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CHAPTER 1
1. INTRODUCTION
1.1 Background of the study
The world is full of risk and uncertainties. When, where, what happens is
unknown. Safety of life and security of property is what ones seek for. What is
going to be happened in future, what loss we are going to bear; is that one penny
or millions rupees or is that which is incomparable with money? It is uncertain
but whatever the loss be it is harmful to us. Basically there are two types of loss-
corporal and emotional loss. Emotional loss is related to human sentiments which
can be felt but cant be valued in terms of money. Corporal loss can be
indemnified, might not be full but in a way that loss doesnt become a burden for
the looser for which the concept of insurance evolve.
Insurance is the pooling of fortuitous loss by transfer of such risk to insurer who
agrees to indemnify insured for loss to provide precautionary benefit on the
occurrence of loss or to render service connecting with the risk.
Insurance are of various types such as life insurance, fire insurance, marine
insurance, aviation insurance, households insurance, personal accident insurance,
liability insurance, motor insurance, etc. among these, I have selected marine
insurance as the subject matter for this field work report. This report is prepared
on the basis of data and information that has been provided by EIC and Rastriya
Beema Samiti. All the informations included in this report are based on the
secondary data provided by the concerned companies, books and magazines. Inthis report, I had tried the best to include as much as possible information's I had
gathered in suitable figures and chart also.
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1.2 Introduction to Everest Insurance Company
EIC was established in 1994 as a public limited company. Established with an
ambition of safekeeping Nepal, EIC has come a long way after the privatization
of insurance sector in Nepal. EIC in todays insurance sector of Nepal is one of
the leading insurance companies. With the mission Security & Support when
you need them most company has been able to win the trust from its more than
20,000 clients. Few amongst them:-
- Manufacturing Industry/Trading Houses
- Banks/Financial Institutions
- Multinational Companies
- Airlines
- Hotels
- Automobiles
- Contractors
- Publication
- Embassies
- NGO/INGO and many more
The company in its present form has been the outcome of strong management
committee, dynamic staff of 60 members and countrywide network of 300
agents.
1.2.1 General Information about the Company
Registration 2051-02-17
Year of starting business 2051-04-07
Main Office Hattisar, KTM, Nepal
Contact Tel. no. 4444717, 4444718
Fax: 977-1-4444366
P.O. Box 10675, KTM
E-mail: [email protected]
Branch office Biratnagar
Birgunj
Pokhara
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Liaison office Butwal
Dharan
Narayangarh
Patan
Shareholders
40% of its total capital is with the general public, which numbers around 6000
shareholder. The leading business and industrial houses of Nepal and individuals
have taken the shares of the company.
Reinsurance Arrangements
EIC has the re-insurance business with the foreign insurance companies like
Zurich International, Italy
Gerling Konzern Global, Germany
General Insurance Corporation of India
Tokyo Fire & Marine, Japan
Mitsui Sumitomo, Japan
Assicurazioni Generali, Dubai
AIG Europe Ltd., UK
Swiss Re, Switzerland
Royal Sun Alliance, UK
ARIG Bahrain
Mille Re, Turkey
African Re, Nairobi
Korean Re, Korea
QBE International Insurance Ltd.
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Management
A Board of Directors under the chairmanship of Mr. Mohan Gopal Khetan
manages EIC. A management Committee under the chairmanship of Mr. Ratan
Lal Shanghai has been formed to ensure smooth functioning of the company.
Different management levels and other 60 dynamic teams are assisting the
management team for the smooth performance.
1.2.2 Objectives of EIC
In this world of uncertainty a sense of security is not only needed but is an
essential factor of life. EIC has been established with an objective of creating a
sense of security in all its customers by providing international standardinsurance. Besides this its other objectives are:
To develop and fulfill the shortage of technical manpower and also to
create awareness among the general public regarding the importance of
insurance.
Nepal is moving ahead to open up the General Insurance sector. With
many new players expected in this field, EIC focuses to explore and top
the potential market and open up new portfolios.
1.2.3 Services offered by EIC
To meet the growing needs of todays world, EIC has been upgrading its range of
products and policies. The services offered by EIC are:-
Fire & Allied Perils Insurance
Burglary & Housebreaking Insurance
Aviation Insurance
Trekkers Assistance Insurance
Duty Insurance
Cash in transit Insurance
Bankers Blanket Insurance
Contractors All Risks Insurance
Erection All Risk Insurance
Everest Travel Trip Insurance
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Household Insurance
Vehicle Comprehensive Insurance
Group Personal Accident Insurance
Group Medical Insurance
Fidelity Guarantee Insurance
Marine Transit Insurance (Import/Export)
1.3 Statements of Problems
Nepal is a small developing country. It is a landlocked country surrounded by
land everywhere. Thus, here exists no sea marine insurance only inland marine
insurance exist. Regarding inland marine insurance many problems are prevailingin Nepal such as:-
Here lacks the reinsurance company, thus in huge amount of national
income is going to foreign country insurance companies.
