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CHAPTER ONE INTRODUCTION

1.1Bacground of study

The development of the insurance company has helped the people to transfer the risk of loss of life and property. It has act as a safeguard against the future uncertain losses that may associated either with the life of the individual, group or things other than life. Bachelor in Business Administration-Banking & Insurance (BBA-BI) of Pokhara University (P.U) has given the platform for the students to choose the organization where their keen interest is. It is a new approach in the academic pursuit with eight weeks period for internship program.

The internship program is aimed at providing practical exposure on the business environment to the students. It also gives the real life lessons ranging from technical skills, behavioral skills and conceptual skills. It generally involves a student working in a professional setting under the supervision and monitoring of practicing professionals. It targets to train and prepare students for managerial functions, develops student’s interpersonal and communication skills by encouraging them to interact with different types of people and situations in the organization.

This internship report is mainly focused on the overview of National life insurance in different department (marketing, underwriting, loan and claim).

  • 1.2 Objectives of the Study

During the period of internship program it has been helpful in understanding the theoretical knowledge in practical field. It has provided the opportunity for us to know the real scenario of working environment in the organization. The objective of this internship is to understand the insurance process and analyze, examine and interpret the policies adopted by National Life Insurance, be familiar with practice portion and users of theoretical understanding.

Other objectives regarding the internship period are as follow:

To be familiar with the corporate culture of the organization

To get information about the insurance product and service provided

To get information about various product of NLIC.

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To understand the general working principle of insurance company. To overview the insurance environment in the country. To understand the marketing, claim and underwriting process of life insurance. To identify associated problems in the observations & research and to recommend

actions required to mitigate the problematic situation in the insurance industry

1.3 Methodology

Selection of a good organization is a very crucial and an important step in internship program. It is a very important to know the details about the company, its popularity and position in the market. After knowing the details about the insurance company internee has selected National life insurance Company for internship among different insurance companies as it is the best offerings to the fresher's.

This report is primarily based on my experiences from the day to day official work under the department of marketing underwriting and claim in Head office and Kathmandu branch of National Life Insurance Company.

Throughout the internship period, the internee was placed in Head Office for sixty working days. The time period of the internship was from 31 st July 2014 to 31st September 2014. During this period the internee got an opportunity to work at marketing, operational and underwriting department. The task was assigned as per the requirement of the department under the supervision of respective department head.

Activities Performed

Intern was placed in operation and underwriting department generally. Intern was given the task of general operation activities to perform under the immediate supervisor. During our tenure we were also given opportunity to use the software of the insurance company to some extent for proposal entry and premium calculation. The list of activities performed by the intern during their tenure is as follow:

Providing different information about the insurance product to the general customers and agents

Filling different insurance proposal forms

Scanning of the documents

Record keeping

Proposal entry for the underwriting

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Searching different documents from the store

Premium calculation

1.3.1 Sources of Data

I have used both primary and secondary data in this report. Both of them played the vital role in the fulfillment of the internship report. They are collected by different ways:

Primary Data:

Primary Data were collected through both formal and informal discussions mainly with my supervisor and senior manager of the company. Besides, I took participation in in-depth group discussion and meeting which have given me the opportunity to take very relevant information regarding the particular topic of my report. Other ways used to collect the information was as follow:

personal observation in the working environment

discussion with the head of department

information from the insurance agents

Secondary Data:

The secondary source of data collection was from the following source:

Annual report of the company

Published article in the insurance company

Journals and brochures of the company

Website of NLICL

Record Book of NLICL

1.4 Limitations of the Study

The preparation of this report was not an easy task. I had to face some problems & limitations during the preparation of this report despite the fact that I have tried my best to prepare this project successfully. The limitations were:

The report is more based on secondary data.

Confidential information that no organization wants to share due to their business

interest was another limitation. The project is prepared in limited topic, all the learned and collected information

cannot be presented in the report. Data from the different source were inconsistent which provide the difficulty in

preparing report.

