Real Insurance Practices

Introduction

In this world, all the individuals, organizations and governments started to co-operate together to make the world more safe, and more cooperative. And that appears in the new financial methods that the business world started to do, just to cover any loose for any individual, organization and even the government, by making all the people share together the loose, not to make the one who lost that he/she is alone. And to insure the fair coverage for the loose, insurance companies appeared and started to act as social financial institutions to help all of the insured to keep their situation as they used to before any loss accrued. But in this small project, we wanted to look closely at the insurance company in real, and compare between their way of practices, and the theoretical part that we studied in RISK MANAGEMENT AND INSURANCE. And to do that, we took Abu Dhabi National insurance company, and Al Dhafra Insurance company, to make the required comparison. A small history about Al Dhafra Insurance Company. Al Dhafra Insurance Company, it is a company which registered in the federal Law in 1984 and started to perform in UAE, this company is owned by the UAE nationals, and their equity is about 186 million Derhams at the end of 2008. And this company is always growing in a consistent grown in both production and profitability. Al Dhafra insurance company is able now to cover all the country by serving all the areas in UAE, and now the company made a service network to serve more clients and to cover wider area. Al Dhafra successfully associated by the world's top class reinsurers in such countries, like Germany, UK, Switzerland, Italy and more countries , and business with the reinsurance brokers all over the world, trying to reduce all the costs of their business, to make the premiums economically scaled and to stay suitable to all the clients. Al Dhafra Insurance Company insure a lot of major business in UAE, such as ADNOC, ETISALAT, Ministry of Finance and a lot of other businesses that all insured by Al Dhafra Insurance Company.

Business Activities

Al Dhafra underwrite both life and non life business, and the major business underwritten:

1. Fire & General Accident
2. Contract Works and Contractor's Plant & Equipment
3. Electronic Equipment & Machinery Breakdown
4. Workmen's Compensation & Employer's Liability
5. Public Liability, Medical Malpractice and other Professional Indemnity risks
6. Marine Cargo, Marine Hull & Pleasure Craft
7. Oil & Gas on and Offshore operations
8. Aviation
9. Personal Accident, Medical & Life
10. Motor

A Small history about ADNIC (Abu Dhabi National Insurance company)

This company started on 1972, with a high quality insurance products and services, and the company has a team of experienced professionals capable insurance requirements. The vision of the company is to be the number one insurance company in the middle east. And the mission of the company is to serve their clients internationally and locally.

Business activities

ADNIC has four three types of insurance policies, personal insurance, business insurance, and over seas insurance.

Automobile insurance

Al Dhafra insurce both comprehensive and third party policies according to the motor insurance, and the comprehensive policy covers the " Accidental collision or overturning, Fire, External explosion, Self ignition, Lightning or thunderbolt, Burglary or theft, Malicious damage and Transit risks." Also the comprehensive policy can cover the automobile outside the country, under some conditions, but of course with extra premiums. In third party policy, the company will cover and respect the third party injury or death, also for any damage for the properties. The insurance can be provided for these kinds of vehicles: Private cars, Goods carrying vehicles, Agricultural vehicles, Buses and coaches, Rental or lease vehicles, Mobile shops and mobile food vans etc. Also Abu Dhabi National Insurance Company has both comprehensive and third party insurance policy. About the comprehensive insurance policy, the company covers the following: The loss and damage of the insured motor, by any of the following: accident, fire, elevator and others, also covers the third party liability, for any body injury or death, plus damages of properties or materials. Third party policy covers any body injury or death, or any property damages of the third party, and covers all the fees except the property owned by the insured while he/she was driving. In the theoretical part, the insurance companies Don't cover the vehicle which is used in ranching or faming, but Al Dhafra insures the cars used in Agriculture. In the theoretical part, we didn't study how do companies build up the price of the premium, but both companies depend on the age of the client, if under 25, they will ask for very high premiums because they say that they drive in a way that the risk of having a loss is much higher than drivers who are older than 25. Also they depend on the kind of the car, if the car is Salon, it has a law premium, but if it is Coupe and sporty, they ask for higher premiums. But these ways of deciding the premium is not connected to any kind of theoretical part that we studied.

Life Insurance

Al Dhafra insurance company stated : "Our standard Group Life Policy provides cover to employees against death due to any causes. Cover can be selected on 24 hours basis applicable worldwide to cover employees during their vacation / business trips. Disability cover is also available for permanent total, partial and temporary disabilities arising out of accident / sickness." but the company doesn't provide more information because they said that it is classified according to the company! But Abu Dhabi National Insurance Company, according to the individual level term insurance, the client will choose the time period, which is between 5-20 years, and the premium rate is fixed and low, and the amount will be paid in case of death. In the theoretical part, according to the individual level term insurance, the premiums get paid during the term period are level. (Rejda, 2008)

Homeowners Insurance

Abu Dhabi National Insurance Company stated "This policy covers loss or damage to the insured household properties in the dwellings caused by Fire, Theft, Water Damage, Earthquake and other Allied Perils." Also, Al Dhafra Insurance Company insures the building against the risk of fire, explosion, earthquake, theft, and others, and damages by any third party damage. Theoretical, homeowners insurance has many conditions, but the two companies didn't provide us with the enough information about the conditions, but in general, each condition has its own premium price.

Health Insurance

Both companies didn't provide any information, but both said that they provide health insurance for the employees and their families, but they didn't give us any more information, and we faced this problem to include it in the project. And also they said that they provide individual health insurance.

Financial results

Gross premium of Abu Dhabi National Insurance Company "for all branches of insurance increased gross premium for all branches of insurance increased from AED 1,157,831,000 in 2007 to AED 1,356,895,000 in 2008" which is increase by 1.17 % also, claim increase from "AED 425,621,000 for 2007 to AED 453,019,000 in 2008". Abu Dhabi National Insurance Company achieved net profit in 2007 AED 330,237,000 but in 2008 net profit decrease to AED 210,268,000 and that result company suffered losses in 2008. Gross premium of Al Dhafra Insurance Company for all branches of insurance increased "by 10.9 % from AED 212,395,595 in 2007 to AED235,468,686 in 2008". Also, paid claims increase by 9.6% from AED 92,418,190 in 2007 to AED 101,299,112 in 2008. Also Al Dhafra Insurance Company suffered losses in 2008 and that effect on profit which decrease by 28.2% from AED 59,619,542 in 2007 to AED 42,778,076 in 2008. When we compare between two companies we found that Abu Dhabi National Insurance Company has retained more than Al Dhafra Insurance Company through profit that gain annually. So Abu Dhabi National Insurance Company is biggest than Al Dhafra Insurance Company in insurance market in the United Arab Emirates.

Reference

• https://www.aldhafrainsurance.ae
• https://www.adnic.ae

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