Since 2058/59, the latest data as whole record of insurance companies of
Nepal is not properly available.
There is lack of legal provision to make the carriers binding for necessary
compensation
Lack of manpower having the specialized knowledge about marine
insurance.
Insurance companies have to face moral and morale hazards.
Due to the political instability transportation at the time is problem, many
goods get damaged on the way due to the stoppage of goods for many
damage.
1.4 Objectives of the study
The main objective is to analyse management of marine insurance with special
reference to EIC Ltd. Basically this study is done to fulfill following objectives:-
To evaluate the financial performance of marine insurance department.
To compare the marine insurance premium of EIC with total premium.
To compare claim paid and claimed amount of marine insurance.
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To evaluate profit portion of marine insurance with total profit.
To study about the activities of marine insurance.
1.5 Significance of the study
This field study report is on A study on marine insurance with special reference
to EIC Co. this report will help to have the knowledge of marine insurance. This
study will also help to evaluate the contribution of marine insurance to the EIC
Co total profit. Since this study is done by visiting EIC Co, Beema Samiti it helps
to have the practical knowledge of insurance which is different from that of
theory of books. This study also helps to distinguish between the theory written
in books and prevailing conditions and activities of insurance companies.
1.6 Organization of the report
It is the concise contents of the report. In the first chapter i.e. introduction, here
the information of marine insurance with the general information of EIC Co. has
been provided. Also the problems regarding insurance (esp. marine insurance),
objectives of field work and its significance have also been provided.
Second chapter is about the findings in marine insurance by various authors,
report writers and the reports and journals of Beema Samiti. Here the conclusions
derived by them are copied same to same.
Third chapter is about the methodology used during the collection of necessary
data for this report.
On the fourth chapter the financial data of EIC has been analyzed and presented
in various diagrams and tables.
At last on fifth chapter the conclusion has been drawn from the study.
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CHAPTER:-2
REVIEW OF THE LITERATURE
2.1 Introduction to insurance
Safety and security of life and property is the common need of every person. But
life is uncertain when, where, what will happen is uncertain. Different accidents
may occur in day to day life. The loss so occurred may bring disaster in the life
of the victim physically or economically. Thus, to minimize the burden of risk,
risk of one person is transfer to another so that after the loss also he could be able
to re-establish himself as before. From here the meaning of insurance arises.
Insurance means the transfer of risk of one person to another. In the insurance
there are two parties- insurer and insured. Insurer is the one who undertake the
risk of other persons. Insured is the one who transfer own head risk to other for
which it pay certain amount to insurer called premium. So we can say that
insurance is the spread of risk of insured to insurer by paying certain amount to
the insurer; who (insurer) promises to reimburse the insured if any loss occurs
accidentally.
Insurance is a contract between an insured and an insurer, in which insured pays
some amount (premium) to the insurer and in return the insurer indemnifies the
loss caused by the contingencies as mentioned in the contract.
Insurance is a social device which spread the loss caused by certain risk over the
number of peoples, who are exposed to it and agree to insure themselves against
the risk. Insurance had been not only able to minimize the risk but also to recover
the loss of victim and re-established him as he was before. So insurance has been
the necessity of the secured society.
2.2 History and Development of Insurance in Nepal
The history of insurance in Nepal emerges from the Guthi system, Joint family
system, Parma and Dhikuti. The official record was made from the
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establishment of Mal Chalani and Insurance Company in 2004 B.S. under the
ownership of Nepal Bank Ltd. Later in 2016 B.S. it was renamed as Nepal
Insurance and Transport Co.. It was again renamed as Nepal Insurance Co.
Ltd in 2048 B.S. it is the oldest insurance company of Nepal.
After the establishment of democracy in 2007, different development works like
transportation, establishment of industries, factories, and business started rapidly.
To take benefit of this, some Indian Insurance companies like Ruby General
Insurance Company, Oriental and Fire Insurance Co. Ltd, the Sterling General
Insurance Company Ltd and Life Insurance Company started insurance business
in Nepal. The national capital was gone out to the foreign country due to the lack
of the insurance services. Realizing the necessity of insurance company in 2024,
Rastriya Beema Sansthan Pvt. Ltd was established. Insurance company Act was
also enacted in 2025 B.S. called Insurance Act 2025 to run the insurance
business effectively inside the country. Under the Insurance Act 2025, the
National Life and General Insurance was established in 2044 which has right to
make life and non-life insurance business. In 2030 National Insurance Company
Ltd was established which has only right to make non-life insurance business.