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CHAPTER TWO GENERAL INTRODUCTION TO INSURANCE COMPANIES

2.1 Introduction to insurance

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. Insurance is one mechanism which is used to hedge the risk from insured to insurer. Insurance is essentially a contract between two parties, one that bears the risks is known as the insurer or the assurer and the other, whose risk is being covered, is termed the insured or the assured. Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance. The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'. 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.

Insurance business is one of the fast emerging financial services. The market of insurance has undergone significant changes in the recent years. The insurance business has been comprehensively networked in all parts of the world. It's a sharing/pooling device to spread the loss caused by a particular risk over a number of persons, who are exposed to it and who agree to insure themselves against the risk. Insurance works under the principle to share the risk among the large number.

  • 2.2 Types of Insurance

Based on today's life style the list of type of insurance is increasing day by day. You will find lots of insurance policy that you have not heard before. There are more than hundred of policies from which you can choose for your need. But according to the business the main insurance present in the market are as follow:

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1.

Life Insurance

Life insurance is a contract between an insured and an insurer, 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 or expiration of the policy. The policy holder typically pays a premium, either regularly or as a lump sum.

  • 2. Non life insurance

Non life insurance is also called as the general insurance. This type of insurance is only for the protection against the possible loss that can occur but not for the saving purpose. The common non life insurance is fire insurance, motor insurance, marine insurance, etc.

  • 3. Social Insurance

Social insurance programs are government insurance programs with certain characteristics that distinguish them from other government insurance plans. These programs are financed entirely by the general revenues of government. The different types of social insurance are Old age survivors and Disability insurance, Medicare, Unemployment insurance, workers compensation.

From risk point of view

  • 1. Personal Insurance The personal insurance includes insurance of human life which may suffer loss due to death, accident and diseases. Therefore the personal insurance is further sub-classified into life insurance, personal accident insurance and health insurance.

  • 2. Property Insurance The property of an individual and of the society is insured against the loss of fire and marine perils, the crop is insured against unexpected decline in production, unexpected death of the animals engaged in business break-down of machines and theft of the property and goods.

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  • 3. Liability Insurance The liability insurance covers the risks of third party, compensation to employees, liability of the automobile owners and reinsurance.

  • 4. Guarantee Insurance The guarantee insurance covers the loss arising due to dishonesty, disappearance and disloyalty of the employers or second. The party must be a party of the contract. His failure causes loss to the first party. For example, in export insurance, the insurer will compensate the loss at the failure of the importers to pay the amount of dept. 2.3 Origin of Insurance In this world of uncertainty the risk is present in every steps of the life. So with the growing risk the importance of insurance is increasing. From the ancient civilization of human being of sharing the food between the communities to minimize the risk of hunger during the lack of food the concept of insurance was established. Early methods of transferring or distributing risk were practiced by Chinese traders as early as the 3rd millennia BC. These merchants travelling treacherous river rapids would cleverly distribute their wares across many vessels to spread the loss due to any single vessel's capsizing. Toward the end of the seventeenth century, London's growing importance as a center for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note this is not insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance. Insurance originally evolved as a commercial instrument, and it was not until after 1666, as a result of the Great Fire of London, that insurance for households, aptly named “Fire Insurance emerged.

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2.4 Insurance in Nepal

The History of financial system in Nepal began in 1881 with the establishment of Tejarath Adda (The National Treasury Office) in initiation of the then National Minister Ranodweep Singh which was used as the government and public bank and Ministry of Finance by Rana rulers. Before this Kumari Chowk Adda was the main treasury office but not organized well. Later, in initiation of Nepalese Ambassador to UK, Nepal Bank Limited as the first commercial bank, was established in 1937 with technical help of British Indian commercial banks.

