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Insurance Sector

- - - - - Insurance Sector Insurance

55 replies to this topic

#7
Mudassir

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    SECP may convene meeting with IAP to discuss insurance related issues

    The Securities and Exchange Commission of Pakistan (SECP) is expected to convene a meeting with the Insurance Association of Pakistan (IAP) in Karachi to discuss insurance-related issues, including premium, re-insurance and terrorism cover, to investors.

    Sources told Business Recorder on Wednesday that the purpose of the meeting with the new team of the IAP is to ensure facilitation and development of insurance companies by providing them a workable environment. The insurance companies are providing cover against losses from terrorism.

    However, the premium rates for terror cover are extremely high as compared to other policies due to extraordinary high risk factor involved. "The cover is available, but certainly there is a high cost to it in Pakistan. It is an open market, and insurance companies are allowed to conduct business in a professional manner after obtaining necessary license from the regulator".

    Sources said that the best way for providing cover against terrorism is to create a fund ie "anti-terrorism pool", for re-insurance purposes. The government is primarily responsible for providing security to local and foreign investors. Whenever insurance related work is being done across the world, the government has the responsibility to provide security to its citizens.

    In UK, "anti-terrorism pool" is operating to provide re-insurance facility to businessmen. The main responsibility has always been taken by the government to provide financial support to such terror insurance pool. On similar pattern, there is need to establish a consolidated "anti-terrorism fund" which should be managed by the insurance companies. The government could significantly contribute to such pool to provide sufficient financing for re-insurance purposes.

    Sources said that Pakistan Reinsurance Company Limited (PRCL) can play an important role in re-insurance facility. Besides, it is a state-owned company, which can effectively provide facility of re-insurance. Usually, terrorism claims are significantly higher due to the high-risk involved. Currently, premium rates are linked to the rise in risk factor.

    Through this company, a vehicle is available to easily provide terrorism cover to the general public. The company can contribute in the pool for risk management of insurance against terrorism. The pool can provide financial backing to local insurance companies.

    At present, the PRCL operates in different areas in all categories of insurance. It is the only strong public sector company in the reinsurance market. The main area of services is provision of treaty, and facultative as well as fronting support to the insurance industry.

    The local insurance companies are engaged in re-insuring their clients with the international re-insurance firms. It has been observed that major portion of the premium is remitted outside Pakistan. The re-insurance has been given to foreign companies due to limited financial capacity of the local industry. Thus, re-insurance is going in the hands of foreign companies and a very small percentage is covered by the local companies.

    Be that as it may, the international reinsurance companies have stopped activities in Pakistan post-Marriott blast, and the local insurance companies are powerless to do anything about it. For the purpose of re-insurance, the SECP has laid down certain criteria to ensure that insurance companies should provide re-insurance facility to internationally reputed companies. Sources said that the Insurance Ordinance 2000 provides protection to insurance policy holders and development of insurance sector on sound footing.


    Mudassir Javed Khan



    #8
    Mudassir

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    Distribution of dividends: insurance companies asked to recognise impairment as of December 31, 2008

    Insurance companies have been asked to recognise the impairment in valuation of investment as of December 31st, 2008 for the purpose of distribution of dividend. In a circular issued by Insurance Division of the (SECP), insurance companies are allowed to value investment in Available-For-Sale (AFS) category at the purchase price and treat the impairment in valuation, at the end of the year, as temporary for finalisation of accounts.

    However, the impairment has to be accounted @ 25 percent per quarter in 2009.

    CIRCULAR NO.3/2009 SAYS: "Available-For-Sale: It is hereby clarified that for the purposes of application of regulations 16(1)(a) of Part A and Part B to the Annexure II: "Statements required to be filed by Life and Non-life Insurers" of the Securities and Exchange Commission (Insurance) Rules 2002, where the market value of any available-for-sale investment as at December 31, 2008, is less than the cost, the fall in value may be treated as temporary and the investment valued at cost.

    Any insurance company which wishes to treat the fall in value as other than temporary, in whole or in part, may do so. However, as provided by SRO 150(I)/2009 dated February 13, 2009 of this Commission, the decline in value of available-for-sale investments as at December 31, 2008 shall be considered as other than temporary and shall be deducted from profit for the purpose of distribution of dividend.

    It is further stated that where any insurance company treats the full in value of available-for-sale investments as temporary, then 25 percent of the difference as at the end of quarter between the cost and the market value as at December 31, 2008, after adjusting for the price through the profit and loss account. For the sake of clarity, any fall in value of available-for-sale investments held by any insurance company as at December 31, 2008, during calendar year 2009, shall be treated as other than temporary."

    Mudassir Javed Khan


    #9
    majid008

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    QUOTE (Mudassir @ Feb 20 2009, 07:50 AM) <{POST_SNAPBACK}>
    Distribution of dividends: insurance companies asked to recognise impairment as of December 31, 2008

    Insurance companies have been asked to recognise the impairment in valuation of investment as of December 31st, 2008 for the purpose of distribution of dividend. In a circular issued by Insurance Division of the (SECP), insurance companies are allowed to value investment in Available-For-Sale (AFS) category at the purchase price and treat the impairment in valuation, at the end of the year, as temporary for finalisation of accounts.

