLAIMS | 31 | 25 | * PROCEDURE OF CLAIM HANDLING | 31 | 26 | * DOCUMENTS REQUIRED IN CLAIMS | 32 | 27 | KNOCK TO KNOCK AGGREEMENT | 32 | 28 | ACCOUNTS | 33 | 29 | * CONTRA VOUCHER | 34 | 30 | * JOURALIZED VOUCHER | 34 |

ACKNOWLEDGMENT:
I am very thankful to sir Talha sher (DM ,HR)for introducing me to a such a prestigeous organization , market leader of insurance industry , plus i am greatly thankfull to all the staff of EFU S.I.T.E division that includes SIR Ashfaq , Ms Shahista , SIR Asghar and many more who have helped me during my internship and provided me great opportunities for learning and a great experience over there.

Exective summary:
This report is based on my internship program , held in summer 2013 . It includes information about each and every thing that I have learned during my experience at EFU. I have included all information regarding insurance , categories and products of insurance in detail , (i.e marine , fire , motor and miscelineous products ) provided by EFU to its individual as well as business customers.

BACKGROUND TO 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.
In 1947, 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 largest non-life insurance company in the country and the mother company of other insurance organizations of EFU Group.
Traditionally the EFU name has become synonymous with progressiveness and prompt claim settlement and now the EFU being the largest insurance group provides a full range of general, life and health insurance services.

INTRODUCTION TO THE COMPANY
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.
A unique feature of EFU is a voluntary review mechanism by professionals of international repute. The independent reviews by these professionals enable the company to keep abreast of international changes in the industry as well as ensure that management adopts the best international practices.
Another pillar of EFU's strength is its very close and long-term relationship with its reinsurers.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, MISSION & VALUES
Vision
To continue our journey to be better than the best.

Mission
To provide services beyond expectation with a will to go an extra mile. In the process, continue to upgrade technology, human resource and reinsurance protection.

Values
Our philosophy is to be the leading company with service above par, with integrity, excellence and professionalism. Following are our core values:

SWOT ANALSIS:
STREMGHTS:
* MARKET LEADER * STRONG BOND WITH CUSTOMERS * BOND WITH BUSNESS CLIENTS * FASTEST CLAIM REFUNDING PROCESS * MANAGEMENT EFFICIENCY
WEAKNESS:
* CONCEPT OF HARAAM * UNSOUGHT PRODUCT * HEAVY LOSS DUE TO HIGH CLAIM RATIO
OPPORTUNITIES:
* GROWTH OPPORTUNITIES IN MARKET * BOOM OF LEASING
THREATS:
* UNCERTAIN CITY SITUATION , HIGH CLAIM RATIO * RELIGIOUS AND CULTURAL RESISTANCE * INVASION OF FORIGN INSURANCE COMPANIES

INSURANCE :
’’A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insure’’
Insurance is a form of risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation known as the premium.
Insurance allows individuals, businesses and other entities to protect themselves against significant potential losses and financial hardship at a reasonably affordable rate. Insurance is appropriate when you want to protect against a significant monetary loss.

* Ensuring debt repayment after death * Covering contingent liabilities * Protecting against the death of a key employee or person in your business * Protecting yourself against unforeseeable health expenses * Protecting your home against theft, fire, flood and other hazards * Protecting yourself against lawsuits * Protecting yourself in the event of disability * Protecting your car against theft or losses incurred because of accidents * And many more

PRODUCTS/SERVICES Aviation | MOTORMarine | * Marine Cargo * Marine Hull | Miscellaneous | * Personal Accident * Workmen's Compensation * TravelCare Insurance (EFU Travel Insurance) * Liability Insurance * Fidelity Insurance * Money Insurance * Plate Glass Insurance * Burglary * Golfers Insurance * Credit Card Insurance * Computer Crime Insurance | | Property | * Engineering

* Erection All Risks Insurance * Contractor's All Risks Insurance * Machinery Insurance * Electronic Equipment Insurance * Comprehensive Machinery Insurance PolicyFire |

MOTOR INSURANCE POLICY
Motor insurance is mandatory under the motor vehicle act. It insures the owner of the vehicle from any financial loss arising out from the damage ,theft or third party liability.

