CHAPTER ONE

INTRODUCTION
1.1Bacground of study
The development of the insurance company has helped the people to transfer the risk of loss
of life and property. It has act as a safeguard against the future uncertain losses that may
associated either with the life of the individual, group or things other than life. Bachelor in
Business Administration-Banking & Insurance (BBA-BI) of Pokhara University (P.U) has
given the platform for the students to choose the organization where their keen interest is. It is
a new approach in the academic pursuit with eight weeks period for internship program.
The internship program is aimed at providing practical exposure on the business environment
to the students. It also gives the real life lessons ranging from technical skills, behavioral
skills and conceptual skills. It generally involves a student working in a professional setting
under the supervision and monitoring of practicing professionals. It targets to train and
prepare students for managerial functions, develops students interpersonal and
communication skills by encouraging them to interact with different types of people and
situations in the organization.
This internship report is mainly focused on the overview of National life insurance in
different department (marketing, underwriting, loan and claim).
1.2 Objectives of the Study
During the period of internship program it has been helpful in understanding the theoretical
knowledge in practical field. It has provided the opportunity for us to know the real scenario
of working environment in the organization. The objective of this internship is to understand
the insurance process and analyze, examine and interpret the policies adopted by National
Life Insurance, be familiar with practice portion and users of theoretical understanding.
Other objectives regarding the internship period are as follow:
To be familiar with the corporate culture of the organization
To get information about the insurance product and service provided
To get information about various product of NLIC.
1

To understand the general working principle of insurance company.

To overview the insurance environment in the country.
To understand the marketing, claim and underwriting process of life insurance.
To identify associated problems in the observations & research and to recommend
actions required to mitigate the problematic situation in the insurance industry

1.3 Methodology
Selection of a good organization is a very crucial and an important step in internship
program. It is a very important to know the details about the company, its popularity and
position in the market. After knowing the details about the insurance company internee has
selected National life insurance Company for internship among different insurance
companies as it is the best offerings to the fresher's.
This report is primarily based on my experiences from the day to day official work under the
department of marketing underwriting and claim in Head office and Kathmandu branch of
National Life Insurance Company.
Throughout the internship period, the internee was placed in Head Office for sixty working
days. The time period of the internship was from 31 st July 2014 to 31st September 2014.
During this period the internee got an opportunity to work at marketing, operational and
underwriting department. The task was assigned as per the requirement of the department
under the supervision of respective department head.
Activities Performed
Intern was placed in operation and underwriting department generally. Intern was given the
task of general operation activities to perform under the immediate supervisor. During our
tenure we were also given opportunity to use the software of the insurance company to some
extent for proposal entry and premium calculation. The list of activities performed by the
intern during their tenure is as follow:
Providing different information about the insurance product to the general customers

and agents
Filling different insurance proposal forms
Scanning of the documents
Record keeping
Proposal entry for the underwriting
2

 Searching different documents from the store

Premium calculation
1.3.1 Sources of Data
I have used both primary and secondary data in this report. Both of them played the vital role
in the fulfillment of the internship report. They are collected by different ways:
Primary Data:
Primary Data were collected through both formal and informal discussions mainly with my
supervisor and senior manager of the company. Besides, I took participation in in-depth
group discussion and meeting which have given me the opportunity to take very relevant
information regarding the particular topic of my report. Other ways used to collect the
information was as follow:
personal observation in the working environment
discussion with the head of department
information from the insurance agents
Secondary Data:
The secondary source of data collection was from the following source:
Annual report of the company
Published article in the insurance company
Journals and brochures of the company
Website of NLICL
Record Book of NLICL
1.4 Limitations of the Study
The preparation of this report was not an easy task. I had to face some problems & limitations
during the preparation of this report despite the fact that I have tried my best to prepare this
project successfully. The limitations were:
The report is more based on secondary data.
Confidential information that no organization wants to share due to their business
interest was another limitation.
The project is prepared in limited topic, all the learned and collected information
cannot be presented in the report.
Data from the different source were inconsistent which provide the difficulty in
preparing report.
3

