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 losscorporal 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. In this report, I had tried the best to include as much as possible information's I had gathered in suitable figures and chart also.

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 Year of starting business Main Office Contact Fax: 977-1-4444366 P.O. Box 10675, KTM E-mail: eveinsco@mos.com.np Branch office 2051-02-17 2051-04-07 Hattisar, KTM, Nepal Tel. no. 4444717, 4444718

Biratnagar Birgunj Pokhara

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.

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 standard insurance. 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 prevailing in 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.

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

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 Company Insurance Regd.Date Ownership Service Provides

Nepal Insurance Co. Ltd

2004

Private

Rastriya Beema Sansthan 2024 (RBS) National Life & General 2043 Insurance Co. Himalayan General 2050 8

Fire, marine, motor, contractors risk and engineering and miscellaneous Government Life, Fire, marine, motor, contractors risk and engineering and miscellaneous Joint Fire, marine, motor, contractors risk and engineering and miscellaneous Private Fire, marine, motor, aviation,

Insurance Co. Ltd. 5 United Insurance Co. Ltd. 2050 Private

Everest Insurance Co. Ltd.

2051

Private

Premier Insurance Co. Ltd.

2051

Private

Neco Insurance Co. Ltd.

2053

Private

9 10

Alliance Insurance Co. 2053 Ltd. Sagarmatha Insurance Co. 2053 Ltd. Credit Guarantee 1993 Corporation Oriental Insurance Co. Ltd. 2024

Private Joint

contractors risk and engineering and miscellaneous Fire, marine, motor, contractors risk and engineering and miscellaneous Fire, marine, motor, aviation, contractors risk and engineering and miscellaneous Fire, marine, motor, contractors risk and engineering and miscellaneous Fire, marine, motor, aviation, contractors risk and engineering and miscellaneous General insurance Fire, marine, motor, contractors risk and engineering and miscellaneous Cattle Insurance & Credit Insurance Fire, marine, motor, contractors risk and engineering and miscellaneous General Insurance Life Insurance Non-life Insurance Life Insurance Life Insurance Non-life Insurance

11 12

Private Foreign

13 14 15 16 17 18 19 20

National Insurance Co. Ltd. Nepal Life Insurance Co. Ltd. NB Insurance Co. Ltd. American life insurance Co. Ltd. Life Insurance Corporation Prudential Insurance Co. Ltd. Shikhar Insurance Co. Ltd. Lumbini Insurance Co. Ltd.

2031 2058 2058 2058 2058 2059 2061 2062

Foreign Private Private Joint

Private Private

Non-life Insurance Non-life Insurance

2.3 Market structure of Insurance Companies of Nepal at glance Ownership Nature of the company General Life Total Composite

Government Owned Private sector Foreign Joint Venture Total

12 2 1 15

1 1 1 3

1 1

1 13 3 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 Fire and lightning. I.T.C.--B 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 I.T.C.--A 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 or caused 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 the commencement 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 insurance Hull 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 Fire or explosion, 'C' cover plus I.C.C.--A 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. 2. 3. 4. 5. 6. 7. 8. Willful misconduct of the insured. Ordinary leakage, ordinary loss in weight of volume of ordinary wear and tear of cargo. Insufficiency or unsuitability of packing or preparation of cargo. Inherent vice or nature of cargo. Delay, even if delay is caused by insured against. Insolvency of financial default of the owners, managers, charterers or operators of the vessel. Unseaworthiness of vessel or craft and unfitness of vessel, craft, conveyance container of lift van. Use of any weapon of war employing atomic or nuclear fission. In addition, the following are excluded: i. ii. War risks. 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 the completion 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 insurance policy. 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 source This 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

18

company, booklets, brochures, Annual Report and books. Also the unpublished information provided by Beema Samiti. 3.4.1 Tools used for the study Statistical follows: a. b. c. & financial tools are used to facilitate this study. Tools used are as Tables Bar Diagrams 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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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 2057/58 2058/59 2059/60 2060/61 2061/61 Total premium in Rs'000 209,210.00 297,840.00 267,777.00 274,313.00 207,039.00 Marine Premium in Rs 000 19,514.00 14,477.00 16,744.00 22,653.00 22,169.00 In % 9.3 4.9 6.3 8.3 11

Fig:-4.1.1 Comparison of Marine Premium with Total Premium

Comparison of Marine premium with Total premium 350,000.00
300,000.00 Premium Amt. 250,000.00 200,000.00 150,000.00 100,000.00 50,000.00 2057/58 2058/59 2059/60 2060/61 2061/61 Fiscal Year
Total premium in Rs'000 Marine Premium

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FY

Total claim In Rs.

Marine Claim In Rs.

Outstanding Claim In Rs.

Marine Claim paid In Rs.

2057/58 2058/59 2059/60 2060/61 2061/62

25,859,532.00 36,848,460.00 34,015,163.00 30,172,543.00 33,186,624.00

3,033,427.00 2,286,266.00 2,263,228.00 2,653,939.00 2,683,406.00

636,090.00 1,188,609.00 1,806,825.00 988,565.00 823,416.00

2,397,337.00 1,097,657.00 456,403.00 1,665,374.00 1,859,990.00

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

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Total claim, marine insurance claim and paid

40,000,000.00 35,000,000.00 30,000,000.00 25,000,000.00 20,000,000.00 15,000,000.00 10,000,000.00 5,000,000.00 20 57 /5 8 20 58 /5 9 20 59 /6 0 20 60 /6 1 20 61 /6 2

Claim amt.

