BACKGROUND

In the early 30s of the 20th century, under the inspiration of the Quaid-e-Azam
Mohammad Ali Jinnah, there began to appear signs of economic renaissance of the Muslims of
India. Shipping, Airline, Banking and Insurance companies made their debut.

In 1932, Mr. Ghulam Mohammad, a far sighted man, established Eastern Federal Union
Insurance Company (EFU) with financial assistance from the Aga Khan III and the Nawab of
Bhopal. Mr. Abdur Rehman Siddiqui became the founder chairman. The company was originally
registered at Calcutta and operated in India (undivided) and Burma.

In 1947, on the birth of Pakistan, EFU found a new home in a new country. In Pakistan,
EFU rapidly established itself as a progressive and innovative insurer. It gave the emerging
insurance industry the leadership, the manpower and the drive needed to grow in a situation
where at one time, three-fourths of insurance was held by foreign companies.

By 1961, EFU had become the flag bearer of Pakistan's insurance industry on the world
stage, and the largest life company in Afro-Asian countries (excluding Japan) under the
leadership of Mr. Roshen Ali Bhimjee. It remained so until 1972 when Life Assurance business in
Pakistan was nationalized. Thereafter EFU operated solely as a General Insurance Company,
and was subsequently renamed EFU General Insurance Limited. Now EFU General is the second
largest non-life insurance company in the country and the mother company of other insurance
organizations of EFU Insurance Group.

In June 1990 the Government of Pakistan decided to allow Life Assurance business in
private sector also. On 18 November 1992, EFU Life was granted a license to carry on life
assurance business. It started operations immediately with Group Life products and in March
1994 launched its Individual Life products. EFU entered the field of life assurance with the focus
on the changing needs of the population. The company is committed to provide its policyholders
with solutions to the problems of today's complex and rapidly changing financial environment
by introducing innovative, and modern products.

In March 2000, Allianz Aktiengesellschaft (Allianz AG), a global leader in the insurance
industry with an active presence in 70 markets across 5 continents and EFU Group signed a
joint venture to form a new company for providing health insurance cover to the people of
Pakistan. Allianz EFU Health Insurance Limited, approved by the Government of Pakistan, is the
first specialized health insurance provider in the country and aims to play a pivotal role in
developing the health insurance market in Pakistan.

Traditionally the EFU name has become synonymous with progressiveness and prompt
claim settlement and now the EFU being the largest insurance group provides a full range of
general, life and health insurance services.

1
 EFU TODAY

EFU Group is one of the few Pakistani organizations run totally by professional
management. Another unique feature of EFU is a voluntary review mechanism by professionals
of international repute. EFU has taken Mr. Wolfram W. Karnowski, who retired at a very senior
level from Munich Re, on its Board of Directors. It has appointed Mr. Michael J de H. Bell, a very
eminent UK based actuary (retired from Wyatt Watsons and chairman of a UK based life
company). EFU has the services of Mr. S.C. (Hamid) Subjally, who retired from a very senior
position from Assicurazioni Generali, Dubai, UAE. The independent reviews by these
professionals enable the group companies to keep abreast of international changes in the
industry as well as ensure that management adopts the best international practices.

Another pillar of EFU's strength is a very close and long term (over 50 years) relationship with
its main reinsurer, ‘Munich Re’, the largest reinsurance company in the world and the strong
support of Allianz Aktiengesellschaft (Allianz AG), a global leader in the insurance industry.

2
 INTRODUCTION

The product, rather a service offered by EFU is insurance policy. There are three service (or
product) lines within which an assortment of several policies is offered. The company offers a
wide range of policies so that each and every consumer gets what he desires.

• Product Line:
The first product line is EFU General Insurance policy. Its product assortment is as
follows:
o Aviation
o Bond
o Engineering
o Fire
o Motor
o Marine Cargo

• The next line is EFU Life Insurance policy which has only one type i.e. life
insurance policy as the name suggests.

• The third and the last line is Allianz EFU Health Insurance policy which has
the following assortment:
o Personal Accident
o Health Insurance
o Utility

The customers of EFU perceive the insurance policies as a “Protection” against the hazards
occurring in the daily life.