In those days, foreign (mostly Indian) insurance companies met the insurance need of Nepal. In eve of Rana Regime, Nepal Insurance and Transport Company (named as Nepal Insurance Company later) was established in 1947 by Nepal Bank Ltd. as its subsidiary company. It was the only national insurance concern before establishment of Rastriya Beema Sansthan (RBS) in 1968. After the establishment of RBS, the then main business holder of life portfolio, Life Insurance Corporation of India transferred the business to RBS and closed its office in Nepal in 1972. None the less, non life companies are in operation till to date. In 1968 Rastriya Beema Sansthan (RBS) was established under Company Act, 2024 and was converted into Corporation in the following year under Rastriya Beema Sansthan Act, 1969. This is a government owned organization even now, and has been operating both life and non-life insurance business. Prior to the enactment of Insurance Act, 1968 there was no regulatory body that supervises insurance business in the country. Under the Insurance Act, 1968, Beema Samiti (Insurance Board) was formulated as the insurance supervisory Authority. In 1986, a new experiment was done in Nepalese insurance scenario by licensing a joint venture insurance company to operate both life and non life business. But the real expansion of the insurance industry in Nepal took place during the 1990s following the financial sector reform and liberalization of the economy by the government. The new policy gave emphasis to the involvement and growth of insurance business in the private sector. As a result, many companies came into the scene in the private sector including foreign equity. Even branches of Indian and US companies are working in the field. As shown in table 1, the number of insurance companies including RBS reached 25 by the end of F.Y. 2009/10.

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2.5 Insurance companies of Nepal (ownership structure and types)

Table 2.1 Insurance Glance

Ownership

Nature of the company

Total

 

Life

Non-Life

Comprehensive

Government

-

-

1

1

Owned

Private sectors

4

12

-

16

Foreign

1

2

-

3

Joint Venture

2

3

-

5

Total

7

17

1

25

Source: insurance board (2012)

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2.6 Insurance Investment in Nepal (Life and Non life)

investment in millions

60000 50000 40000 30000 20000 10000 0
60000
50000
40000
30000
20000
10000
0
  • Life

  • Nonlife

  • Total

(Source: Economy survey Ministry of finance)

In the above graph what we can view is that the proportional growth in life insurance is much more than non life insurance in context of Nepal.

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CHAPTER-THREE ORGANIZATION PROFILE

3.1NationalLife at a glance:

National Life Insurance Co. Ltd. (National Life) came into existence in 1988. Promoted by eminent business groups, National Life has carved a niche for itself in the insurance sector and has achieved the following:

Earned net profit of NPR 56.75 million in the first full year operation. This is an unprecedented achievement in the Nepalese Life Insurance Industry.

National Life Insurance Limited has posted net profit of Rs. 79.231 million on its 4th quarter financial report of the fiscal year 2070/71.

More than 714,797 policies in just 5 years of operation.

Collected premium amounting to NPR 2,896 Million. Increased its distribution network by opening 85 network points of representations

(including Branches and Sales Offices) all over Nepal. Continues to be among the fastest growing life insurance company with incremental growth in premium, quality of business, customer service and assurance of good returns.

The share holding constitutes of the promoters holding 70 percent and 30 percent is to be offered to general public. The promoters represent Nepal’s leading and highly prominent business groups having widely diversified business interests and expertise. Rastriya Banijya Bank Limited, one of the leading commercial banks in Nepal, is one of the major promoters with 10 percent stake. We are expecting approval from Securities Exchange Board for Initial Public Offerings (IPO) amounting to NPR 108 million by the end of January 2010. After the completion of IPO, company’s capital base will increase to NPR 360 million from existing NPR 252 million.

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3.2

OBJECTIVES

NLICL values are based on high standards of corporate governance, transparency and professionalism. Governed by NLICL values, the mission are:

To provide complete range of life insurance products bundled with innovation and superior customer services in order to achieve excellent business growth and provide

superior value to all our stakeholders. To make National Life appealing to the target consumer in terms of the following

benefits earned.

Savings

Life security

Tax benefits

  • 3.3 PRODUCTS AND SERVICE

3.3.1 Amrit Barsa Beema Yojana

Each individual’s insurance needs can be different from that of others. At National life, we study and suggest wide range of life insurance products that meet customer’s social and financial requirements. The key features of this product are:

Insurance term can be determined as per requirement.