The insured value or sum insured depends on the market value of the vehicle. Under insurance or over insurance occur when this value is not properly mentioned.

Over insurance occurs when sum insured is higher than the market value, maximum compensation is the market value of the vehicle.

Under insurance occurs if sum insured is less than the market values, you are as self-insuring the difference. In the event of a loss, you will only be partially compensated.

Average clause is applied when you suffer damage to your vehicle which is under insured. Your claim will be reduced proportionately by the uninsured portion, e.g. if you have insured your vehicle up to 70% of the market value, the insurance company will only pay 70% of total repair cost.

Clauses: * Depreciation clause * Market value clause * Terrorism endorsement * Subject to tarif endorsement car laid up concession.
Endorsement:
Additional coverages.what are not covered in the policy.

TERMS AND CONDITIONS OF THE POLICT:

Section 1:Loss or damage: * Accident external means * Fire external explosion * Theft * Malicious act * Riot , strike * Flood * Earthquake

1. Section 11:Liability to third party: 2. Section 111:Medical expenses

PROCEDURE OF INSURING A VEHICLE: * Rates are given to the corporations , if they have to insure , they will mail the details for their vehicles to the efu. * Proposal is made by the underwriter, he mail it to the client , and then if the client approves it , underwriter start writing the policy. * Client send the details and the documents through email or any other source

Proposal:
Proposal form contains following information: * name of the insured * vehicle name * model * engine no * emp;oyee ID * residencial address * documents required

Types of clients: * individual client * busuness client * different clients need permission at different rates.there is a client code for the business clients , not for the individual clients. But if they go above the premium of 50000 ,they are issued a client code. * Individual clients do not receive their policy before the payment of premium.

* 3.5 is the authorized rate from headoffice or above. But if wants to go below it, need to take permission.if permission is not granted, then the net premiumis adjusted to the discount rate or other charges.

SOME GENERAL EXCEPTIONS OF THE POLICY:

* Loss arising out of geographical area * Being driven by any other than the driver * Causing out by a nuclear weapon material * Caused after any termination of the contract or insured party’s interest.

SUBROGATION RIGHT:
Subrogation is the legal doctrine whereby one person takes over the rights or remedies of another against a third party.[1] Rights of subrogation can arise two different ways: either automatically as a matter of law, or by agreement as part of a contract.[2] Subrogation by contract most commonly arises in contracts ofinsurance.
With insurance subrogation, there are three parties involved: the insured; the insurer; and the tortfeasor (the party who is responsible for the damages). Under subrogation, the insurance company assumes the right to sue the tortfeasor for the amount of the damages reimbursed to the insured

Tips on buying right motor insurance policy
Driver should bear in mind that there are number of details that should be taken into account when applying for motor insurance policy.

Firstly as soon as car purchased the owner must buy an insurance cover. If a used car is purchased, the new owner needs to know that the cover of the previous owner is null and void.

The insured value or sum insured depends on the market value of the vehicle. Under insurance or over insurance occur when this value is not properly mentioned.

Over insurance occurs when sum insured is higher than the market value, maximum compensation is the market value of the vehicle.

Under insurance occurs if sum insured is less than the market values, you are as self-insuring the difference. In the event of a loss, you will only be partially compensated.

Average clause is applied when you suffer damage to your vehicle which is under insured. Your claim will be reduced proportionately by the uninsured portion, e.g. if you have insured your vehicle up to 70% of the market value, the insurance company will only pay 70% of total repair cost.

