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Wednesday, November 21, 2012

Insurance Industry Crisis Survivors

The Insurance Industry is facing many problems along with other sectors of the economy. Although Insurance has become one of the basic need of Corporate Sector as well as Consumer Sector with the passage of time, but due to immense business crisis and downfall, Insurance industry’s profits have fallen to a great extent. This is due to increased loss ratios and decreased premium rates. Therefore the rates of return of the Insurance Companies owners have decreased.  But still smart owners are leading the market with good business strategies such as: 

Ø  They are increasing any particular class of business such as some are concentrating on Auto Insurance, some are on Bonds and Engineering etc. In this way they are earning huge amount of premiums from these classes and the factor of losses in these sectors is negligible.

Ø  Some companies have extended the period of claim settlement which in the short run increase their cash flows but in the long run cause them disadvantages such as lower client satisfaction, lack of credit facilities (Workshops, Hospitals etc.).

Ø  Also some are doing very limited business but their profits are quite satisfying. This is due to their good investment’s returns.

Ø  The performance of some Insurance companies is also affected because they are much concentrating on business development only, while neglecting the factor of effective Human Resource and infrastructure. As this will increase the profits in the short run but in the long run this result in issuance of policies which are too risky for that enterprise because the human resource working is not well equipped to analyze the risk factors of any particular risk.

Ø  Some top level companies are too much equipped with Human Resources, Business, and Capital that they are only affected up to a little extent from this crisis. As they have good ratings and market repute.

Ø  Consumer policies are quite popular nowadays such as Health Insurance, Auto Insurance, Household Insurance and Travel Insurance etc. Companies specialized in these services are also very much stable.

Ø  Companies that are offering built in products to Institutions such as Credit Card Insurance, Loan Insurance, Agri Insurance, Life Insurance (Bancassurance), and Auto insurance are also enjoying profits with not much pain.

Ø  Although the overall volume of Insurance business in the market has increased with the passage of time but in the same time competition has also increased. Insurance companies are offering lowest rates in order to fetch business as a result of which the rates have been fallen to a greater extent thus affecting profitability.

On the whole only those owners are successful which use mix of all the above strategies otherwise their profits will be short term.

Hope I am able to explain problems pertaining in the Insurance market. Please post your comments / suggestions.

Saturday, August 20, 2011

SORN and Continuous Insurance Enforcement (BLOG from

honda cb750 1969
Many owners of classic motorcycles will be affected by CIE.
I am a very keen motorcyclist and like many others I am faced each year with the issue of whether or not to leave my motorcycle registered for the road over the winter months. A number of my friends also have classic motorcycles that are only rarely used in the summer months.
I was shocked when I heard recently about the upcoming changes to the law regarding insurance for off-road motorbikes and other vehicles: I heard it would soon be illegal to own a vehicle – even one you are not using – and not insuring it.
On investigation, I found the real situation was a little more complicated and although there was some hope, the new law will certainly have a major impact on all of us who want to adhere fully.
Update: It seems that an interesting solution has revealed itself on our own doorstep, so if you’ll excuse the shameless plug, it seems I’ve discovered a new type of insurance!
I thought I should share this topic with RiskHeads readers right away and get feedback on what people are thinking and doing about this. Read on for the full story and information on how to stay within the law…

What Does SORN mean ?

Since 31st January 1988, SORN has been an abbreviation for Statutory Off Road Notification.
If you are the registered keeper of a vehicle that’s not being road taxed and is kept off road you must make a Statutory Off Road Notification. This is done online or by phone as long as you are registered as the vehicle keeper. It’s all very straightforward and you receive an acknowledgement letter from the Driver and Vehicle Licensing Agency (DVLA) soon after they are notified.
The SORN ends when the registered keeper changes or road tax is purchased for the vehicle.

What is Continuous Insurance Enforcement (CIE) and what’s all the fuss about?