• Brand
The brand name is EFU and the brand mark is:

_INCLUDEPICTURE "logo.gif" \* MERGEFORMATINET ___

3
4
 EFU MOTOR INSURANCE

Our main focus is on the EFU motor Insurance Company. That how they promote
their motor vehicle insurance services, competing with many other national and international
level of insurance companies, in the market.

• Target Market
The target market for EFU comprises of all kinds of consumers, whether business or non
business users, who have the need to feel and be secure. To determine its target market
EFU uses four P’s (Product, Price, Place, Promotion) which helps the organization to
determine where the insurance policy should be launched, advertised and at what price.
Within its target market EFU has several market segments each one having a
differentiated need.

• Target Market Strategies

Aggregation strategy is adopted for the consumers of insurance policies.
Consumers in high income brackets go in for insurance policies with greater advantages
at little extra cost, but basically the company has one marketing mix to treat its
customers. With some product differentiation the company can treat its separate
segments using the same marketing mix.

• Segmentation
Separate segments are created for consumers of life insurance and health insurance
policies. Company defines income ranges within which the consumers are segmented
according to their buying power. Using some demographic factors such as income and
social class and psychographic factors such as life style, EFU clearly identifies its
customers.

• Positioning

The positioning of services (in this case insurance) is a difficult job for any
organization, even for EFU where a huge emphasis is placed on client satisfaction. To
position themselves against the competitors EFU provides best services to their clientele.
At EFU clients affairs receive immediate and responsive attention. Providing expert
advice on the interpretation and consequences of contractual obligations, together with
the efficient handling and prompt settlement of claims is a way through which EFU
position their services. Developing innovative solutions to meet the requirements of its
clients is another tactic used by EFU to position its policies.

5
 EFU Auto Insurance 5 C’s Analysis

5 C’s Analysis
of EFU MOTOR

Customer Collaborator
Company Competitors Context
s s

Life Business Brokers Adamjee Cultural

Users
Health Agents Others legal

Non- Munich Re’ New Jubilee Technological

General Business
Users
Allianz AG
Insurance
Motor Company
Insurance

Diagram – 1 5 C’s Analysis

1) Customers:
Major Customers of the EFU motor insurance are both business and non business users.
They have many companies who are their customers and had insured their vehicles with EFU.
Non-Business users include those users which are more safety conscious. And people who buy
expensive vehicles tend to insured them. Some of their customers are those who had
experience of car theft or car accident. They are more conscious to insured their vehicles. So
that they can secure the risk they had faced in the past.

2) Competitors:
EFU motor Insurance has 28 competitors in the market. The major competitor is the
Adamjee Insurance Company Limited. There is a minor difference between the market shares of
both insurance companies, which shows that there is tough competition between these
companies. Second largest competitor in market is New jubilee insurance company limited it is
also a very old insurance company however its market share is 7.94 only 27% of the market
share of EFU. This shows that it is not a very big competitor. All other competitors are very
minor and market share of each of them is below 5.
6
 More importantly EFU is the market leader

I nsura

Diagram – 2 : Competitors Market Share Comparison

3) Collaborators:
Others
33%
Collaborators are those companies/groups/individuals, that helps or supports
the company in enhancing its business more efficiently and effectively. Like other companies
EFU Insurance also have collaborators. EFU Insurance is being collaborated by the world largest
reinsurance company, ‘Munich Re’ providing technical support. Allianz Insurance Company, from
India is another collaborator providing its services to EFU Insurance Limited.
More over brokers and agents are also includes in its collaborators. Brokers are general
collaborators, i.e. they provide their services to the other Insurance Companies as well. On the
other hand the agents are exclusively EFU collaborators.

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 4) Company:
EFU Insurance Company is the most established company and pioneer of the
Insurance in Pakistan. Established in 1932. and providing its services in wide range of insurance
policies. Including Life, health and General insurance. Motor insurance comes under general
insurance. Which is a main focus of our report. EFU has an ability to provide quality Insurance
services, to its customers. It is the most financially strong Insurance Company. After passing
the law for minimum capital requirement of 15 Million for health insurance and 11 million for
other Insurance services by the government of Pakistan. Because of this many companies have
withdrawn from providing wide range of insurance services and limit their range of insurance
services. But as EFU has can support such amount of liabilities, so EFU covers a wide variety of
insurance services.