After the period of 2047, HMG replaced Insurance Act 2025 with Insurance Act
2049 and amended it in 2052 B.S. Insurance regulations enacted in 2049 were
also reformed in 2053 B.S. Thus HMG has encouraged private sectors to enhance
insurance business in Nepal. After the introduction of these Acts, Rules and
regulations following companies are operating in Nepal.
S.N. Name of Insurance
Company
Regd.Date Ownership Service Provides
1 Nepal Insurance Co. Ltd 2004 Private Fire, marine, motor,
contractors risk and
engineering and miscellaneous
2 Rastriya Beema Sansthan
(RBS)
2024 Government Life, Fire, marine, motor,
contractors risk and
engineering and miscellaneous
3 National Life & General
Insurance Co.
2043 Joint Fire, marine, motor,
contractors risk and
engineering and miscellaneous4 Himalayan General 2050 Private Fire, marine, motor, aviation,
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Insurance Co. Ltd. contractors risk and
engineering and miscellaneous
5 United Insurance Co. Ltd. 2050 Private Fire, marine, motor,
contractors risk and
engineering and miscellaneous6 Everest Insurance Co. Ltd. 2051 Private Fire, marine, motor, aviation,
contractors risk and
engineering and miscellaneous
7 Premier Insurance Co. Ltd. 2051 Private Fire, marine, motor,
contractors risk and
engineering and miscellaneous
8 Neco Insurance Co. Ltd. 2053 Private Fire, marine, motor, aviation,
contractors risk and
engineering and miscellaneous9 Alliance Insurance Co.
Ltd.
2053 Private General insurance
10 Sagarmatha Insurance Co.
Ltd.
2053 Joint Fire, marine, motor,
contractors risk and
engineering and miscellaneous
11 Credit Guarantee
Corporation
1993 Private Cattle Insurance & Credit
Insurance
12 Oriental Insurance Co. Ltd. 2024 Foreign Fire, marine, motor,
contractors risk and
engineering and miscellaneous
13 National Insurance Co.
Ltd.
2031 Foreign General Insurance
14 Nepal Life Insurance Co.
Ltd.
2058 Private Life Insurance
15 NB Insurance Co. Ltd. 2058 Private Non-life Insurance
16 American life insurance
Co. Ltd.
2058 Joint Life Insurance
17 Life Insurance Corporation 2058 Life Insurance
18 Prudential Insurance Co.Ltd.
2059 Non-life Insurance
19 Shikhar Insurance Co. Ltd. 2061 Private Non-life Insurance
20 Lumbini Insurance Co.
Ltd.
2062 Private Non-life Insurance
2.3 Market structure of Insurance Companies of Nepal at glance
Ownership Nature of the company Total
General Life Composite
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Government
Owned
- - 1 1
Private
sector
12 1 - 13
Foreign 2 1 - 3
Joint
Venture
1 1 1 3
Total 15 3 2 20
( Source: Beema Samiti)
In the above table we can see that there is only one insurance company owned by
government and it provide both general and life-insurance facility. There are total
13 private sector companies, out of which 12 provide general life insurance
facility and only 1 provide life-insurance facility. 3 companies are foreign
companies among which 2 provide general insurance and 1 provide life insurance
facility. 3 insurance companies are established in the joint-venture out of which 1
provide general insurance, 1 provide life-insurance and 1 provide the facility of
both general and life-insurance.
2.4 Introduction to marine insurance
Marine insurance is the contract of indemnity under which the insurance
company promises to compensate the loss caused by the marine risks under
certain period, in return for certain premium. In old days marine insurance used
to be contract of merchant navy, ship, goods and the rent. But with the time phase
the objectives of marine insurance is widening. In this modern age marine
insurance include not only sea risks but also the land risks too. Total loss or
damage to the cargo by fire,si9nking and stranding or the vessel, short delivery,
non-delivery, theft, pilferage, leakage, breakage, shortage due to tearing,
chipping, water damage and damage by extraneous substances can be covered by
marine policy depending upon the nature of commodity and as mutually agreed
by the insurer and the insured.
Due to the growth of the population, development of education and other reasons
import & export of things is cheaper through marine may and riskier also.