Premium payment frequency can be chosen as per convenience.

Sum insured can be chosen as per customer’s need.

The benefits of this product are:

After the maturity period, the sum assured plus bonus amount will be returned.

In case of death of the insured, the nominee will get sum assured plus bonus.

If accidental death benefit (ADB) is taken then the amount up to 5, 00,000 will be provided to nominee if the accidental death is happened.

If accidental total permanent.

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3.3.2

National Life Pension Plan

National Life Pension Plan is a pension product that provides the security after active work- life. You have an option to choose two ways to get your pension for your life time. The key benefits are:

Pay monthly premium and receive monthly pension for your whole life.

In case of an unfortunate event of death during premium paying term, sum assured

with applicable bonus will be paid to the holder’s nominee. There is a flexibility to choose retirement date from which the policy holder will start

receiving the pension. Flexibility to choose from two pension options after the policy maturity to get regular

income for the life time. Flexibility to add on riders line Accidental Death Benefit and permanent Total

Disability (waiver of premium) in case of an unfortunate event of death or disability during the premium paying term of the policy. Tax benefits on premium paid (up to the limit of NPR. 20,000/- per annum.)

  • 3.3.3 National Life Jeevan Amrit

This product provides sum assured plus bonus at the end of the insurance period. Additional death risk cover is provided for the entire policy period.

Key Features

Insurance term can be determined as per requirement

Premium payment frequency can be chosen as per convenience

Sum insured can be chosen

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3.3.4

National Life Baideshek Rojgar

National life Foreign Employment Policy Or Baideshek Rojgar Plan Is Designed To Cover Natural As Well As Accidental Insurance For People Living And Working Out Of Nepal. The key features are:

Low premium rate as it does not carry any saving factor.

In the event of death of the person living abroad, a sum of Rs. 500,000 will be paid to

the beneficiary.

  • 3.3.5 National Life Single Payment

National Life Single and Limited Payment Plan are designed to the people who wish to pay the premium in lump sum basis and who wish to pay premium for the limited payment. The key features are:

Premium can be paid in lump sum basis as a single payment or for the desired period. Upon maturity of policy, Sum assured and vested bonus will be paid. In case of death of the insured within the premium paying term, subject to policy in

force, Sum Assured and vested bonus will be paid to the legal heir or beneficiary of the insured.

  • 3.3.6 National Life Saral Amrit

National life Saral Amrit is aimed at providing Collateral Security to the Lender-financial- institution for the loan advance to the Borrower-Life-Assured against the Death or Permanent-Total-Disability before Re-payment of the Total loan.

The key features are:

It is a special policy for financial institution’s loan customers.

Low premium rate as it does not carry any saving factor.

Reducing coverage of the insurance corresponding to customer’s reducing outstanding loan balance.

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In the event of death of the borrower, the proceeds of the policy will be paid to the Financial Institution to cover the current outstanding loan.

3.3.7 National Life Bachat Amrit

Customers require funds for different requirements at different stages in life. Be it for child’s education, wedding or for old age. National life Bachat Amrit is structured to meet requirements at periodical intervals.

 

Key Features

Insurance term can be either 15 or 20 years.

Premium payment frequency can be chosen as per convenience.

Sum insured can be chosen as per customer’s need.

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CHAPTER FOUR CRITICAL ANALYSIS OF JOB PERFORMED

4.1 Departments of NLICL

  • A. Underwriting

  • B. Account

  • C. Claim

  • D. Marketing

  • A. Underwriting Department This is based on a risk assessment. It is pretty much the "behind the scenes" work in an insurance company where they determine who is insured and how much in insurance premiums they will charge the insured person. Insurance underwriting also involves choosing who the insurance company will not insure.

  • B. Account Department The department is responsible for managing, controlling and recording the inflow and outflow of cash from the daily basis to monthly and annual basis. The profitability of the company is judged through the analysis of its accounts record.