CHAPTER TWO
GENERAL INTRODUCTION TO INSURANCE COMPANIES
2.1 Introduction to insurance
Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another,
in exchange for payment. Insurance is one mechanism which is used to hedge the risk from
insured to insurer. Insurance is essentially a contract between two parties, one that bears the
risks is known as the insurer or the assurer and the other, whose risk is being covered, is
termed the insured or the assured. Insurance is a contract between two parties whereby one
party agrees to undertake the risk of another in exchange for consideration known as
premium and promises to pay a fixed sum of money to the other party on happening of an
uncertain event (death) or after the expiry of a certain period in case of life insurance or to
indemnify the other party on happening of an uncertain event in case of general insurance.
The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is
covered is known as the 'insured' or 'assured'. In most cases, the policy holder pays part of the
loss (called the deductible), and the insurer pays the rest. Examples include car insurance,
health insurance, disability insurance, life insurance, and business insurance.
Insurance business is one of the fast emerging financial services. The market of insurance has
undergone significant changes in the recent years. The insurance business has been
comprehensively networked in all parts of the world. It's a sharing/pooling device to spread
the loss caused by a particular risk over a number of persons, who are exposed to it and who
agree to insure themselves against the risk. Insurance works under the principle to share the
risk among the large number.
2.2

Types of Insurance

Based on today's life style the list of type of insurance is increasing day by day. You will find
lots of insurance policy that you have not heard before. There are more than hundred of
policies from which you can choose for your need. But according to the business the main
insurance present in the market are as follow:

1. Life Insurance
Life insurance is a contract between an insured and an insurer, where the insurer promises to
pay a designated beneficiary a sum of money (the "benefits") in exchange for a premium,
upon the death of the insured person or expiration of the policy. The policy holder typically
pays a premium, either regularly or as a lump sum.
2. Non life insurance
Non life insurance is also called as the general insurance. This type of insurance is only for
the protection against the possible loss that can occur but not for the saving purpose. The
common non life insurance is fire insurance, motor insurance, marine insurance, etc.
3. Social Insurance
Social insurance programs are government insurance programs with certain characteristics
that distinguish them from other government insurance plans. These programs are financed
entirely by the general revenues of government. The different types of social insurance are
Old age survivors and Disability insurance, Medicare, Unemployment insurance, workers
compensation.
From risk point of view
1. Personal Insurance The personal insurance includes insurance of human life which may
suffer loss due to death, accident and diseases. Therefore the personal insurance is further
sub-classified into life insurance, personal accident insurance and health insurance.
2. Property Insurance
The property of an individual and of the society is insured against the loss of fire and marine
perils, the crop is insured against unexpected decline in production, unexpected death of the
animals engaged in business break-down of machines and theft of the property and goods.

3. Liability Insurance
The liability insurance covers the risks of third party, compensation to employees, liability of
the automobile owners and reinsurance.
4. Guarantee Insurance
The guarantee insurance covers the loss arising due to dishonesty, disappearance and
disloyalty of the employers or second. The party must be a party of the contract. His failure
causes loss to the first party. For example, in export insurance, the insurer will compensate
the loss at the failure of the importers to pay the amount of dept.
2.3 Origin of Insurance
In this world of uncertainty the risk is present in every steps of the life. So with the growing
risk the importance of insurance is increasing. From the ancient civilization of human being
of sharing the food between the communities to minimize the risk of hunger during the lack
of food the concept of insurance was established. Early methods of transferring or
distributing risk were practiced by Chinese traders as early as the 3rd millennia BC. These
merchants travelling treacherous river rapids would cleverly distribute their wares across
many vessels to spread the loss due to any single vessel's capsizing.
Toward the end of the seventeenth century, London's growing importance as a center for trade
increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee
house that became a popular haunt of ship owners, merchants, and ships captains, and
thereby a reliable source of the latest shipping news. It became the meeting place for parties
wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today,
Lloyd's of London remains the leading market (note this is not insurance company) for
marine and other specialist types of insurance, but it works rather differently than the more
familiar kinds of insurance.
Insurance originally evolved as a commercial instrument, and it was not until after 1666, as a
result of the Great Fire of London, that insurance for households, aptly named
Insurance emerged.
7