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Financial and physical loss can be created by the marine risk sea storm, sea
pirates and the natural crisis. If the ship sinks, goods get damaged, goods owner
and merchant, navy company that provide ship in rent had to bear the loss of
great amount. Marine insurance helps out to get relief from the burden of such
risk by providing compensation at the time of so occurred loss. Marine insurance
has made foreign trade easy. Also it has helped to establish relationship with
peoples of different countries. Air transport is very high, transportation expenses
in marine transport is lower so, its importance has grown up.
In context of Nepal, 16 insurance companies provides marine insurance policy.
Since export and import business is growing on in context of Nepal, the market
of marine transit insurance is also in increasing trend. As the banks have made
marine insurance compulsory to issue LC which has also helped to boost up
marine transit insurance business. The awareness regarding the insurance itself is
gradually increasing in Nepal and marine transit insurance is also not apart from
it.
2.5 Definition
"A marine insurance policy is very after defined as a contract of indemnity
whereby the insurer undertakes to indemnify insured against perils of the sea"
- Ghosh & Agrawal
Marine insurance has been defined as a contract between insurer and insured
whereby the insurer undertakes to indemnify the insured in a manner and to the
interest thereby agreed, against marine losses incident to marine adventure
- M.N. Mishra
Marine insurance is a contract whereby the insurer undertakes to indemnify the
insured in a manner and to the extent whereby agreed, against marine losses, that
is to say the losses incidental to marine adventure.
- Indian Marine Insurance Act 1963
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Marine insurance is a contract whereby one party, for an agreed consideration,
undertakes to indemnify the other against loss arising from certain perils and sea
risks to which a shipment and other interest in a marine adventure may be
exposed during a certain voyage or certain time.
- Mr. Arnold
2.6 Classification of Marine Insurance
Marine Insurance is the insurance of goods in transit. Since it covers goods in
transit against most pure risks connected with transportation, it is also known as
transportation insurance. Marine Insurance can be classified into two categories:-
2.6.1 Inland marine insurance
Inland marine insurance provides financial security of goods being shipped on
land. When goods are imported, exported or domestically shipped, land marine
insurance covers all types of risks on good in transit. This coverage includes the
loss by accident, theft, robbery, fire, etc.
2.6.1.1 Risks covered by inland marine insurance
Risks covered by inland marine insurance are specified in the Inland transit
Clause-A, B& C which are attached to the policy. These are as under:
I.T.C.--C I.T.C.--B I.T.C.--A
Fire and lightning. Fire, lightning,
breakage of bridges,
collision with or by the
carrying vehicle,
derailment or
overturning of the
carrying vehicle,
accidents of like nature
to the carrying railway
All physical loss or
damage to the insured
goods except as per
exclusions, it covers all
risks but not all losses
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wagon or vehicle.
2.6.1.2 Risks excluded by inland marine insurance
In no case shall this insurance cover loss, damage or expense attributable to orcaused by:-
1. Wilful misconduct of the assured.
2. Ordinary leakage, loss in weight or volume, wear and tear.
3. Insufficiency or unsuitability of packing or preparation of the subject
matter insured.
4. Inherent vice or nature of subject matter.
5. Delay even though the delay caused by insured peril.6. Insolvency or financial default of anyone connected with the transit and
relevant trade transaction.
7. Misuse or loss of carriers receipt.
8. Malicious damage.
9. War and war like risks.
10.Strikes, riots and civil commotion risks.
11.Capture seizure arrest restraint or detainment, and the consequence thereof
or any attempt thereat.
12.Derelicts mines, bombs or derelict weapons of war.
13.Caused by terrorist or any person acting from a political motive.
2.6.1.3 Duration
Under clause C:
Attaches from the time the insured goods loaded into the WAAGON/TRUCK for
the commencement of transit and continues during the ordinary course of transit
including transshipment, if any and ceases immediately on the unloading form
wagon at the final destination Railway station or arrival of vehicle at the
destination named in the Policy.
Under clause B & A:
Attaches from the time the insured goods leave the Warehouse/store for thecommencement of transit including Customary transship, if any,
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1. Until delivery to the final Warehouse at destination station or
2. Until expiry of 7 days after arrival of the vehicle Railway wagon at the
final destination Railway station or the vehicle at the destination town,
whichever shall first occur.
2.6.2 Ocean marine insurance
Ocean marine insurance provides protection of all types of risks of goods in
transit in ship. All legal liabilities of the owners and shippers can also be covered
in ocean marine insurance. There are four main types of ocean marine insurance:-
I. Hull insuranceHull insurance covers damage to a ship itself. The hull policy offers
an unusal coverage under its collision clause, which provides
liability insurance for loss or damage to the other vessel involved in
a collision, as well as to its cargo.
II. Cargo insurance
Cargo insurance covers losses to a ships physical cargo. This
insurance is available for shippers of goods moving by sea or air in
international trade.