Put simply, from 1st April 2011 it became illegal to keep a vehicle and not insure or SORN it.
Previously it was only an offence to use a vehicle without insurance but the new law means that if your vehicle is kept in a garage and never used it will still need to be insured or otherwise declared SORN.
V890 SORN form
Everyone's favourite V890 SORN form.
From the end of June 2011 Insurance Advisory Letters (IAL) will be issued by the Motor Insurers Bureau to the registered keepers of uninsured vehicles. This will be following a check of the Motor Insurance Database (MID).
The IAL will advise the registered keeper that their vehicle appears to have no insurance and what actions to take to avoid receiving a fixed penalty from DVLA.
If the vehicle does not have insurance the registered keeper could:
• Receive a fixed penalty of £100
• Have their vehicle wheel-clamped, impounded or destroyed
• Face a court prosecution, with a possible maximum fine of £1,000
And moreover, payment of a penalty does not replace the need for insurance.

If I have a vehicle laid up what should I do ?

If you have no intention of using the vehicle on the road an extended period then it must be SORN’d right away!
If on the other hand the vehicle is only off the road for a short period then you could just retain your insurance during this period.

How can I insure a vehicle that is currently SORN ?

The normal approach is to ask your Insurers if they would restrict your normal cover to Fire and Theft only as you will not need the Third Party cover that is required under the Road Traffic Act.
Unfortunately I found that many insurers will not consider this reduced cover so you have to pay for full cover that you do not actually need.
Update: The shameless plug
Well, a funny thing happened after I wrote this article. You might not believe it, I probably wouldn’t – which is just A-OK with me – but I was contacted by a client of our sister company, who are offering a new product designed for, yes you’ve guessed it, off-road motorcycle insurance.
It seems therefore that there is a solution to this dilemma – for motorcycles at least – in the form of a new website, So I did a little review.
It seems the website offers motorcycle owners genuine ‘laid up’ cover for all bikes, not just classics. I’m told it’s a new scheme aimed at bikers to reduce the cost of their premiums by providing cover for the bike whilst its kept off the road.
So clearly it covers your bike whilst stored in your garage or shed – something the average household insurance policy does not cover – providing fire and theft insurance whilst your bike is off the public highway.
The policy looks good for bikers who don’t ride some of their bikes or for people who just want some cover during the winter months, or those who have a collection of machines or their bike is too ‘modern’ for a classic laid up policy.
I got in touch with SORN Insurance ‘s Head of Products Paul Wheeler who was happy to give me a quote for RiskHeads (no surprises there!)…
“We know motorbike owners suffer sleepless nights knowing their pride and joy may be at risk as they can’t get a Fire and Theft only policy. The ones who get some have a standard Third Party Fire & Theft policy which means they end up paying through the nose for cover they don’t really want or need. Our ‘laid-up’ policy is available on all motorcycles with no age restrictions. To get an instant quote and buy online visit or call and speak to an advisor on 0844 3188 398.”
Well there you have it! This may not be right for everyone, but it’s the best solution I’ve seen.

Read more about RiskHeads | Rewriting the insurance industry. 

Tuesday, April 19, 2011

Business Interruption Insurance

Business Interruption Insurance is a special kind of Insurance offered to Large Businesses in order to provide coverage to them when they suffer loss (business Interruption) due to any insured peril.

Business Interruption Insurance (also known as Business Income Insurance) covers the loss of income that a business suffers after a disaster while its facility is being rebuilt. 

A property insurance policy only covers the physical damage to the business, while the additional coverage allotted by the business interruption policy covers the profits that would have been earned. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred.

This type of coverage is not sold as a stand-alone policy, but can be added on to the business' property insurance policy or comprehensive package policy. Since business interruption is included as part of the business' primary policy, it only pays out if the cause of the loss is covered by the overarching policy.