Fire

2.4 Insurance in Nepal

The History of financial system in Nepal began in 1881 with the establishment of Tejarath
Adda (The National Treasury Office) in initiation of the then National Minister Ranodweep
Singh which was used as the government and public bank and Ministry of Finance by Rana
rulers. Before this Kumari Chowk Adda was the main treasury office but not organized well.
Later, in initiation of Nepalese Ambassador to UK, Nepal Bank Limited as the first
commercial bank, was established in 1937 with technical help of British Indian commercial
banks.
In those days, foreign (mostly Indian) insurance companies met the insurance need of Nepal.
In eve of Rana Regime, Nepal Insurance and Transport Company (named as Nepal Insurance
Company later) was established in 1947 by Nepal Bank Ltd. as its subsidiary company. It was
the only national insurance concern before establishment of Rastriya Beema Sansthan (RBS)
in 1968. After the establishment of RBS, the then main business holder of life portfolio, Life
Insurance Corporation of India transferred the business to RBS and closed its office in Nepal
in 1972. None the less, non life companies are in operation till to date. In 1968 Rastriya
Beema Sansthan (RBS) was established under Company Act, 2024 and was converted into
Corporation in the following year under Rastriya Beema Sansthan Act, 1969. This is a
government owned organization even now, and has been operating both life and non-life
insurance business. Prior to the enactment of Insurance Act, 1968 there was no regulatory
body that supervises insurance business in the country. Under the Insurance Act, 1968,
Beema Samiti (Insurance Board) was formulated as the insurance supervisory Authority. In
1986, a new experiment was done in Nepalese insurance scenario by licensing a joint venture
insurance company to operate both life and non life business. But the real expansion of the
insurance industry in Nepal took place during the 1990s following the financial sector reform
and liberalization of the economy by the government. The new policy gave emphasis to the
involvement and growth of insurance business in the private sector. As a result, many
companies came into the scene in the private sector including foreign equity. Even branches
of Indian and US companies are working in the field. As shown in table 1, the number of
insurance companies including RBS reached 25 by the end of F.Y. 2009/10.
8

2.5 Insurance companies of Nepal (ownership structure and types)

Table 2.1 Insurance Glance
Ownership
Government

Life
-

Nature of the company

Non-Life
Comprehensive
1

Owned
Private sectors
4
12
Foreign
1
2
Joint Venture
2
3
Total
7
17
Source: insurance board (2012)

10

Total
1
16
3
5
25

2.6 Insurance Investment in Nepal (Life and Non life)

investment in millions
60000

50000

40000

Life

30000

Nonlife
Total
20000

10000

(Source: Economy survey Ministry of finance)

In the above graph what we can view is that the proportional growth in life insurance is much
more than non life insurance in context of Nepal.

11

CHAPTER-THREE
ORGANIZATION PROFILE
3.1NationalLife at a glance:
National Life Insurance Co. Ltd. (National Life) came into existence in 1988. Promoted by
eminent business groups, National Life has carved a niche for itself in the insurance sector
and has achieved the following:
Earned net profit of NPR 56.75 million in the first full year operation. This is an
unprecedented achievement in the Nepalese Life Insurance Industry.
National Life Insurance Limited has posted net profit of Rs. 79.231 million on its 4th
quarter financial report of the fiscal year 2070/71.
More than 714,797 policies in just 5 years of operation.
Collected premium amounting to NPR 2,896 Million.
Increased its distribution network by opening 85 network points of representations
(including Branches and Sales Offices) all over Nepal.
Continues to be among the fastest growing life insurance company with incremental
growth in premium, quality of business, customer service and assurance of good
returns.
The share holding constitutes of the promoters holding 70 percent and 30 percent is to be
offered to general public. The promoters represent Nepals leading and highly prominent
business groups having widely diversified business interests and expertise. Rastriya Banijya
Bank Limited, one of the leading commercial banks in Nepal, is one of the major promoters
with 10 percent stake. We are expecting approval from Securities Exchange Board for Initial
Public Offerings (IPO) amounting to NPR 108 million by the end of January 2010. After the
completion of IPO, companys capital base will increase to NPR 360 million from existing
NPR 252 million.