COVERAGES:

Private and Commercial Vehicle Comprehensive Insurance
This is the widest form of cover; our client is protected against financial losses of all kinds, accidental loss to vehicle, theft of car and third party liability claims on him or her.
Private and Commercial Vehicle Third Party Motor Vehicle Insurance
EFU's client is protected against all financial losses due to accidental damage liability of all forms to third party, property damage or bodily injury, death or both.
Private and Commercial Vehicle Act only Liability Insurance
The cover meets the minimum legal insurance requirement. In this cover, EFU offers you protection against financial losses due to liability of accidental bodily injury or death to third party. In addition to above basic protections we are offering insurance solutions to our clients, combining basic covers with following EXTRA BENEFITS.
Family Accidental Benefit Cover
EFU offer accidental death or injury benefit for insured, spouse and the entire family of EFU individual clients, in addition to comprehensive insurance of motor vehicle.
Accidental Death Cover for Salaried Driver
For our commercial clients owning fleet of vehicles a specially designed product offering personal accident covers for the paid drivers.
Protection of Loan Amount for Financial Institutions
For financial institution offering car financing schemes EFU offer modified insurance package offering protection of outstanding loan amount to the leasing company in case of death of lessee, combined with the comprehensive coverage of motor vehicle.
Personal Accident Benefit Cover for Passengers
This is a very popular cover that EFU is giving its clients who are in hospitality business, car rental service. Their guests are offered accidental injury or death benefits while traveling in motor vehicle.

Premium calculation of motor policy:
Sum insured xxxx
Rate taken %
= gross premium
Add :admin charges 5 % Federal insurance fee 1% Sales tax 17% Stamp Rs 20

Fleet/schedule policy:
When corporations do insurance of their employee vehicles, they do not do it individually but a fleet of cars are insured on scheduled policy , where individual certificates are issued tio each car and a single policy is issued to a fleet.

property insurance:
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.
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.
FU covers both medium and large industrial and commercial risks relating to property, including energy complexes
Scope of coverage is fire and allied perils extending to all risks including difference-in-condition, with both physical damage and business interruption.

Fire material damage:

Fire Insurance policy provides compensation to the insured person or firm in the event of damage to the property insured (i.e. buildings, stock, machinery lightning.and other contents) caused by fire,

FIRE AND ALLIED PERILS INSURANCE:
These perils provides insurance to the asset damages arises due to following reasons:
Riot and strike damage cover: * Strike in factory * Strike in neighbourhood * Riot of any kind except occurred due to following causes: * Political * Religious * Ideological/ ethinic * Act of lawfull agency to suppress any such act
Terrorisim t3 cover:
An act of terrorism arising from following * Political violence * Religious * Ethnic / ideological

Act of any individual or more people with a motive against govt to create fear among public (bomb explosion , sucide bombing etc)
Extended terrorism cover lpo-437: * Riot and strike damages * Malicious damages * Terrorism t3 cover * Civil commotion

FULL SCOPE POLITICAL VIOLENCE: * Riot and strike damages * Malicious damages * Terrorism t3 cover * Civil commotion * Insurrection , revolution or rebellion .

GENERAL CLAUSE AND COVERAGES WITH RATES: * Riot n strike(SRSD malicious damage ) 1.5 %o * Earthquake 0.06 %o * Atmospheric disturbance 0.06 %o * Explosion 0.05 %o * Impact damage 0.05 %o * Aircraft 0.05 %o * Buglury 1%o * Household(house fire protection insurance) * Sighn boarde * Shop owner * Loss of profit:

ENGENEERING: 1. ERECTION ALL RISK INSURANCE 2. CONTRACTORS ALL RISK INSURANCE 3. MACHINEREY INSURANCE 4. ELECTRONIC EQUIPMENT INSURANCE 5. COMPREHENSIVE MACHINEREY INSURANCE POLICY