5) Context:

EFU motor insurance is covering all Pakistan but it major emphasis is on the two of the
most business oriented and populated cities of Pakistan. Lahore and Karachi. As most of their
offices are located in these two cities. Pakistan as developing country, and these days there is
an increment in the technology and one of the most major technology that EFU motor insurance
has to face is the car tracking devices. As a time is passing the number of car tracking
companies are also establishing.

As Pakistan is an Islamic state, so EFU insurance also has to face the Islamic issues
against the concept of insurance. Majority of the people here are very non risk averse. And also
not very aware of the policies insurance companies are offering. Due to the lack of
communication through advertisements.
In Pakistan the banks lease cars to the customers (Lassie)* , and it is compulsory to insured
the vehicle which is leased. This helps in legal binding with the customers.

8
 Marketing Mix
4 P’s Analysis EFU auto Insurance

4 P’s Analysis
EFU AUTO INSURANCE

Product Place Pricing Promotion

Promotion
Insurance Distribution
Means/Strat
Service Channels
egy

Internet Insurance Advertisements

Comprehensive
Insurance Association of
Pakistan [IAP]
Agents Personal Selling

Third party Motor Fixed Price

Brokers Sponsor Ship
vehicle Insurance

Location Price Fluctuations Direct Mail

due to
Act only Liability
competition
Insurance Website
advertisement

Pull Strategy

Integrating
Marketing
Strategy

Diagram – 3 : 4 P’s Analysis

9
 The Four P’s are the parameters that a marketing manager can control, subject to
the internal and external constraints of the marketing environment. The goal is to make
decisions that center the four P’s on the customers in the target market in order to create
perceived value and generate a positive response.
Below is the diagram of the 4 P’s analysis Diagram. Figure-B

Figure B_2
4 P’s Analysis Diagram

1) PRODUCT:

The term “Product” refers to tangible physical products as well as services. EFU auto
Insurance is a service providing company; it provides auto insurance services to their
customers. EFU ensures that the services provided are according to the standards of Insurance
Association of Pakistan.

o Product Categorization:

EFU has categorization in their services, according to the needs of the customers.
Customers vary with their problems related to Insurance. The company offers a wide range
of policies so that each and every customer gets what he desires. To achieve the
satisfaction, customers can choose any one of the following kind of Auto insurance.

• Private and Commercial Vehicle Comprehensive Insurance

• Private and Commercial Vehicle Third Party Motor Vehicle Insurance

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 • Private and Commercial Vehicle Act only Liability Insurance
• Family Accidental Benefit Cover
• Accidental Death Cover for Salaried Driver
• Protection of Loan Amount for Financial Institutions
• Personal Accident Benefit Cover for Passengers
• 20% Discount in Premium on Installation of Tracker Device

2) PLACE:

EFU auto insurance can provide its services, from the following distribution channels,
assuring that the services are in the access of every customer.

o Distribution Channels:

EFU auto Insurance has the following distribution channels, from which their
customers can easily access to the insurance services they are providing.

o Location:

EFU has the vast network of 64 branches in Pakistan. EFU had established there
offices according to the demand of customers from every city. Karachi and Lahore are the two
largest cities of business in Pakistan. EFU has 23 branches in Karachi including the main Head
office and 14 branches in Lahore. Mostly EFU covers the Punjab, because of the high demand of
insurance policies from Punjab. Distribution of the EFU offices in Pakistan is presented by the
figure B-3 below:

Figure B_03 Distribution of EFU offices in Pakistan [Appendix]

o Internet:

Internet is the widely using resource of information now days. And EFU uses this
mean as well, to reach their customers. EFU is the only auto insurance provider, giving a
facility of submitting the policy online. This makes very easy for the customers having
less time to spent, to buy a policy.
The link is given below to submit the online policy to EFU.