12

3.2 OBJECTIVES
NLICL values are based on high standards of corporate governance, transparency and
professionalism. Governed by NLICL values, the mission are:
To provide complete range of life insurance products bundled with innovation and
superior customer services in order to achieve excellent business growth and provide
superior value to all our stakeholders.
To make National Life appealing to the target consumer in terms of the following
benefits earned.
Savings
Life security
Tax benefits

3.3 PRODUCTS AND SERVICE

3.3.1 Amrit Barsa Beema Yojana
Each individuals insurance needs can be different from that of others. At National life, we
study and suggest wide range of life insurance products that meet customers social and
financial requirements. The key features of this product are:

Insurance term can be determined as per requirement.

Premium payment frequency can be chosen as per convenience.

Sum insured can be chosen as per customers need.

The benefits of this product are:

After the maturity period, the sum assured plus bonus amount will be returned.
In case of death of the insured, the nominee will get sum assured plus bonus.
If accidental death benefit (ADB) is taken then the amount up to 5, 00,000 will be
provided to nominee if the accidental death is happened.
If accidental total permanent.
13

3.3.2 National Life Pension Plan

National Life Pension Plan is a pension product that provides the security after active worklife. You have an option to choose two ways to get your pension for your life time. The key
benefits are:
Pay monthly premium and receive monthly pension for your whole life.
In case of an unfortunate event of death during premium paying term, sum assured
with applicable bonus will be paid to the holders nominee.
There is a flexibility to choose retirement date from which the policy holder will start
receiving the pension.
Flexibility to choose from two pension options after the policy maturity to get regular
income for the life time.
Flexibility to add on riders line Accidental Death Benefit and permanent Total
Disability (waiver of premium) in case of an unfortunate event of death or disability
during the premium paying term of the policy.
Tax benefits on premium paid (up to the limit of NPR. 20,000/- per annum.)

3.3.3 National Life Jeevan Amrit

This product provides sum assured plus bonus at the end of the insurance period. Additional
death risk cover is provided for the entire policy period.
Key Features
Insurance term can be determined as per requirement
Premium payment frequency can be chosen as per convenience
Sum insured can be chosen

14

3.3.4 National Life Baideshek Rojgar

National life Foreign Employment Policy Or Baideshek Rojgar Plan Is Designed To Cover
Natural As Well As Accidental Insurance For People Living And Working Out Of Nepal. The
key features are:
Low premium rate as it does not carry any saving factor.
In the event of death of the person living abroad, a sum of Rs. 500,000 will be paid to
the beneficiary.
3.3.5 National Life Single Payment
National Life Single and Limited Payment Plan are designed to the people who wish to pay
the premium in lump sum basis and who wish to pay premium for the limited payment. The
key features are:
Premium can be paid in lump sum basis as a single payment or for the desired period.
Upon maturity of policy, Sum assured and vested bonus will be paid.
In case of death of the insured within the premium paying term, subject to policy in
force, Sum Assured and vested bonus will be paid to the legal heir or beneficiary of
the insured.

3.3.6 National Life Saral Amrit

National life Saral Amrit is aimed at providing Collateral Security to the Lender-financialinstitution for the loan advance to the Borrower-Life-Assured against the Death or
Permanent-Total-Disability before Re-payment of the Total loan.
The key features are:
It is a special policy for financial institutions loan customers.
Low premium rate as it does not carry any saving factor.
Reducing coverage of the insurance corresponding to customers reducing outstanding
loan balance.
15

 In the event of death of the borrower, the proceeds of the policy will be paid to the
Financial Institution to cover the current outstanding loan.
3.3.7 National Life Bachat Amrit
Customers require funds for different requirements at different stages in life. Be it for childs
education, wedding or for old age. National life Bachat Amrit is structured to meet
requirements at periodical intervals.
Key Features
Insurance term can be either 15 or 20 years.
Premium payment frequency can be chosen as per convenience.
Sum insured can be chosen as per customers need.

16

CHAPTER FOUR
CRITICAL ANALYSIS OF JOB PERFORMED
4.1 Departments of NLICL
A.
B.
C.
D.