Erection All Risk Insurance offers comprehensive and adequate protection during the period and stages of erection of the machinery, plant and steel structures of any kind as well as third party claims in respect of property damage or bodily injury arising in connection with the execution of an erection project.
Contractor's All Risks Insurance
Contractor All Risks Insurance offers comprehensive and adequate protection against loss or damage in respect to contract works of civil engineering projects, construction plant and equipment and construction machinery as well as third party claims in respect of property damage or bodily injury arising in connection with the execution of a construction project.
Contractor's Plant and Machinery Insurance
This policy is developed for the contractors. It offers comprehensive insurance to contractor's plant and machinery on an annual basis. It offers loss or damage occurring at work, at rest or during maintenance or during the transit of equipment and is not limited to a specific construction site.
Machinery Insurance is developed to grant industry the effective insurance cover for expensive plant, machinery and mechanical equipment. All type of machinery, plant, electrical and mechanical equipment and apparatus may be covered under this policy. By its very nature Machinery Insurance is an all risk "Accident" insurance for machinery. It covers unforeseen and sudden physical loss or damage from causes not specifically excluded, in a manner necessitating repair or replacement. Those items having a short service life compared to the entire plant are normally excluded.
Machinery Loss Of Profit (MLOP) Insurance:
This policy provides cover for actual loss of gross profit sustained as a result of a business interruption caused by an accident indemnifiable under machinery insurance.

Electronic Equipment Insurance is today a common policy for high valuable electronic equipment. The term electronic equipment comprises all electrical systems having moderate power requirement
All types of equipment which generate, convert, store transfer and/or process physical data and information can be insured. Electronic Equipment Insurance is one of the most comprehensive policies. The insurance protects owner as lesser or lessee, as operator, or as hirer, or as maintainer. This policy is an "Accidental" insurance of "all risk" basis covering almost all the perils but only after successful commissioning of the insured items. Mobile and portable equipment whilst at stationary or at transit any where in the country may also be covered under this policy.
Comprehensive Machinery Insurance Policy:
The Comprehensive Machinery Insurance policy is intended to provide property cover for machinery and industrial plant as an enhancement of machinery insurance and is specially aimed at risks which are demanding from underwriting perspective. Power and steel plants, paper, cement factories, sugar mills or other industry with a high exposure to machinery damage but a lower exposure to fire, explosion and natural hazards are insured under this policy.
Comprehensive Project Insurance Policy:
The Comprehensive Project Insurance policy is applicable to erection and construction projects, but it is particularly relevant to risks such as hydroelectric plants which involve both construction works and machinery erection. In addition to Third Party Liability and construction machinery this policy includes marine cargo section so as to fully live up to the idea of a Comprehensive Project Insurance.

Marine insurance:
Marine Insuranc covers damages to the shell and machinery of the vessel, cargo carried on the vessel, and also offers protection against liabilities to shipping and transport related companies. 1. Marine Hull and Machinery Insurance 2. Marine Cargo Insurance
Cargo:
* Import * Export * Inland transit (domestic)
Documents needed in import:
Bill of leading , Letter of credit , Bank guarantee ,In import COVER NOTE is made
3 CLAUSES: * Institute cargo clause A (icc) * Institute cargo clause B * Institute cargo clause C * Clause Acovers ALL RISK POLICY * By road, COVERS CLAUSE A & B * By air , covers clause A,B & C
“There are careers in marine so it is called CARGO “

EXPORT:
In export DIRECT POLICY is made.
Marine hull: * Include luxuries boat * Terminals * Ships * Fright farwardind liability is alsi covered * Premium calculations is according to per km container

COVERAGES:

1. Institute War and Strike Clauses — Hulls — Time 2. Institute Time Clauses — Hulls: disbursements and increased value (total loss only, including excess liabilities) 3. Protection and Indemnity Associations 4. Liabilities in respect of Seamen 5. Liabilities in respect of Passengers 6. Liabilities in respect of Third Parties 7. Liabilities arising from Collisions 8. Liabilities arising from Pollution 9. Liabilities arising from Wreck Removal 10. General Averag

: Marine premium is low as compared to other insurance products
If age of ship is beyond 65, then extra premium is charged (vessel clause applied).