    However, the impairment has to be accounted @ 25 percent per quarter in 2009.

    CIRCULAR NO.3/2009 SAYS: "Available-For-Sale: It is hereby clarified that for the purposes of application of regulations 16(1)(a) of Part A and Part B to the Annexure II: "Statements required to be filed by Life and Non-life Insurers" of the Securities and Exchange Commission (Insurance) Rules 2002, where the market value of any available-for-sale investment as at December 31, 2008, is less than the cost, the fall in value may be treated as temporary and the investment valued at cost.

    Any insurance company which wishes to treat the fall in value as other than temporary, in whole or in part, may do so. However, as provided by SRO 150(I)/2009 dated February 13, 2009 of this Commission, the decline in value of available-for-sale investments as at December 31, 2008 shall be considered as other than temporary and shall be deducted from profit for the purpose of distribution of dividend.

    It is further stated that where any insurance company treats the full in value of available-for-sale investments as temporary, then 25 percent of the difference as at the end of quarter between the cost and the market value as at December 31, 2008, after adjusting for the price through the profit and loss account. For the sake of clarity, any fall in value of available-for-sale investments held by any insurance company as at December 31, 2008, during calendar year 2009, shall be treated as other than temporary."





    adamjee insurance sirf ajj kaa rate per 60 maa 1.60 kaa multiple per trade kar raha
    haa extermely attractive


    #10
    Mudassir

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    Insurance companies' privatisation: commerce ministry protests against being ignored

    Commerce Ministry has reportedly protested against Privatisation Commission's (PC) failure to take it on board over proposed divestment plan of insurance companies during a recent meeting of Cabinet Committee on Privatisation (CCoP), official sources told Business Recorder.

    On February 17, 2009, CCoP approved, in principle, privatisation of State Life Insurance Company (SLIC), National Insurance Company Limited (NICL) and Pakistan Reinsurance Company Limited (PRCL). Commerce Ministry, sources said, will take up the issue with Prime Minister Yousaf Raza Gilani during his scheduled visit to the Ministry's office on February 25.

    "We cannot give any instant comment on the proposed divestment of insurance companies as we have not been consulted prior to bring these entities to the CCoP," sources quoted Commerce Ministry official who was present in the meeting.

    Sources said that the decision with regard to these three companies had been settled during the Shaukat Aziz government, but the present government has revisited this issue without any prior consultation with Commerce Ministry.

    "Privatisation of SLIC, NICL and PRCL was approved in principle, with the direction to Commerce Ministry to re-examine all aspects of privatisation of insurance entities in consultation with Privatisation Commission," sources added.

    One of the officials familiar with insurance sector challenged the decision to privatise an entity whose 97 percent shares are owned by policy holders.

    As regards privatisation of Pakistan Railways, the CCoP was informed that it has three distinct component--Railways workshops; locomotives workshops; and sleeper factories--and in the privatisation process these components should be treated separately.

    Some CCoP members were of the view that the present commercialisation of properties of Railways and tracks access policy framework are under consideration of Railways administration, sources said.

    According to sources, CCoP was also apprised that public-private partnership (PPP) mode for privatisation had not been a success in most parts of the world. However, it was observed that at present Railways had already obtained and overdraft of Rs 35 billion, and debt of Rs 22 billion. Therefore, the government has to avoid further financial loss.

    Sources said that Pakistan Railways apprised the CCoP that it had been working on PPP model. Three studies are being carried out by Asian Development Bank (ADB) and study on PPP model would be completed by the end of December 2009.

    Advisor to Prime Minister on Finance, sources said, was not happy over the slow pace of privatisation process, and stated that "we need to act with speed".

    He, however, constituted a committee under the chairmanship of Deputy Chairman, Planning Commission, comprising Minister for Railways, Minister for Privatisation and Secretaries, Privatisation and Railways, to carry out an exercise through which the structure and method of privatisation of Railways will be suggested.

    When a proposal on privatisation of the Utility Stores Corporation (USC) came under discussion, CCoP was informed that it was a profit-making organisation and at present is running more than 5000 outlets.

    It was also stated that 1300 stores were not financially viable, but the government was running them to provide cheaper commodities to the general public. Industries Ministry, sources said, was of the view that in case of privatisation of USC, these outlets would close and this would not be in public interest.

    Tarin, however, did not agree with Industries Ministry's viewpoint, and said that it was not the business of the government to run a business. USC would, therefore, be privatised.

    Mudassir Javed Khan


    #11
    Mudassir

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    30 percent decline in insurance business

    The insurance business has declined by 30 percent in the country due to slowing down of economic activities in the recent global recession. The international re-insurers have cut the rates of commission of local insurance companies, while on the other hand the 5 percent increase in the CED to 10 percent had put an extra burden on the insurance business, M. A. Shahid, CEO of United Insurance said on Wednesday while talking to Business Recorder.