Underwriting
Account
Claim
Marketing

A. Underwriting Department
This is based on a risk assessment. It is pretty much the "behind the scenes" work in an
insurance company where they determine who is insured and how much in insurance
premiums they will charge the insured person. Insurance underwriting also involves choosing
who the insurance company will not insure.
B. Account Department
The department is responsible for managing, controlling and recording the inflow and
outflow of cash from the daily basis to monthly and annual basis. The profitability of the
company is judged through the analysis of its accounts record.
C. Claim Department:-Claim is a tangible result of insuring. The actual procedure for handling
claims varies according to matter such as the type of cover. Claims come either at the
maturity or at the death of the insured.
Claim settlement
Claim settlement is one of the most important services that an insurance company can
provide to its customers. Insurance companies have an obligation to settle claims promptly.
You will need to fill a claim form and contact the financial advisor from whom you bought
your policy. Submit all relevant documents such as original death certificate and policy bond
to your insurer to support your claim. Most claims are settled by issuing a cheque within 7
days from the time they receive the documents. However, if your insurer is unable to deal
with all or any part of your claim, you will be notified in writing.

17

Types of claims
Maturity Claim - On the date of maturity life insured is required to send
maturity claim / discharge form and
original policy bond well before maturity date to enable timely settlement. Most
companies offer/issue post dated cheques and/ or make payment through ECS
credit

on

the

maturity

date.

Death Claim (including rider claim) - In case of death claim or rider claim the
following procedure should be followed.

Follow these four simple steps to file a claim:

1. Claim intimation/notification
The claimant must submit the written intimation as soon as possible to
enable the insurance company to initiate the claim processing. The
claim intimation should consist of basic information such as policy
number, name of the insured, date of death, cause of death, place of
death, name of the claimant.
The claimant can also get a claim intimation/notification form from
the nearest local branch office of the insurance company or their
insurance advisor/agent. Alternatively, some insurance companies also
provide the facility of downloading the form from their website.
2. Documents required for claim processing
The claimant will be required to provide a claimant's statement,
original policy document, death certificate, police FIR and post
mortem exam report (for accidental death), certificate and records
from the treating doctor/hospital (for death due to illness) and advance
discharge form for claim processing. Based on the sum at risk, cause
of death and policy duration, insurance companies may also request
some additional documents.
3. Submission of required documents for claim processing
18

For faster claim processing, it is essential that the claimant submits

complete documentation as early as possible. A life insurer will not be
able to take a decision until all the requirements are complete. Once
all relevant documents, records and forms have been submitted, the
life insurer can take a decision about the claim.
4. Settlement of claim
As per the regulation 8 of the IRDA (Policy holder's Interest)
Regulations, 2002, the insurer is required to settle a claim within 30
days of receipt of all documents including clarification sought by the
insurer. However, the insurance company can set a practice of settling
the claim even earlier. If the claim requires further investigation, the
insurer has to complete its procedures within six months from
receiving the written intimation of claim.

For Death Claim:

Death Certificate
Original Policy Bond
Claim Forms issued by the insurer along with supporting documents
For Accidental Disability / Critical Illness Claim:
Copies of Medical Records, Test Reports, Discharge Summary, Admission
Records of hospitals and Laboratories.
Original Policy Bond
Claim Forms along with supporting documents

D Marketing Department
19

This department mainly focuses on promotion of the insurance product offered

by NLICL. It activities involved in this department is to make customers known
about the products offered through advertisement, news releases, events and so
on without leaving its objectives i.e. customer satisfaction. During the time of
internship we promote various product of NLICL.
Mainly Insurance agents promote the insurance markets. Agents received
commission from the premium paid by insured.
Mainly dependent upon mass advertising
o The likes of Nepalese cricket team Captain Mr. Parash Khadka is used to
market the insurance product
Vast use of Call centers as well
Major corporations insure all their staffs at once
Besides that, the normal use of Insurance Agents as well
Others come to the insurance office themselves, for specific kind of
insurance

20

4.2 SWOT Analysis

NLICL has strong market position. It has been maintaining its credibility since its
establishments. With strengths and opportunities there are also weaknesses, and threats that
affect NLICL which are presented in figure below:

21

Figure SWOT Analysis

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATES

Goodwill
Good contacts and successful networking.
Interaction with professional organization.
Huge amount of organization resources.
Experienced employees
Highest amount of bonus paying organization.

Lack of sufficient qualified employees.

Poor implementattion of the insurance software.
Poor management of the available resources.
Improper distribution of human resources in
organization.
Poor customer care and sercives.
Lack of dedication to the work.