The following are typically covered under a business interruption insurance policy:
  • Profits- Profits that would have been earned (based on prior months' financial statements);
  • Fixed Costs- Operating expenses and other costs still being incurred by the property (based on historical costs);
  • Temporary Location- Some policies cover the extra expenses for moving to, and operating from, a temporary location;
  • Extra Expenses- Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operation while the property is being repaired.
This coverage extends until the end of the business interruption period(Indemnity Period), which is determined by the insurance company. Most insurance policies define this period as starting on the date of the covered peril and the damaged property is physically repaired and returned to operations under the same condition that existed prior to the disaster.

The Sum insured for Business Interruption is normally calculated by amounting the Gross Profit of the Company. And a suitable premium rate is applied to it. 
The main factors which are usually kept in mind by Insurers while transacting Business Interruption Insurance are:
  • Could the company can operate from any other premises.
  • What would be the maximum time to reinstate the Insured peril, if a loss occurs.
  • Amount of Gross Profit etc.
So If you are a large business owner don't forget to purchase Business Interruption Insurance in order to cover your loss of income if any Insured Peril occurs.

You can also visit the following link on order to gain complete knowledge of Business Interruption Insurance:

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Saturday, April 16, 2011

Achievements of The United Insurance Company of Pakistan Ltd in 2010

Dear All,
I am hereby delighted to inform you about the remarkable achievements our company has made during the year 2010. The year 2010 marks as a benchmark in the history of The United Insurance Company of Pakistan Limited and as well as United International Group. Some of the key achievements are as follows: -
  • A new addition in the United International Group which is "Tawasul Insurance LLC, Abu Dhabi".
  • Paid up Capital of The United Insurance Company of Pakistan Ltd increased to about Rs.400 millions.
  • Transacted a Gross Premium of about Rs.840 million including all the classes of General Insurance.
  • Generated A Profit After Tax of About Rs.120 million (Profit Before Tax About Rs.130.8 millions).
  • The Credit Rating of The United Insurance Company of Pakistan Limited has been upgraded to Single A (Previously Single A Minus) by PACRA vide their letter dated 31st Jan, 2011. This can be seen on the official Website of PACRA .
  • Issued Bonus Shares.
  • Gave an EPS (Earnings Per Share) of Rs.2.96
  • Total Number of Branches in Pakistan reached to 110.
  • and many more
Above are some of the key achievements of the United Insurance Company, A detailed information could be available on request. These achievements are all due to the great level of trust and relationship we maintain with our clients and our good teamwork. We hope to strengthen this relationship in the future. Should you require any further Information / queries we shall rather be pleased to furnish you the same.

Thursday, July 22, 2010

Badly Needed Health Insurance Reforms in Pakistan.

In third world countries like Pakistan, the health conditions of the citizens are not so much good. Which results in high rates of infections, and diseases. In Pakistan where per capita income is less than Rs. 5000 p.m. the citizens cannot afford expensive Health and medical facilities thus resulting in poor health. With poor health conditions citizens cannot take active part in daily activities.

Health Insurance reforms, as introduced in America and other countries, should also be introduced in Pakistan, providing at least basic health facilities to all citizens. Health reforms should be implemented at Federal, Provincial, District levels.
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Sunday, July 18, 2010

Bloodstock Insurance

Bloodstock Insurance is the insurance of horses, for example stallions, geldings, mares and foals. Livestock insurance is the insurance of animals (normally farming animals) which are kept for use or profit, and is a wider category. Within this area is also the insurance of exotics, which covers insurance of more unusual animals such as ostriches and zoo animals and aquatics insurance, which covers insurance of fish (usually commercial fish farms) or aquatic mammals such as dolphins.

Space Insurance

Geostationary orbit-animationImage via Wikipedia
Compared to other areas of Insurance, space insurance is a relatively new area- the first policy was written in 1965 for Intelsat I---- and is continuously developing. Whereas states and governmental organizations were instrumental in pioneering space exploration, in recent years the commercial exploitation of space has increased at a rapid rate. Space tourism is no longer in the realms of science fiction and will result in new insurance products being developed.
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