III. Freight insurance
Freight insurance covers shippers against a loss of freight.
IV. Marine liability insurance
Marine liability covers damages to people and property from
collisions and other incidents. The marine insurance policy may
include liability hazards such as collision or running down.
2.6.2.1 Risks covered by ocean marine insurance
Risks covered by ocean marine insurance are specified in the Institute Cargo
Clause-A, B& C which are attached to the policy. These are as under:
I.C.C.--C I.C.C.--B I.C.C.--A
Fire or explosion, 'C' cover plus All risks of loss or
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stranding, sinking
etc., Overturning,
Derailment (of
Land Conveyance),Collision,
Discharge of cargo
at Port of Distress,
Jettison, General
Average Sacrifice,
Salvage Charges.
Earthquake, Lightening,
Washing Overboard,
Entry of Sea, Lake or
River water into vessel,craft, Total loss of
Package in Loading or
Unloading.
damage except those,
which are specifically
excluded plus Malicious
Damage Piracy.
2.6.2.2 Risks excluded by ocean marine insurance
Except for the risks of Piracy and Malicious Damage which are covered in the
I.C.C.A clauses but not in B & C clauses, the excluded risks are common to all
3 clauses. These are:
1. Willful misconduct of the insured.
2. Ordinary leakage, ordinary loss in weight of volume of ordinary wear and
tear of cargo.
3. Insufficiency or unsuitability of packing or preparation of cargo.
4. Inherent vice or nature of cargo.
5. Delay, even if delay is caused by insured against.
6. Insolvency of financial default of the owners, managers, charterers or
operators of the vessel.
7. Unseaworthiness of vessel or craft and unfitness of vessel, craft,
conveyance container of lift van.
8. Use of any weapon of war employing atomic or nuclear fission. In
addition, the following are excluded:
i. War risks.
ii. Strike risks (including damage caused by terrorists)
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It is however, normal to include War and Strike Risks in insurance of ocean
shipments. For this purpose, the Institute War Clauses (Cargo) and Institute
Strike Clauses (Cargo) are used.
2.6.2.3 Duration of the policy
Attaches from the time goods leave the warehouse named herein for the
commencement of the transit, continues during the ordinary course of transit and
terminates either on delivery to the consignees final warehouse or on delivery to
any other warehouse whether prior to or at the destination named herein, which
the assured elect to use either for storage other than in the ordinary course of
transit or for allocation or distribution or on the expiry of 60 days after thecompletion of discharge at the final port of discharge whichever shall first occur.
The insurance shall remain in force during delay beyond the control of the
assured, any deviation, forced discharge. Reshipment or transshipment and
during variation of the adventure arising from the exercise of a liberty granted to
the shipowners or charterers under the contract of affreightment.
2.7 Principles of Marine Insurance
The marine insurance has the following fundamental principles:-
1. Principle of Insurable Interest
The principal of insurable interest is very important in marine insurance.
Since the ownership and other interest og the properties often changes
from hands to hands, the requirement of the insurable interest to be present
only at the time of loss makes a marine insurance policy freely assignable.
2. Utmost Good Faith
The principle of utmost good faith is applied to both insurer and insured.
But the duty of disclosure of material facts rests highly on the insured,
because he is aware of the material facts. Any non-disclosure of a material
fact enables the insurer to avoid the contract.
3. Principle of Indemnity
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The marine insurance is based on the principle of indemnity. Under no
circumstances an insured is allowed to make a profit out of claim. The
basis of indemnity is always a cash basis as the insurer cannot replace the
lost ship and cargoes.
4. Principle of Subrogation
If the loss or damage is occurred due to the third party the insurer has the
right to claim against the third party after the payment is made to the
insured.
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CHAPTER: - 3
METHODOLOGY
3.1 Field work design
Here, the research has shown available data in descriptive & analytical form. The
report has been designed on the basis of the financial aspects of EIC Ltd of
marine department which consist of 5 year data.
3.2 Study area
This field work is the study on marine insurance with reference to EIC. This
study is also about the total share of marine insurance in total profit of EIC
Company, Income and Outflow of marine insurance.
3.3 Field work procedures
Once I select my subject matter of report writing as "Marine Insurance" I went to
the office of EIC in Hattisar. It was a big office that deals with non-life insurancepolicy. There I was introduced to Mr., Sudeep Subedi of claim department who
gave me the information about the marine insurance and its comparison with
other national marine insurance companies.