Backed by customers faith.

High fund raising than other insurance company.
High number of customers being served.
High scope for employment.

Emerging insurance companies.

Advancement in the technology.
Better sustomer focused sercices by other insurance
company.
Limited professional development.
Compertive and skilled employyes movement to other
private insurance company.

The above figure helps to know about the various factors of internal and external
environment that affected NLICL.

22

4.3 Calculation of premium

Based on Occupation
o People with riskier jobs pay more amount of premium
Based on Financial hazard
o Risk also depends upon jobs a person undertakes and his commission
Based on Moral Hazard
o Primarily based on morals and motives of people
o People in various regions have to face various risks thus, risk also changes
4.4

Activities Done

During internship period internee was assigned in the different section. Each and every staffs
under this section helped internee a lot to learn the insurance related activities. Knowledge
was gained on entry of insurance proposal, basic underwriting process, and registration of the
claim, handling of claim and maintaining account of the settled claim. This internship report
is based on the claim department of National life Insurance Company which mainly focused
on the activities internee had involved with.
4.5

Problems Identified

Internee working period in NLICL is only for sixty days. There was a time constraint.
However some of the problems internee faced while working is as follows:
1. Lack of Proper Management of the Documents
The most important difficulties faced by the insured while making claim is that they have to
submit the relevant document more than twice. The documents sent by the insured are not
arranged in their respective place. This results in loss of their documents.
2. No Lower Level Staffs

23

The middle level position is occupied by the existing staffs. There are no another staff to
work on their behalf. So, in case of absenteeism of the managerial level staffs, the work is
completely stopped. All the activities ranging from registering the claim to claim settlement is
done by the managerial level staffs. So, they have got very busy working schedule. Internee
was involved in registering and some accounting activities which minimize the department
head burden to some extent.
3. Improper Allocation of Employees
There are only few staffs in NLICL. Also available employees are not properly allocated on
the basis of priority of work. Internee shared many work with the department head and
minimize their hectic schedule.
Complains of the Clients
Customers come with full anger and frustration. Internee had to deal them patiently. Internee
helped them to find their documents. Also internee learned that most important thing to calm
the clients is through listening their problems. They are almost half calmed doing so. After
that Internee tried to solve their problems.
4. Dissatisfied Staff
Staffs were not satisfied with the administrative management. They have not done any
motivational activities for the staff like job rotation, job enlargement etc. Internee was also
placed in claim section throughout the internship period.

24

CHAPTER FIVE
CONCLUSION AND LESSON LEARNT
5.1

Conclusion

Insurance companies are a major business in today's world. The insurance industry is one of
the largest sectors of finance everywhere in the world and in Nepal too, it plays a major role.
It ranges from consumer to corporate and industrial insurance, and even reinsurance, or
insurance of insurance. Because of the growing number of insurance companies in Nepal, the
business has been much competitive as companies are offering more and better facilities. In
Nepal too, the scenario has been much populated today than compared to what it was a few
years ago. Actually this is a good sign as the increase in number of Insurance companies
means better exposure to people regarding the importance of insurance policies. A wellmanaged insurance sector helps to build the economically safe, secure and prosperous nation.
BBA-BI faculty of management provides the student opportunity to work on the real
environment and gain some practical experiences in the field of insurance. The internship
opportunity was a milestone for internee to gain practical acquaintance of the insurance
company and its corporate culture. Prior to the internship knowledge regarding the insurance
was limited only to the books. The internship period was only of sixty working days so
gaining more knowledge on insurance, throughout sixty days is very difficult.
5.2

Lesson Learnt

During sixty working days as an internee in the insurance company, one cannot learn each
and every aspect of insurance services. Life insurance has wide scope in Nepal. The main
obstacle that was found at the organization is its privacy which cannot be displayed. The
following are the major lessons learnt during the internship period:

Understand how to deal with the clients.

Understand the corporate culture of the organization.
Learn the function of the various department
Learn the process of claim settlement.
Gain necessary skills to tackle problems.
Knowledge of issue of agents updated ID.
Opportunity to improve communication and interpersonal skills.
25

 Know the rules and regulations related with claim settlement.

Learned to be communicative with experts and various natured people as well as built
self confidence.
Learned the chronological filing of documents.

26