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 LINK : http://efuinsurance.com/motorform.html

o Agents (personal selling):

EFU mostly depends on the personal selling. A person representing the EFU goes
to the people who are facing problems, firms and large organizations to motivate them
to buy the Insurance policy from EFU. By describing the benefits of the insurance,
introducing them to the prices according to their policy, and the nature of the risk they
are facing. Agents make good relations, uses references to capture the customers.
Agents are very much effective in the EFU insurance selling.

o Brokers:

The concept of broker is not so common in Pakistan. But it is expected to be

popular in the few coming years. An independent agent who represents the buyer,
rather than the insurance company, and tries to find the buyer the best policy by
comparison shopping. Brokers prefer those companies, from where they can expect
more commission. Brokers are the complete guide for the customers to ensure their
vehicle, with the best auto insurance company available in the market.

3) Promotion:

If the insurance policy is new, the promotional effort at EFU relies heavily on
advertising to make potential buyers aware of the insurance policy, inform these buyers about
the benefits associated with the insurance policy,convice buyers that the policy possesses high
value and finally entice the buyer to purchase the policy.

o Promotion strategy

EFU uses pull strategy relying mainly on product advertising or consumer sales
promotion. these activities are aimed motivating the consumers to pull the product
through the channel.

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 o Integrated Marketing Communication

The company carefully integrates and coordinates its many communication

channels to deliver a clear consistent and compelling message about the organization
and its products.

o Advertisements:
Advertisements are placed to aware people about the services and benefits of
service through different mediums. Now a days Televisions and Bill board are the
mediums being used by EFU for advertisement purpose.

o Personal Selling’s:

Personal selling is required if the policy is highly technical and needs a lot of
explanation. Interaction of agents and brokers to the customers, also give awareness to
the customers about the EFU auto insurance services. By asking their problems and
giving them the solution in the form of one of the service of EFU insurance.

o Sponsorship:

EFU also promotes its brand name by giving sponsorships on different events as
it recently give a sponsorship of RS. 15 lac to the Halley College of Commerce for
the new course of Insurance services.

4) Pricing
EFU is status Quo oriented i.e. their pricing objective is to stabilize prices and
meet the competition. The company tends to follow the competitors when setting
their prices in order to remain competitive.

o Factors influencing price determination

Factors that affect the pricing decisions include the nature of the market and
demand , and competition.

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 o Estimated demand

EFU Insurance first understand the relationship between price and demand for
its product before setting prices. pricing decisions at EFU are buyer oriented. The company
understand how much value consumer place on the benefits that they receive from the product
and setting a price that fits that value.

o Price elasticity of demand

The company measure their demand curves by estimating demand at different
prices. If the demand is elastic the company lower their prices. if the demand is
inelastic , a higher premium would increase the profit.

o Competitive reactions

EFU’s pricing strategies affect the nature of competition it faces. In setting or

changing prices. the company consider its competition and how the competition
will react to the price of product. Initially considerations are given to such factors:
• Number of competitors
• Size of competitors
• Cost structure of competitors
• Number of insurance policy sold by competitors
• Historical reaction of competitors to price changes
The company learns about the price and quality of each competitor’s offer and
uses this information as a starting point for its own pricing. it benchmark its
cost against its competitors costs to learn whether the company is operating
at a cost advantage or disadvantage.
o Price Competition

EFU uses price competition to remain competitive. They decrease their premium rates to
increase their sales. Offering low priced policies such as fire and motor insurances with
minimum of services is an example of price competition done by EFU.

o Discounts And Allowances

o EFU provides its established customers with cash discounts for insurances
covered up to more than a year.

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 SWOT ANALYSIS

A step involved in analyzing the company’s position with respect to the competitor’s
position, involves SWOT analysis. It analyzes the external factors like environment, location,
availability of recourses and the internal factors of the company. Like company’s ability to
achieve the goal; the company is established for. The ability to solve the problems in achieving
that goal. Proper utilization of resources, to use the potentials of the company. That result in
the identification of strengths, weaknesses, opportunities and threats through what is termed a
SWOT Analysis. This is a complex analysis which involves matching external possibilities with
internal capabilities of a company.

