PowerPoint Presentation

Risk Management & InsurancePresented To : Mr.Ahsan KhaliquePresented By : M.HashaamRoll no. : AM5523812Topic: Private Insurance in the Financial Services IndustryOverview of Private Insurance in the Financial Services IndustryThe financial services industry consists of:Commercial banksSavings and loan institutionsCredit unionsLife and health insurersProperty and casualty insurersMutual FundsSecurities brokers and dealersPrivate and state pension fundsGovernment-related financial institionsOverview of Private Insurance in the Financial Services IndustryChanges in the financial services industry include:ConsolidationsThe number of firms has declined due to mergers and acquisitionsConvergenceExisting financial institutions now sell a wide variety of financial products that earlier were outside their core business areaTypes of Private InsurersInsurers can be classified by their organizational form:Stock insurersMutual insurersReciprocal exchangesBlue Cross and Blue Shield PlansHealth maintenance organizations (HMOs)Other types of private insurersTypes of Private InsurersA Stock Insurer is a corporation owned by stockholdersObjective: earn profit for stockholdersIncrease value of stockPay dividendsStockholders elect board of directorsStockholders bear all lossesInsurer cannot issue an assessable policyTypes of Private InsurersA Mutual Insurer is a corporation owned by the policyownersPolicyowners elect board of directors, who have effective management controlMay pay dividends to policyowners, or give a rate reduction in advanceThere are three main types of mutual insurers:An advance premium mutual is owned by the policyowners; there are no stockholders, and the insurer does not issue assessable policiesAn assessment mutual has the right to assess policyowners an additional amount if the insurers financial operations are unfavorableA fraternal insurer is a mutual insurer that provides life and health insurance to members of a social or religious organizationTypes of Private InsurersThe corporate structure of mutual insurers is changing due to:An increase in company mergersDemutualization, in which a mutual company is converted into a stock insurer by:Pure conversionMergerBulk reinsurance The creation of mutual holding companiesA holding company is a company that directly or indirectly controls an authorized insurer

Types of Private InsurersA Reciprocal exchange is an unincorporated mutualThe reciprocal is managed by an attorney-in-factIn a pure reciprocal exchange, insurance is exchanged among the members; each member of the reciprocal insures the other membersA separate account is kept for each memberA modified reciprocal exchange is similar to an advance premium mutualNo individual accounts Types of Private InsurersBlue Cross and Blue Shield Plans are generally organized as nonprofit, community oriented plansBlue Cross plans provide coverage for hospital servicesBlue Shield plans provide coverage for physicians and surgeons feesMost plans have merged into one entityMany sponsor HMOs and PPOsSome plans have converted to a for-profit status to raise capital and become more competitiveTypes of Private InsurersA Health Maintenance Organization (HMO) provides comprehensive health care services to its membersBroad health care services are provided for a fixed prepaid feeCost control is emphasizedChoice of health care providers may be restrictedLess costly forms of treatment are often providedTypes of Private InsurersA Captive insurer is an insurer owned by a parent firm for the purposes of insuring the parent firms loss exposuresSavings Bank Life Insurance refers to life insurance that is sold by mutual savings banks, over the phone or through Web sitesConclusionThere is no trend of insurance in Financial Industry of Pakistan. Other Countries of World use these type of insurances very commonly.RecommendationThere should be awareness about insurance specially Private Insurance in the Financial Services Industry. Islamic mode of Insurance can also play role in this industry.