MISCILENEOUS PRODUCTS:

1. PROFESSIONAL INDEMNITY 2. BANKERS BLANKET 3. BANKERS BLAMKET BOND 4. CASH IN TRANSIT 5. CASH IN SAVE 6. BUGLURY 7. TRAVEL INSURANCE 8. PERSONAL ACCIDENT 9. LIFE STOCK 10. FEDILITY INSURANCE 11. MOBILE INSURANCE

LEASING * In leasing , cars purchases on leased are insured by individual clients and corporate clients * In leasing EFU has to deal with BANKS who lease the cars. * An open policy is made at the start of month for the corporate clients and as the cars start getting insured , cars being added on that policy. * In leasing policy is generated without cutting receipt. In the end of month they issue a bill. * Every certificate is a fine document

Procedure: * Request came from thebank . * Name of the customer * Vehicle make, value , tracker and premium rate. * Banks finance individual,so PURCHASE ORDER is made * PURCHASE ORDER is for dealer * Bank aproves the amount , then dealer show the vehicle to the client * Dealer fills the forms against PURCHASE ORDER. * Dealer submits DAF to bank . * Basnk will directly pay to the dealer. * PURCHASE ORDER request inserted in the system * Company opens the policy * Certificates issued against the open policy.

CLAIMS
A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.

Claim procedur:
1st step:
Claim intimation: customer contact the company through email or phone , and intimate(inform) the claim officer about the loss. * Appointment of survey: survey is a 3rd party person from a liscensed surveyor company or efu”s own surveyor.
Surveyor is given the policy and he checks out the expiry period of the policy, if time period is not expired surveyor starts investigation.
2nd step:
Settlement of claim:Surveyor contact client and make an estimate regarding the loss , take photographs , the insured party or a workshop dealor in case of motor demand an amount , which by negotiation and bargaining both come to a single settlement of amount. * Preliminary findings report:
Surveyors report its findings regarding the loss in detail to the clain officer in PLR report.
Types of loss: * Total and partial loss.
If the subject matter is damaged more than 40% , it is included on total loss o, otherwise partial loss.

3rd step:
Payment step:Surveyor does re inspection .a report is issue after inspection. photos are attached and surveyor gives invoice/fee report.

Documents required in claim processing: 1. Claim form 2. Satisfactory note 3. Preliminary findings report 4. Statement of insured 5. Estimate 6. Inspection Pictures , reinspection 7. Survey fee/invoice 8. Payment voucher
Motor claim: 1. Car”s documents 2. Driver”s l driving licens

KNOCK TO KNOCK AGREEMENT:
A knock-for-knock agreement is an agreement between two insurance companies whereby, when both companies' policy-holders incur losses in the same insured event (usually a motor accident), each insurer pays the losses sustained by its own policy-holder regardless of who was responsible.
After then , the insurance company of the guikty party pays to the other insurance company. The knock-for-knock agreement simplifies recovery claims among insurers and, over time, attributes costs fairly among insurers.

ACCOUNTS DEPARTMENT:
Accounting dept deals with 3 acounts with banks: 1. Collection account 2. General disbursement account 3. Claim disbursement account

* Collection account , does not issue any checques it only collects or receives the payment * General disbursement account include , * Survey fee * Salary of staaf * Commission payment * Entertainment charges * Employees car expenses * Medical benefits * Other than claims all accounts are dealt through general disbursement account

In Claim disbursement account , when payment from the client is received , following entry is passes: Bank debit Client credit
Policy underwrites: Client debit Premium credit
Paying comission to the agent: Commission a/c debit Agent credit

Contra voucher:
A Contra voucher entry is a transaction involving transfer of cash between one Cash A/c to another or one Cash A/c to another Bank A/c i.e., is a transaction indicating transfer of funds from:

* Cash account to Cash account * Cash account to Bank account * Bank account to Cash account * Bank account to Bank account

Journalized voucher:

An accounting record that notes the details of a transaction for record keeping and auditing purposes. Journal vouchers include the names of accounts affected, the date of the transaction, a description of the transaction, signatures of authorizing parties, and other details critical to proper accounting procedures. first bank disbursement statement ismade , in any mistake arises , to ractify that , journalized voucher is made.