Figure B-2 SWOT analysis EFU MOTOR

STRENGTHS WEAKNESSES

• Pioneer of General • Pakistan people are not

Insurance 1932 more policy conscious
• Wide variety of Insurance • Awareness about insurance
Policies benefits is less
• Specifically Insurance • Losses due to heavy claims
Industry
• Easy access of customers
• Leasing contracts with
Banks (customer Binding)
• Technical Support
agreement with the largest
reinsurance company in the
world German Insurance
Company “Manic-re”

OPPORTUNITIES THREATS

• Customer Trust • Motor Insurance competitors

• Increase in growth
• More bank contracts
• Information and research
• Market Development
• Development in Information
and education sector.
• Foreign Insurance
companies
• Undercutting pricing
strategy of competitors
• Car tracking products
• Natural Disasters
• Agreements with banks
• Religious and Cultural
Resistance
• Car snatching

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 The opportunity today for the company may be the Strength of the company tomorrow. If
the company changes its strategy and work more efficiently to convert that opportunity in to
the strength of the company, similarly if company doesn’t overcome to the weaknesses, then
they may be threat for the company in the future. And become a hurdle for the company in
achieving the goal.

Now we are going to use this SWOT Analysis for EFU Auto Insurance, to analyze the
company’s strengths, weaknesses, opportunities and threats. A block diagram of the SWOT
analysis of EFU General Insurance is as follows.

STRENGTHS

Strengths of EFU Auto Insurance can determine the competition ability in the market,
with other Insurance Companies. The more the strength of the company, comparing to its
competitors the more superior it is on its competitors. After having a detailed research on the
EFU Auto Insurance and using the marketing strategies to analyze. The Following Strengths are
determined.

1. Pioneer of General Insurance :

EFU GENERAL INSURANCE LIMITED is Pakistan's pioneer general insurer with the
industry's highest premium growth in 2003 of Rs. 86 crores.

EFU established in 1932, under the inspiration of the Quaid-e-Azam Mohammad Ali
Jinnah. The company was originally registered at Calcutta and operated in India (undivided) and
Burma. In 1947, on birth of Pakistan EFU found a new home to develop. In Pakistan, EFU
rapidly established itself as a progressive and innovative insurer. It gave the emerging
insurance industry the leadership, the manpower and the drive needed to grow in a situation
where at one time, three-fourths of insurance was held by foreign companies.

Traditionally the EFU name has become synonymous with progressiveness and prompts claim
settlement and now the EFU being the largest insurance group provides a full range of general,
life and health insurance services.

Eastern Federal Union Insurance Company has an advantage of being the pioneer of the
Insurance Industry in Pakistan. Because of the experience and market share they had gained,
made them the leader in General Insurance in Pakistan. More over it is the nature of the

16
 customer that preference is for the older and stable company. And as EFU has been providing
its services since 1947, people are more intend towards EFU.

2. Wide variety of Insurance Policies:

EFU has a wide variety of Insurance policies. Main categories are:

 Life
 Health
 General Insurance.

Customers Business or non-business when have to buy more than a single type of
insurance policies, then they seek for the company which can fulfill there needs under one roof.
EFU provides wide range of Insurance services.

3. Specifically Insurance Industry:

Comparing to EFU competitors, Easter Federal Union Insurance is specifically the

Insurance Industry. Its focus is totally on the development of Insurance sector. All the
investment of this company is for the betterment and progress of insurance company. Having
focus on the Insurance, EFU has gain more professionalism in providing Insurance services to
its customers.

Major competitor of EFU is Adamjee Insurance Limited. This is not specifically for
Insurance. It is the group of industries, and one of their industries is the Insurance service
providers.

4. Easy access for customers:

Customers can have the access to EFU very easily. One can contact to the EFU through
one of the 64 branches spread all over the Pakistan. From which 23 along with the Head office
in Karachi, the largest city of business in Pakistan. And 14 branches are in the Lahore the
second largest city of Business. Rest all are distributed in the country according to the demand
of the customers. And it is still growing.

Customers can also have an access through Internet. The widely used media, in the
customers of EFU. No other insurance company is providing the facility to submit policy online.
This easy and fast way of submitting Insurance Policies saves the time for the customer and for
the EFU to process the policy.

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 Another easy and efficient way to access to the EFU is the agents in the market. EFU
agents step by step guides the customers for deciding for the right policy which fulfills the
needs of the customer more efficiently.