  • C. Claim Department:-Claim is a tangible result of insuring. The actual procedure for handling claims varies according to matter such as the type of cover. Claims come either at the maturity or at the death of the insured. Claim settlement Claim settlement is one of the most important services that an insurance company can provide to its customers. Insurance companies have an obligation to settle claims promptly. You will need to fill a claim form and contact the financial advisor from whom you bought your policy. Submit all relevant documents such as original death certificate and policy bond to your insurer to support your claim. Most claims are settled by issuing a cheque within 7 days from the time they receive the documents. However, if your insurer is unable to deal with all or any part of your claim, you will be notified in writing.

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Types of claims

Maturity Claim - On the date of maturity life insured is required to send maturity claim / discharge form and

original policy bond well before maturity date to enable timely settlement. Most companies offer/issue post dated cheques and/ or make payment through ECS

credit

on

the

maturity

date.

.

Death Claim (including rider claim) - In case of death claim or rider claim the following procedure should be followed.

Follow these four simple steps to file a claim:

  • 1. Claim intimation/notification The claimant must submit the written intimation as soon as possible to enable the insurance company to initiate the claim processing. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death, name of the claimant. The claimant can also get a claim intimation/notification form from the nearest local branch office of the insurance company or their insurance advisor/agent. Alternatively, some insurance companies also provide the facility of downloading the form from their website.

  • 2. Documents required for claim processing The claimant will be required to provide a claimant's statement, original policy document, death certificate, police FIR and post mortem exam report (for accidental death), certificate and records from the treating doctor/hospital (for death due to illness) and advance discharge form for claim processing. Based on the sum at risk, cause of death and policy duration, insurance companies may also request some additional documents.

  • 3. Submission of required documents for claim processing

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For faster claim processing, it is essential that the claimant submits complete documentation as early as possible. A life insurer will not be able to take a decision until all the requirements are complete. Once all relevant documents, records and forms have been submitted, the life insurer can take a decision about the claim.

4. Settlement of claim

As per the regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim.

For Death Claim:

Death Certificate Original Policy Bond

Claim Forms issued by the insurer along with supporting documents

For Accidental Disability / Critical Illness Claim:

Copies of Medical Records, Test Reports, Discharge Summary, Admission Records of hospitals and Laboratories.

Original Policy Bond Claim Forms along with supporting documents

D Marketing Department

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This department mainly focuses on promotion of the insurance product offered by NLICL. It activities involved in this department is to make customers known about the products offered through advertisement, news releases, events and so on without leaving its objectives i.e. customer satisfaction. During the time of internship we promote various product of NLICL.

Mainly Insurance agents promote the insurance markets. Agents received commission from the premium paid by insured.

o

Mainly dependent upon mass advertising

The likes of Nepalese cricket team Captain Mr. Parash Khadka is used to market the insurance product

Vast use of Call centers as well

Major corporations insure all their staffs at once

Besides that, the normal use of Insurance Agents as well

Others come to the insurance office themselves, for specific kind of insurance

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4.2 SWOT Analysis NLICL has strong market position. It has been maintaining its credibility since its

4.2 SWOT Analysis

NLICL has strong market position. It has been maintaining its credibility since its establishments. With strengths and opportunities there are also weaknesses, and threats that affect NLICL which are presented in figure below:

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Figure SWOT Analysis

STRENGTHS • Goodwill • Good contacts and successful networking. • Interaction with professional organization. • Huge
STRENGTHS
• Goodwill
• Good contacts and successful networking.
• Interaction with professional organization.
• Huge amount of organization resources.
• Experienced employees
• Highest amount of bonus paying organization.
WEAKNESSES
• Lack of sufficient qualified employees.
• Poor implementattion of the insurance software.
• Poor management of the available resources.
• Improper distribution of human resources in
organization.
• Poor customer care and sercives.
• Lack of dedication to the work.
OPPORTUNITIES
• Backed by customers faith.
• High fund raising than other insurance company.
• High number of customers being served.
• High scope for employment.
• Emerging insurance companies.
• Advancement in the technology.
THREATES
• Better sustomer focused sercices by other insurance
company.
• Limited professional development.
• Compertive and skilled employyes movement to other
private insurance company.
The above figure helps to know about the various factors of internal and external
environment that affected NLICL.

