National Insurance Corporation was established in 1976 with an initial paid upcapital of Rs. 5 million for the sole purpose of insuring public properties. This included properties owned by the government, autonomous bodies and organizations in which the Government of Pakistan had controlling financial interest
The National Insurance Corporation conducted its business on commercial principles similar to private insurance companies transacting general insurance business. The Corporation made considerable efforts to develop economical premium rates for various types of insurance covers generally needed by the public sector organizations. A major objective of the Corporation was to reduce the outflow of foreign exchange in the form of reinsurance premium. The Corporation was successful in curtailing dependence on reinsurance from foreign companies from approximately 80% in 1976 to less than 10% in 1998 (except in case of Aviation Hull and Marine Hull)
Evolution of the Company
The subcontinent was divided in two sovereign states --- Pakistan and India. At independence Pakistan inherited 5 insurance companies. Later2 more companies shifted their offices to Pakistan making a total of 7 companies competing against 77 foreign insurance companies.
Insurance Association of Pakistan (IAP) was established as tariff determining body. IAP also acts as a connecting link between the government agencies and the private sector insurance companies.
As the country progressed the Government of Pakistan realized the need to promote indigenous insurance industry and to check the flow of funds from Pakistan to foreign companies. Pakistan Insurance Corporation (PIC) was established in 1953 under Pakistan Insurance Act of 1952. All insurance companies were required to cede 10% of all business underwritten in Pakistan to the PIC. This was later increased to 30%.
National Co-Insurance Scheme (NCS) a pool of Pakistani companies was sponsored to help Smaller Pakistani companies grow. The result was an increase in number and financial strength of Pakistani companies.
Following the Government's decision to nationalize all types of industry, NCS was converted into National Insurance Fund (NIF) in 1973.
National Insurance Fund was converted into National Insurance Corporation in 1976. The corporation became the sole insurer of the Public sector enterprises.
In January 2001, the government changed the legal status of the National Insurance Corporation to National Insurance Company Limited and raised its paid up capital from Rs 5 million to Rs 2 billion, thus making it the largest insurance company in Pakistan.
The National Insurance Corporation has been converted into National Insurance Company Limited with effect from January 2001 to operate under the Insurance Ordinance 2000. National Insurance Company Limited was incorporated on 31st March and took over National Insurance Corporation with effect from January 01, 2002. The Government's decision to convert it from a Corporation into a limited company was based on the fact that the National Insurance Corporation had, over the years, developed a very strong financial base. A Company could make a more efficient use of this strength. NICL has a paid up capital of Rs 2 billion as compared to NIC which had a paid up capital of Rs 5 million.The change in stature from a statutory corporation to a corporate body is aimed at running this organization on purely commercial lines. NICL has the potential to function like a multinational company and emerge as a role model for the insurance industry of Pakistan.
The Government has appointed a new Board of Directors, comprising of highly successful individuals from different walks of life. The management is actively considering and studying the legal implications of entering into the reinsurance market in competition with the International Reinsurers.