    He pointed out that the Pakistans insurance companies were facing less losses as compared with other insurers in the world due to their strong products and risk management measures. The international insurance companies faced huge losses during the recent global recessions, he added.

    He said that Pakistan is one of the potential markets for insurance business and expects a significant growth of this sector in future. However, he emphasised for attractive products which could meet the peoples needs. About his company, he said that the United Insurance is the first company in Pakistan that provides crop loan insurance in the country. The company has also launched livestock insurance scheme.

    He said that the present government had announced support to the agriculture sector of the country and made crop insurance mandatory. The announcement that government would pay the premium of all small growers having up to 12 acres agriculture land would provide support to small growers, he added. He said that the company was already providing insurance coverage for tractors and other agricultural machinery for over ten years. "We provide insurance cover for almost all sectors", he said.

    The principal activity of the company is general insurance business and qualifies as a domestic insurance company under Insurance Ordinance, 2000 and undertakes fire, marine, motor and miscellaneous general insurance. He said that UIC is a service-oriented and customer-friendly company, which believes in professional excellence. He said that consistent growth and excellent performance of the company is a reflection of customers confidence. "We strive to work in accordance with international standards of excellence", he added.

    UIC is among the pioneers in designing and launching branded products. In the series, travel plan for Haj/Umra is the latest addition. UIC has already launched Travel Guard, Health Guard, Farm Guard, etc.

    He said that UIC is among the first national companies to launch agi, crop and livestock insurance. "We are the first to come in this hitherto neglected but vital sector of the economy", he said, and added that UIC has made arrangements with Picic Bank, Punjab Provincial Co-operative Bank, Bank Al Falah, Faisal Bank and National Bank for agri, crop and livestock insurance.

    Mudassir Javed Khan


    #12
    Mudassir

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    SECP proposes amendments to Insurance Rules 2002: only licensed surveyors will be allowed to conduct business

    Only licensed insurance surveyors under Insurance Ordinance 2000 would be allowed to conduct insurance survey of insured loss/damage to ensure impartiality and fair handling of a claim by an insurer under the proposed insurance surveying rules.

    The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments/modifications in the insurance surveying rules of Insurance Rules 2002, through SRO.224(I)/2009 here on Wednesday. The amended rules have been placed on its website for eliciting publics opinion as to their suggestions/objections, if any.

    After approval of the amendments, insurance surveyors will fully understand the prescribed requirements and comply with the same within the given timeframe. According to the SECP, all those insurance surveyors, registered under the repealed Insurance Act 1938, were allowed a five years transitional period to convert their registration under the Ordinance.

    Regrettably, majority of the insurance surveyors did not fully understand the prescribed requirements and therefore failed to comply with the same within the given timeframe. Moreover, to address the identified anomalies and weaknesses in the relevant rules, the Commission in consultation with Surveyors and Adjusters Association of Pakistan, finalised the said amendments/modifications.

    The SECP remains committed to continuous professional development of those functional in the field of insurance surveying, and the proposed amendments/modifications in the insurance surveying rules will go a long way in this direction.

    The proposed amendments/modification in the insurance surveying rules have been placed on the SECP website http://www.secp.gov.pk/notifications.asp to elicit comments and suggestions of the stakeholders and the general public. Under the proposed rules, the renewal of registration to act as an authorised surveying officer, for the respective classes of insurance surveying shall be subject to the laid down qualifications and practical experience.

    The SECP has specified the educational qualification and experience for insurance surveyors belonging to different classes including fire & property damage business; fire & property business (including loss of profit and Business interruption in consequence of fire and property damage); engineering (material damage) business; engineering business (including loss of profit and advanced loss of profits in consequence of engineering material damage); marine, aviation and transport business; marine cargo business; marine hull business; aviation hull business; motor third party compulsory business; motor business (including own -damage and motor third party compulsory); workers compensation business; credit and suretyship business; accident and health business; agriculture insurance including crop insurance; and miscellaneous business category of the authorised surveying officer.

    As per proposed rules, an application for registration as authorised surveying officer shall be accompanied by a fee of five thousand rupees per class of insurance surveyor which shall be refunded if the relevant certificate is not granted and for renewal of registration as authorised surveying officer shall be accompanied by a fee of three thousand rupees per class of insurance surveyor which shall be refunded if the relevant renewal certificate is not granted.

    The Commission, if it is satisfied that the applicant seeking fresh registration or renewal to act as an authorised surveying officer has fulfilled the conditions mentioned in the Ordinance or these rules may grant or renew registration, as the case may be, to act as an authorised surveying officer.

    The Commission may, at any time, in writing require an applicant whose application is pending for registration or renewal of registration to act as an authorised surveying officer to furnish, within the time specified therein, any statement, information or documents relating to the registration or renewal or may require the applicant to appear in person, proposed rules added.

    Mudassir Javed Khan







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