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4.3 Calculation of premium

Based on Occupation

 

o

People with riskier jobs pay more amount of premium

Based on Financial hazard

 

o

Risk also depends upon jobs a person undertakes and his commission

Based on Moral Hazard

 

o

Primarily based on morals and motives of people

o

People in various regions have to face various risks thus, risk also changes

  • 4.4 Activities Done

During internship period internee was assigned in the different section. Each and every staffs under this section helped internee a lot to learn the insurance related activities. Knowledge was gained on entry of insurance proposal, basic underwriting process, and registration of the claim, handling of claim and maintaining account of the settled claim. This internship report is based on the claim department of National life Insurance Company which mainly focused on the activities internee had involved with.

  • 4.5 Problems Identified

Internee working period in NLICL is only for sixty days. There was a time constraint. However some of the problems internee faced while working is as follows:

  • 1. Lack of Proper Management of the Documents The most important difficulties faced by the insured while making claim is that they have to submit the relevant document more than twice. The documents sent by the insured are not arranged in their respective place. This results in loss of their documents.

  • 2. No Lower Level Staffs

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The middle level position is occupied by the existing staffs. There are no another staff to work on their behalf. So, in case of absenteeism of the managerial level staffs, the work is completely stopped. All the activities ranging from registering the claim to claim settlement is done by the managerial level staffs. So, they have got very busy working schedule. Internee was involved in registering and some accounting activities which minimize the department head burden to some extent.

  • 3. Improper Allocation of Employees There are only few staffs in NLICL. Also available employees are not properly allocated on the basis of priority of work. Internee shared many work with the department head and minimize their hectic schedule. Complains of the Clients Customers come with full anger and frustration. Internee had to deal them patiently. Internee helped them to find their documents. Also internee learned that most important thing to calm the clients is through listening their problems. They are almost half calmed doing so. After that Internee tried to solve their problems.

  • 4. Dissatisfied Staff Staffs were not satisfied with the administrative management. They have not done any motivational activities for the staff like job rotation, job enlargement etc. Internee was also placed in claim section throughout the internship period.

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CHAPTER FIVE CONCLUSION AND LESSON LEARNT

  • 5.1 Conclusion

Insurance companies are a major business in today's world. The insurance industry is one of the largest sectors of finance everywhere in the world and in Nepal too, it plays a major role. It ranges from consumer to corporate and industrial insurance, and even reinsurance, or insurance of insurance. Because of the growing number of insurance companies in Nepal, the business has been much competitive as companies are offering more and better facilities. In Nepal too, the scenario has been much populated today than compared to what it was a few years ago. Actually this is a good sign as the increase in number of Insurance companies means better exposure to people regarding the importance of insurance policies. A well- managed insurance sector helps to build the economically safe, secure and prosperous nation.

BBA-BI faculty of management provides the student opportunity to work on the real environment and gain some practical experiences in the field of insurance. The internship opportunity was a milestone for internee to gain practical acquaintance of the insurance company and its corporate culture. Prior to the internship knowledge regarding the insurance was limited only to the books. The internship period was only of sixty working days so gaining more knowledge on insurance, throughout sixty days is very difficult.

  • 5.2 Lesson Learnt

During sixty working days as an internee in the insurance company, one cannot learn each and every aspect of insurance services. Life insurance has wide scope in Nepal. The main obstacle that was found at the organization is its privacy which cannot be displayed. The following are the major lessons learnt during the internship period:

Understand how to deal with the clients.

Understand the corporate culture of the organization.

Learn the function of the various department

Learn the process of claim settlement.

Gain necessary skills to tackle problems.

Knowledge of issue of agents updated ID.

Opportunity to improve communication and interpersonal skills.

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Know the rules and regulations related with claim settlement.

Learned to be communicative with experts and various natured people as well as built

self confidence. Learned the chronological filing of documents.

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