3.4 Methods of data collection
Data's are collected using both sources- Primary & Secondary sources.
i. Primary sourceThis data is original in character. For the study purpose the required
information was collected through various primarary sources like
interviews, questionnaires & informal discussions.
ii. Secondary source
Besides primary source, additional required information were collected
from various secondary sources like published official document of the
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company, booklets, brochures, Annual Report and books. Also the
unpublished information provided by Beema Samiti.
3.4.1 Tools used for the study
Statistical & financial tools are used to facilitate this study. Tools used are as
follows:
a. Tables
b. Bar Diagrams
c. Pie Charts
3.4.2 Limitation of the study
To collect data during the study period is difficult task. During the period of this
study I faced following problems:-
1. Time, there was a lack of time while preparing
this report. Preparing report based mostly on primary sources required
sufficient time which lacked while preparing this report.2. Since 2058/59 the latest data as a whole record of
insurance companies are not available.
3. Lack of availability of industry average values to
compare with company values.
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Comparison of Marine premium with Total
premium
-
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
300,000.00
350,000.00
2057/58 2058/59 2059/60 2060/61 2061/61Fiscal Year
PremiumA
m
Total premium
in Rs'000Marine
Premium
CHAPTER:-4
PRESENTATION AND ANALYSIS OF DATA
4.1 Description of the study area
This field work report evaluates the financial aspects of Marine Insurance
Department of EIC. In this report the financial activities of marine insurance is
compared to the total financial act of the company. For this different data's are
collected and processed & presented in suitable diagram, chart and in other forms
using different suitable statistical tools & techniques for the appropriate
interpretation and to draw the reliable conclusions.
4.1.1 Comparison of Marine Insurance Premium with Total Premium
Table 4.1.1 Total premium and Marine premium
FY Total premium in Rs'000 Marine Premium in Rs 000 In %
2057/58 209,210.00 19,514.00 9.3
2058/59 297,840.00 14,477.00 4.9
2059/60 267,777.00 16,744.00 6.32060/61 274,313.00 22,653.00 8.3
2061/61 207,039.00 22,169.00 11
Fig:-4.1.1 Comparison of Marine Premium with Total Premium
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The above table and figure shows the total premium collected by EIC in different
fiscal years and the total premium collected through marine claim. It shows that
in last five years nearly 8% (in average) of total premium is collected by marine
insurance.
4.1.2 Total claim, marine insurance claim and paid
Table 4.1.2 Total claim, marine insurance claim and paid
Fig:-4.1.2 Total claim, marine insurance claim and paid
21
FY Total claim
In Rs.
Marine Claim
In Rs.
Outstanding Claim
In Rs.
Marine Claim paid
In Rs.
2057/58 25,859,532.00 3,033,427.00 636,090.00 2,397,337.00
2058/59 36,848,460.00 2,286,266.00 1,188,609.00 1,097,657.00
2059/60 34,015,163.00 2,263,228.00 1,806,825.00 456,403.00
2060/61 30,172,543.00 2,653,939.00 988,565.00 1,665,374.00
2061/62 33,186,624.00 2,683,406.00 823,416.00 1,859,990.00
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Total claim, marine insurance claim and paid
-5,000,000.00
10,000,000.0015,000,000.0020,000,000.00
25,000,000.0030,000,000.0035,000,000.0040,000,000.00
2057
/58
2058
/59
2059
/60
2060
/61
2061
/62
Fiscal year
Claima
mt. Total claim
Marine Claim
Outstanding Claim
Marine Claim paid
In the above table or figure the total amount of claim of Everest Insurance
Company and the amount of marine claim and claim paid is represented.
4.1.3 Gross Profit/ (Loss) of Marine Insurance
Table 4.1.3 Gross Profit / (Loss) of Marine Insurance in different fiscal years
FY Profit / (Loss) in Rs.
2057/58 3,380,349.00
2058/59 2,868,159.00
2059/60 3,331,965.00
2060/61 3,652,837.00
2061/62 2,522,821.00
Fig: - 4.1.3 Gross Profit/ (Loss) of Marine Insurance
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-
500,000.00
1,000,000.00
1,500,000.00
2,000,000.00
2,500,000.003,000,000.00
3,500,000.00
4,000,000.00
Profit/(Loss) amt.
2057/58 2058/59 2059/60 2060/61 2061/62
Fiscal Year
Profit / (Loss)
Profit / (Loss)
Above table and pyramid shows the total profit earned by the marine insurance
department of Everest Insurance Company during different fiscal years. We can
see that in year 2060/61 the marine department earned highest profit than other
fiscal years.