Total claim Marine Claim Outstanding Claim Marine Claim paid

Fiscal year

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 2057/58 2058/59 2059/60 2060/61 2061/62 Profit / (Loss) in Rs. 3,380,349.00 2,868,159.00 3,331,965.00 3,652,837.00 2,522,821.00

Fig: - 4.1.3 Gross Profit/ (Loss) of Marine Insurance

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Profit / (Loss)
4,000,000.00 3,500,000.00 3,000,000.00 2,500,000.00 Profit/(Loss) amt. 2,000,000.00 1,500,000.00 1,000,000.00 500,000.00 2057/58 2058/59 2059/60 2060/61 2061/62 Fiscal Year

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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4.1.4 Comparison of National marine premium and EIC marine premium Table 4.1.4 National Marine premium and EIC Marine premium
National marine premium FY in Rs'000 EIC marine premium in Rs'000 In %

2056/57 2057/58 2058/59

145,313.00 160,534.00 167,949.00

15,414.00 19,514.00 14,477.00

10.61 12.16 8.62

Fig: - 4.1.4 National Marine premium and EIC Marine premium

National marine premium & EIC marine premium
180,000.00 160,000.00 140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 2056/57 2057/58 2058/59 Fiscal Years

Premium amt.

National marine premium in Rs'000 EIC marine premium in Rs'000

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
FY National marine claim in Rs'000 EIC marine claim in Rs'000 In %

2056/57 33,769.00 2057/58 27,244.00 2058/59 22,433.00

898.00 3,033.00 2,286.00

2.66 11.13 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

40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 2056/57 2057/58 Fiscal Years 2058/59

Claim amt.

National marine claim in Rs'000 EIC marine claim 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 marine claim 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
National Reinsurance in Rs'000 67,154.00 69,950.00 61,004.00 EIC Reinsurance in Rs'000 13,638.00 16,979.00 12,555.00

FY 2056/57 2057/58 2058/59

In % 20.31 24.27 20.58

Fig 4.1.6 Comparison of National Reinsurance and EIC Reinsurance

National Reinsurance & EIC Reinsurance
80,000.00 70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 2056/57 2057/58 Fiscal Ye ars 2058/59

Claim amt.

National Reinsurance in Rs'000 EIC Reinsurance in Rs'000

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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 Fire Insurance Marine Insurance Engineering Insurance Aviation Insurance Miscellaneous Insurance Motor Insurance Total Premium Collection in Rs 52,704,058.00 22,169,512.00 8,658,091.00 32,933,527.00 42,886,549.00 47,687,590.00 207,039,327.00 In % 25.46 10.71 4.182 15.91 20.71 23.03 100

Fig 4.1.7 Sector wise premium collection of fiscal year 2061/62

Premium Collection

23%

25%

Fire Insurance Marine Insurance Engineering Insurance Aviation Insurance

21% 16%

11% 4%

Miscellaneous Insurance Motor Insurance

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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Table 4.1.8 Sector wise management collection in fiscal year 2061/62

Insurance Business Fire Insurance Marine Insurance Engineering Insurance Aviation Insurance Miscellaneous Insurance Motor Insurance Total Management expenses in Rs 7,187,858.00 3,023,511.00 1,180,804.00 4,491,524.00 5,848,932.00 6,503,705.00 28,236,334.00 In % 25.46 10.71 4.182 15.91 20.71 23.03 100

Fig 4.1.8 Sector wise management expenses in fiscal year 2061/62

Management expenses

23%

25%

Fire Insurance Marine Insurance Engineering Insurance Aviation Insurance

21% 16%

11% 4%

Miscellaneous Insurance Motor Insurance

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 Fire Insurance Marine Insurance Engineering Insurance Profit /(loss) amt. in Rs. 8,230,768.00 2,522,821.00 211,237.00 27

Aviation Insurance Miscellaneous Insurance Motor Insurance

7,846,475.00 -

Fig: - 4.1.9 Gross profit / (Loss) of different departments of the company

Gross /(Loss) of different departments
9,000,000.00 Profit/(Loss) amt. 8,000,000.00 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 Insurance Business
Fire Insurance Marine Insurance Engineering Insurance Aviation Insurance Miscellaneous Insurance Motor Insurance

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 fire i.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
Profit before tax FY 2057/58 2058/59 2059/60 2060/61 2061/62 &bonus (Rs.) 25,492,839.00 29,020,725.00 27,816,757.00 25,778,605.00 14,970,761.00 Tax amount (Rs.) 4,860,136.00 6,801,594.00 6,704,724.00 6,435,674.00 3,666,122.00 Bonus amount (Rs.) 2317531 2658859 2589748 2177893 1182712 Profit before tax & bonus (Rs.) 18,315,172.00 19,560,272.00 18,522,285.00 17,165,038.00 10,121,927.00

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Fig: - 4.1.10 Profit earned in different fiscal years

Profit earned in different fiscal years
70,000,000.00 60,000,000.00 50,000,000.00 40,000,000.00 30,000,000.00 20,000,000.00 10,000,000.00 20 57 /5 8 20 58 /5 9 20 59 /6 0 20 60 /6 1 20 61 /6 2

Profit amt.

Profit before tax & bonus (Rs) Bonus amount (Rs) Tax amount (Rs) Profit before tax &bonus (Rs)

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 the specialized 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.

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