5. Leasing contracts with Banks (customer Binding):

In Pakistan auto leasing is growing day by day. Banks have an agreement with the lassie
that the auto should be insured. Banks have different contracts with Insurance companies. EFU
also have contracts with Banks. Those banks which have agreements with EFU, makes it
compulsory for the lassie to insured their vehicle from EFU Auto insurance.

6. Technical Support from the largest reinsurance company in the world:

Another pillar of EFU's strength is a very close and long term (over 50 years)
relationship with its main reinsurer, ‘Munich Re’, the largest reinsurance company in the world
and the strong support of Allianz Aktiengesellschaft (Allianz AG), a global leader in the
insurance industry. By this support EFU provides its insurance services on the international
standards, with complete satisfaction of customer’s needs.

WEAKNESSES

Another important aspect of the SWOT analysis is the weaknesses of the company. No
company is perfect. Some weaknesses are there, and to overcome those company move
towards progress and development. EFU also have some weaknesses which can put hurdles in
achieving the goal. After analyzing these are the following weaknesses determined.

1. People of Pakistan are not more policy conscious:

People of Pakistan are not so much policy conscious. Pakistan is an underdeveloped

country. People are intending to invest, from where they can have a proper income source
rather than to secure the income source.

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 In auto insurance industry people are not so much insurance conscious. Comparing auto
insurance with other insurance policies. People are more likely to intend towards health and life
insurance services. Neglecting the risk factor involved in having a vehicle.

2. Awareness about Auto insurance benefits is very less:

People in Pakistan are not very much risk conscious. Literacy factor is also involved for
less awareness of Insurance benefits between the people of Pakistan. The insurance is the long
term planning and is very helpful, that a person further plans risk free.

Proper know how about the insurance policy and less advertisement through the
channels easily access to the people is very poor. This is the reason that the awareness of the
benefits of auto insurance are very less in Pakistan.

3. Losses due to heavy claims:

Insurance is basically a pool strategy. All people invest some amount of money and one
when one suffers then that person will be paid the amount promised/agreed by the insurance
company. And that amount is collected from other investors.

But when there are many claims that the people giving amount are less and the people
claiming are more than the company suffers loss. This is the one big uncertainty.

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 OPPORTUNITIES

1. Customer Trust:

Customer trust is the one of the foremost priority of the EFU. Customer trust
means customer will prefer EFU then other insurance companies. That will increase the sales
and will helps in achieving the goal.

EFU Auto insurance is struggling to have the customer trust by providing the
excellence in service, the quality of the service, and by reducing time of processing the
policy.

Snr. Vice President of EFU Insurance quoted in regard of achieving the customer
trust ;
“Once the customer is satisfied with our service to fulfilling the need or the problem
he/she was facing and for that purpose we were contacted by him/her. Then we had the
trust of the customer”

2. Increase in Growth:

Increase in growth is the major aim of any company, as well as EFU’s. Increasing
in growth by having more market share , by having more sales and by increasing the quality
and in line services will result in the increase in the overall growth of the EFU auto
insurance.

Moreover the increase in the sales point units or Volume is also the factor of
growth increment. And EFU is planning for it. Increase in growth needs a long term strategic
planning. The broader view of the market and demand. The capability to utilize the recourse
more efficiently then to the competitors.

3. More Bank Contracts:

The bank agreements on the insurance company specification on the auto leasing
are the one of the major opportunity for EFU to increase its sales. The more the auto leasing
banks agree to have contracts with EFU. The more will be the sales of EFU auto insurance.

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 To achieve this opportunity EFU is making its repute in the market best by
providing quality service to its customers.

4. Development in Information and Education:

Development in Information and Education about the Insurance will affect directly
to the EFU auto insurance. The more the qualified and with more knowledge the employees
will. The more will be the profit.

Recently Halley college of Commerce Lahore, started the MBA related to

Insurance services. And EFU Insurance provided Rs. 15 lac. For the development of this
discipline.

THREATES

1. Motor Insurance Competitors:

The major threat to EFU motor insurance, are its competitors. The more the
competitors the lesser the market share, the lesser the sales. And that effects the overall
growth of the company. The competitors always try to lower the sales of their competitors.
And for this they keep on changing the strategies, struggle to attract the customers,
improving the quality of service, and many other similar strategies which can increase the
sale of the company or can reduce the sale of their competitor.