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National marine premium & EIC marine premium
-
20,000.00
40,000.00
60,000.00
80,000.00
100,000.00
120,000.00
140,000.00
160,000.00
180,000.00
2056/57 2057/58 2058/59
Fiscal Years
Premiuma
mNational marine premium
in Rs'000
EIC marine premium in
Rs'000
4.1.4 Comparison of National marine premium and EIC marine premium
Table 4.1.4 National Marine premium and EIC Marine premium
FY
National marine premium
in Rs'000
EIC marine premium in
Rs'000 In %
2056/57 145,313.00 15,414.00 10.61
2057/58 160,534.00 19,514.00 12.16
2058/59 167,949.00 14,477.00 8.62
Fig: - 4.1.4 National Marine premium and EIC Marine premium
In the above Table and Bar Diagram the total National marine premium collected
during different years is given. In year 2058/59 highest premium is collected
throughout the nation. In case of EIC in year 2057/58 highest premium is
collected.
4.1.5 Comparison of National marine claim and EIC marine claim
Table 4.1.5 National Marine Claim and EIC Marine Claim
FYNational marine claim in
Rs'000 EIC marine claim in Rs'000 In %
2056/57 33,769.00 898.00 2.66
2057/58 27,244.00 3,033.00 11.13
2058/59 22,433.00 2,286.00 10.19
Fig: - 4.1.5 Comparison of National Marine Claim and EIC Marine Claim
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National marine claim & EIC marine claim
-
5,000.00
10,000.00
15,000.00
20,000.0025,000.00
30,000.00
35,000.00
40,000.00
2056/57 2057/58 2058/59
Fiscal Years
Claim
am National marine claim in
Rs'000
EIC marine claim in
Rs'000
National Reinsurance & EIC Reinsurance
-
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
2056/57 2057/58 2058/59
Fiscal Years
Claima
m National Reinsurance in
Rs'000
EIC Reinsurance in Rs'000
Comparison of total marine claim amount of EIC with National marine claim
amount is done in the above table and figure. In the year 2056/57 EIC marineclaim shares 2.66% of total National marine claim. Similarly, in 2057/58 EIC
marine claim shares 11.13% of total National marine claim. Likewise in 2058/59
EIC marine claim shares 10.19% of total National marine claim.
4.1.6 Comparison of National Reinsurance and EIC Reinsurance
Table 4.1.6 National Reinsurance and EIC Reinsurance
FY
National Reinsurance in
Rs'000
EIC Reinsurance in
Rs'000 In %
2056/57 67,154.00 13,638.00 20.31
2057/58 69,950.00 16,979.00 24.27
2058/59 61,004.00 12,555.00 20.58
Fig 4.1.6 Comparison of National Reinsurance and EIC Reinsurance
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Premium Collection
25%
11%
4%
16%
21%
23%Fire Insurance
Marine Insurance
Engineering Insurance
Aviation Insurance
Miscellaneous Insurance
Motor Insurance
In the above figure and table we can see that reinsurance amount of marine
insurance in 2056/57 is 20.31 % of National reinsurance. In 2057/58 it is 24.27 %
and similarly in 2058/59 it is 20.38 %.
4.1.7 Sector wise premium collection of fiscal year 2061/62
Table 4.1.7 Sector wise premium collection of fiscal year 2061/62
Insurance Business Premium Collection in Rs In %
Fire Insurance 52,704,058.00 25.46
Marine Insurance 22,169,512.00 10.71
Engineering Insurance 8,658,091.00 4.182
Aviation Insurance 32,933,527.00 15.91
Miscellaneous Insurance 42,886,549.00 20.71
Motor Insurance 47,687,590.00 23.03
Total 207,039,327.00 100
Fig 4.1.7 Sector wise premium collection of fiscal year 2061/62
From the above Pie-chart we can say that fire insurance is able to collect highest
premium than others i.e. it consist of 25% of total premium collected. Motor
insurance premium consist of 23% of total premium and miscellaneous consist of
21%. Also Aviation premium is 16% of total premium; marine premium is 11%
of total premium and 4% of total premium is consisting of engineering insurance.
4.1.8 Sector wise management expenses in fiscal year 2061/62
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Management expenses
25%
11%
4%
16%
21%
23%Fire Insurance
Marine Insurance
Engineering Insurance
Aviation Insurance
Miscellaneous Insurance
Motor Insurance
Table 4.1.8 Sector wise management collection in fiscal year 2061/62
Insurance Business Management expenses in Rs In %
Fire Insurance 7,187,858.00 25.46
Marine Insurance 3,023,511.00 10.71
Engineering Insurance 1,180,804.00 4.182
Aviation Insurance 4,491,524.00 15.91
Miscellaneous Insurance 5,848,932.00 20.71
Motor Insurance 6,503,705.00 23.03
Total 28,236,334.00 100
Fig 4.1.8 Sector wise management expenses in fiscal year 2061/62
From the above Pie-chart we can observe that management expenses of fire
insurance is the highest and followed by motor insurance, miscellaneous,
aviation, marine and engineering insurance.
4.1.9 Gross profit / (Loss) of different departments of the company for fiscal
year 2061/62
Table 4.1.9 Gross profit / (Loss) of different departments of the company for
fiscal year 2061/62
Insurance Business Profit /(loss) amt. in Rs.Fire Insurance 8,230,768.00Marine Insurance 2,522,821.00Engineering Insurance 211,237.00
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Gross /(Loss) of different departments
-
1,000,000.00
2,000,000.00
3,000,000.004,000,000.00
5,000,000.00
6,000,000.00
7,000,000.00
8,000,000.00
9,000,000.00
Insurance Business
Profit/(Loss)am
Fire Insurance
Marine Insurance
Engineering Insurance
Aviation Insurance
Miscellaneous
InsuranceMotor Insurance
Aviation Insurance -Miscellaneous Insurance 7,846,475.00Motor Insurance -
Fig: - 4.1.9 Gross profit / (Loss) of different departments of the company
Above figure shows the gross profit of different departments of the company for
the fiscal year 2061/62. The fire insurance department has high profit than other
i.e. Rs. 82,30,768. Similarly miscellaneous department has high profit after firei.e. Rs. 7,846,475. Then marine department profit is higher i.e. Rs. 2,522,821 and
of engineering of Rs. 2,11,237. Neither profit is earned nor is loss beard by
aviation and motor departments.
4.1.10 Details of profit earned in different fiscal years of Everest Insurance
Company
Table 4.1.10 Profit earned in different fiscal years of Everest Insurance Company
FY
Profit before tax
&bonus (Rs.)
Tax amount
(Rs.)
Bonus
amount (Rs.)
Profit before tax
& bonus (Rs.)
2057/58 25,492,839.00 4,860,136.00 2317531 18,315,172.00
2058/59 29,020,725.00 6,801,594.00 2658859 19,560,272.00
2059/60 27,816,757.00 6,704,724.00 2589748 18,522,285.00
2060/61 25,778,605.00 6,435,674.00 2177893 17,165,038.00
2061/62 14,970,761.00 3,666,122.00 1182712 10,121,927.00
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Profit earned in different fiscal years
-
10,000,000.00
20,000,000.00
30,000,000.00
40,000,000.00
50,000,000.00
60,000,000.0070,000,000.00
205
7/58
205
8/59
205
9/60
206
0/61
206
1/62
Fiscal Years
Profitamt
Profit before tax &
bonus (Rs)
Bonus amount (Rs)
Tax amount (Rs)
Profit before tax
&bonus (Rs)
Fig: - 4.1.10 Profit earned in different fiscal years
Above table and trend lines shows the profit after tax and bonus earned by EIC in
different fiscal years. EIC has earned Highest profit in the year 2058/59 i.e. Rs.
19,560,272.
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CHAPTER:-5
5. SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary and conclusion
Insurance business is increasing rapidly in Nepal. Most of the insurance
business provide both life and non- life insurance facilities. The market of
marine transit insurance is also increasing. As the Banks have made Marine
Insurance compulsory to issue LC which has also boost up marine transit
insurance business. The awareness regarding marine insurance is increasing
among the Nepalese Business houses.
In context of Nepal, here exists inland marine insurance and aviation insurance
business. The awareness of marine insurance is increasing but due to the
political instability different problems arises in the business from time to time.
Insurance companies have to face different problems in marine insurance
business like moral and morale hazards, lack of manpower having thespecialized knowledge about marine insurance, etc. even of various existing
problems EIC has been able to overcome all problems and is no. 1 insurance
company in Nepal. Since it has reinsurance provision with various foreign
companies it can take large amount business also.
Marine Insurance business of EIC is always in profit. It is never operating in
loss. In last fiscal year 2061/62, it has earned profit of Rs. 25,22,821. Marine
insurance has lot of contribution to the total premium of EIC. In the year
2061/62, 11% of total premium is the contribution of marine insurance.
5.2 Recommendation
In Nepal there is lack of reinsurance company, thus large amount of nation
is going to foreign companies so, provision of reinsurance companies
should be maintained within the country so that to prevent outflow of
national income to outside.
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The political situation should be well maintained because it is the main
factor affecting the business.
Since insurance business has to face moral and morale hazards different
preventive measure should be taken to control it.
Different awareness programme should be conducted to make people
aware of insurance.
Provision of proper maintenance of yearly data as a whole record of
insurance companies of Nepal should be made.