2. Foreign Insurance Companies:

Foreign Insurance Companies are investing here in Pakistan. And Government of

Pakistan is also supporting them, and planning for more foreign investment. And many
other Insurance companies will also invest. And start providing their services here in
Pakistan, with new technologies, more improved methods and more investment. This
increases the competitors to EFU auto insurance. And increase the number of competitors.

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3. Undercutting pricing strategy of competitors:

The price cutting strategy of the competitors of EFU auto insurance produces
many hurdles. When competitors lower their prices of premiums, then the customers intend
towards them. More over the people which are already the customer of the EFU also
attracted to other companies. And that lower the sales. This is the very tactical threat.
Sometimes it may effects a lot. When the same quality of service is being provided by
another company but on the lower price. So there always be a threat for EFU auto
Insurance.

4. Car tracking products:

The difference between the Car tracking products and Auto insurance is that the
when a vehicle is theft or lost. Then a person having a car tracking system can have the car
back easily by tracking it. But incase of auto insurance the person cannot have its car back,
but the equal amount of money which he insured his car for.

As car tracking products/services are cheap. That is the reason many people and
firms prefer them to keep in track with their vehicle. More over the Tracking services gives
the owner many other details of the vehicle. Like speed. The total journey and route of the
vehicle and other same information. This is also one of the factors that customers buy those
tracking devices.

5. Natural Disasters:

Natural Disasters are one of the big threat for the EFU auto insurance. In
Pakistan floods, earth quakes and many other natural disturbances occurs periodically.
When this happens the heavy amount of claims occurs which cannot be easily settled. And
thus sometimes gives a heavy loss.

Recently last year, 8th October earth quake, many vehicles damaged, and lost.
Many claims occurred. Same was happened in the Sialkot flood. Many cars were insured and
were damaged. Many claims occurred.

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6. Competitors agreements with banks:

Bank agreements on the auto leasing are very important for EFU auto insurance.
If EFU fails to have the agreement with the bank, then it will be given to its competitors.
And that is the loss for EFU auto insurance. So to avoid this EFU tries at its level best to
have the agreements with the banks by providing the quality service and maximum benefit
to banks as well.

7. Religious and Cultural Resistances:

Pakistan is an Islamic country and the culture here is based on Islamic principles.
One the controversy in the Insurance company services and the Religion is that the Islam
doesn’t allow the Insurance. And people resist for insurance, and avoid the advertising of
Insurance. This leads in lack of knowledge and benefit about the EFU auto insurance.

8. Car snatching:

Car snatching is one of the major threat for the EFU auto insurance. Car
snatching rate is too much in Lahore and Karachi where 22% and 39% of the offices are
located respectively. The demand of insurance is more there where the risk of auto theft is
more. Lower the claims more the profit. So if the crime rate increases, the auto theft will
increase. And more the claims. Giving a heavy loss to the company.

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 Sustaining value

EFU motor Insurance, offers its insurance services for motor vehicles. Motor vehicle
Insurance was not so much common in the late 1960’s. Now a days growing industry of the
motor vehicles, and bank leasing vehicles, also had an affect on EFU motor insurance. EFU
motor insurance has to compete with its three major competitors and twenty five minor
competitors.

Strategies to sustain value:

EFU motor insurance, struggled a lot to achieve the satisfaction of the need of the
customers. By providing quality services. By competing in the premium prices. And by reducing
the uncertainty of the claims. And providing the excellence in the service/process of policy.
More over the motor insurance services are also enhanced by giving incentives to the clients. As
now a days it is included, that if the customer installs the security [Car tracking Device:
purpose to track cars and prevent thefts] the customer will be then given a discount of 20% in
the premium.
As EFU is the first and pioneer of general Insurance the Law passed defining the criteria
for the establishment of a general Insurance company. Helped EFU motor insurance to gain a
lot of trust and to believe in the reliability of the company.
Many registered Business rating companies also rated EFU as a stable company.
From *Business Recorder Lahore [Friday 28 April, 2006] page # 35, 3rd column last para,

“The directors informed that ICR-VIS, its rating agency, has improved its financial
strength Rating to AA and outlook to be stable”

Zohra Ibrahim evidence the growth due to this sustaining in value of the EFU motor
insurance, in *Business Recorder Lahore [Friday 28 April, 2006] page # 35, that

“The year under review saw highest annual growth in the company's Written Premium in
the insurance history in Pakistan. Net Premium Revenue increased by 52.3 percent to Rs
3.862 billion (2004: Rs 2.536 billion). The overall claim ratio (ie claims as a percentage of net
premium revenue) was 70 percent as against 60 percent in the previous year.

“The directors emphasized that EFU General Insurance Ltd has established itself as the

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market leader in insurance of leased motor cars. Motor insurance now represents over 50
percent of the company's total Written Premium.”

Highest annual growth rate was recorded by Business recorder *. That

“With a Written Premium of Rs. 6.64 billion. It grew by Rs. 1.6 billion (i.e. 32%)
over the previous year and is the highest annual growth recorded by any company in the
insurance industry in the country.”

Reference: www.businessrecorder.com [search for *]

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 RECOMMENDATIONS

After analyzing the data gathered of EFU motor insurance. We interpret for the
following recommendations for the EFU motor insurance, to overcome their weaknesses and to
avoid the threats.

1. Advertisement :
EFU motor insurance should increase their advertisement, quantity and
quality, so that the majority of the people who are unaware of Insurance policies and
companies should attract. Quality of the advertisement should be excellent and life
touching. Means that the advertisements should presents that EFU motor has an ability and
capacity to solve the problems of people who want to secure their vehicles by reducing risk,
by investing less.

2. Incentives:
EFU motor should release some of the incentives for marketing their
product. Like they can offer their customers that if they refer 4 or 5 more customers then
they will be awarded with a gold coin or they will be installed with the car tracking device.
That will motivate the people who are already the customer. And also to those people who
are being deciding for either to insure the vehicle or to install a car tracking device. And the
cost of this tracking device can also be cover in the premium.

3. Start providing Tracking device facility:

If motor insurance also starts installing car tracking device facility, then
that will help the company to reduce the number of claims. And ultimately generates the
profits. As this is also the demand of the today’s position. As crime and car theft is
increasing day by day.

4. Awareness of Insurance and its benefits:

Arrange TV shows and aware people of Pakistan about the benefits and
uses of insurance policies. And how they can affect in one’s life. Plus how they can be
helpful in increasing of efficiency in business as well as in daily life.

5. Internet advertisement should be use:

EFU motor insurance should use internet advertisement. On many online
vehicle information sites and other car search engines. Like www.Pakwheels.com, Efu can
sponsor them as well, that can also market the brand name of EFU motor company.

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EFU AUTO INSURACNE COMPANY

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PAKISTAN MAP EFU OFFICE DISTRIBIUTION

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 Graphs from EFU General Insurance Annual Report 2005

Premiums and Claims Revenues and Funds

Investments and Bank Balance

Total Adjusted Assets

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 BRAND LOGO

EFU GENERAL INSURANCE

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 POLICY FORM EFU MOTOR INSURANCE

Authorized for report appendix : Liaqat Ali Khan

F.C.I.I
Senior Vice President

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 REFRENCES

 Business Recorder.
www.businessrecorder.com
Article : EFU General Insurance Ltd.
Writer : ZOHRA IBRAHIM
Date : Friday 28 April, 2006

Article : Motor Vehicles’ Snatching to Cell-Phones

Writer : M. A Chishti
Date : Friday 28 April, 2006

 Financial Data.
EFU Main Office, Mall, Lahore

Financial Data for market Share of Motor Insurance Companies. Pakistan

 Marketing Mix .
www.marketingteacher.com

Marketing Mix Diagram. [4 P’s]

 Interview.
Liaqat Ali Khan
F.C.I.I
Senior Vice President
EFU General Insurance, Main Branch, Mall, Lahore

Imran Hassan
Sales Consultant
EFU General Insurance, Gulberg Branch. Lahore

Shokat Ali Bajwa

Unit Manager

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EFU General Insurance, Gulberg Branch, Lahore

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