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NICL: Pakistan’s Insurance Partner plays its role in regional integration

National Insurance Company Limited (NICL) takes pride in its partnership with National Logistic Cell (NLC) on the historic occasion of commencing Transports Internationaux Routiers (TIR) operations by road to Turkey and Azerbaijan. NICL will be providing risk insurance coverage and insurance guarantee for trade transactions being facilitated through TIR under the provisions of CMR (Contract for the International Carriage of Goods by Road).

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It is a landmark achievement for NICL to be part of the beginning of a new era, of regional connectivity, under the Ministry of Commerce’s Silk Route Reconnect Policy. NICL partnered in this venture to promote trade of Pakistan to regional countries through road transport to support the vision of the Prime Minister of Pakistan. It is a milestone in making Pakistan a transit and trans-shipment hub by trucking.

National Insurance Company Ltd (NICL), which the Government of Pakistan wholly owns, has been functioning under the administrative control of the Ministry of Commerce and exclusively providing strategic risk coverage to the public properties and assets since its inception in 1976 as a corporation.

NICL, however, was transformed into a more dynamic entity when it was incorporated in Pakistan on 31 March 2000 as a public limited company under the Companies Ordinance 1984 through NIC (Reorganization) Ordinance 2000.

While it continues to provide general insurance to assets and projects or undertaking holding a controlling financial share or interest of the federal and provincial governments, it can now also offer its services to corporate bodies in the private sector.

NICL

Khalid Hamid
Chief Executive Officer

“We at NICL take pride in serving you as an organization
specializing in all cases of general insurance.
Established in 1976 under the NIC act, we are
the National Flag carriers in the field of general
insurance. As such, we are actively involved in
virtually all the large infrastructure projects that
have strategic National importance.”

NICL is governed by its vision, “to excel in providing insurance and other financial services, enhance growth, profitability and shareholders’ equity through development of human resource, technology and adherence to sound corporate governance.”

Its objectives are to: provide insurance cover to the government and semi-government organizations at an economical cost, reduce the outflow of foreign exchange by reducing dependence on reinsurance abroad, make significant contributions to the public exchequer by payment of taxes & dividends, and make prudent investments in public as well as the private sector to obtain maximum returns.

Read More: NLC’s first TIR commercial operation commences

Its partnership with NLC to promote trade under TIR and CMR will be further enhancing these objectives. Currently, the authorized capital of the Company is Rs. 6 billion, and paid-up capital of Rs. 2 billion is divided into 200 million shares of Rs. 10 each. Securities and Exchange Commission of Pakistan (SECP) is the regulator of NICL.

NICL today covers a broad range of economic activity; traditionally, it has been providing insurance cover in the areas of fire and property damage, aviation hull, marine hull, marine cargo, credit risk and suretyship, motor liability, and workers’ compensation. NICL has the ability to design products tailored to the needs of its various customers.

NICL’s large capital and equity base is its strength, and it is ready to leverage it, ready to accept any big challenge being the lead insurer. The current management is actively involved in marketing in new areas for business and portfolio spread.

NICL has been growing at an encouraging rate of approximately 50 percent year on year during the last three years, with the Gross Written Premium reaching 15.7 Billion (approx.) in 2020. NICL is working on launching two new products, Micro Finance Insurance and Health Insurance.

The purpose of both products is to provide coverage to low-income and poor people of the country residing in rural areas on payment of nominal premium. By providing these innovative insurance coverages, NICL’s aim is just to act upon present Government Policies of providing relief and protection to the nation.

NICL is also working on Private Public Partnership Scheme and has invited private insurance companies to join hands with NICL for the insurance coverage of big projects to be launched in the near future, so that big outflow of precious foreign exchange in the shape of reinsurance premium could be stopped hence forthwith.

Read More: Regional Connectivity: Vital Element of Economic and National Security

How TIR inclusion will facilitate Pakistani trade?

The Convention on International Transport of Goods under cover TIR carnets (TIR Convention) is a multilateral treaty concluded at Geneva in November-1975 to simplify and harmonize the administrative formalities of international road transport.

Pakistan in 2021 is its latest and 78th member. Seventy-seven members, including Pakistan, are sovereign states, and one member European Union is a “Customs Union” consists of 27 member countries after the Brexit.

TIR stands for “Transports Internationaux Routiers” or “International Road Transports.” The 1975 Convention had replaced the TIR Convention of 1959, which replaced the 1949 TIR Agreement between several European countries.

These conventions were adopted under the auspices of the United Nations Economic Commission for Europe (UNECE) – basically, it is an evolution of the European concepts towards trade integration.

The objective of the TIR Convention is to facilitate international transit through simplified Customs transit procedures and an international guarantee system. The controlling architecture of the TIR system consists of a common customs document, the TIR carnet, an accepted guarantee system, the mutual recognition of customs controls and secured vehicle containers. Usage of the TIR system is limited to authorized operators.

Pakistani trucks making use of the TIR procedure must first obtain an internationally harmonized customs document, referred to as a TIR carnet. TIR carnets are issued by national road transport associations. (PNC-ICC in Pakistan).

This customs document is valid internationally and as well as describing the goods, their shipper, and their destination represents a financial guarantee. When a truck arrives at a border customs post (for instance, Afghanistan bound for Uzbekistan), it need not pay import duties and taxes on goods at that time.

Read More: Pakistan Pavilion at Dubai Expo 2020: The Hidden Treasure

Instead, the payments are suspended. If the vehicle transits the country without delivering any goods, no taxes are due. If it fails to leave the country with all the goods, then the taxes are billed to the importer, and the financial guarantee backstops the importer’s obligation to pay the taxes.

TIR transits are carried out in bond, i.e., the truck must be sealed as well as bearing the carnet. The security payment system is administered by the International Road Transport Union (IRU)

While the “TIR Convention” is a United Nations Convention administered by the IRU (The International Road Union) based in Geneva, PNC-ICC (The Pakistan National Committee of the International Chamber of Commerce) is the associate member of IRU and represents IRU’s presence in Pakistan. The PNC-ICC under this arrangement is responsible for the financial guarantees covering the implementation of the Convention.

NICL will provide risk insurance under the umbrella of TIR & CMR

Facilitation of international trade and its risk coverage is based on trust. This trust depends upon transparency and is reinforced through international standard documents. CMR note is an important part of this process.

 

NICL
Brig Zaheer ud Din Babur, Commander Logistics Services, Khalid Hamid ( CEO NICL) , Secy Commerce Salueh Ahmed Farroqi, Brig Nasir Zia, COO Ops and Qasim Rashid CFO NICL

The CMR Convention (full title Convention on the Contract for the International Carriage of Goods by Road) is a United Nations convention that was first signed in Geneva on 19 May 1956 as part of international private law. Based on the CMR, the International Road Transport Union (IRU) developed a standard CMR waybill – also called CMR Note.

The CMR note is the standard contract of carriage for goods being transported internationally by road. CMR stands for “Convention relative au contract de transport international de marchandises par route” or “Contract for the International Carriage of Goods by Road.”

This establishes contractual relations for the international carriage of goods by road between the sender, the carrier, and the consignee. Details are to be provided by the sender, and the carrier and the recipient need to be familiar with the details of goods being sent by road. Similarly, as an insurer, NICL teams will be provided details of the consignment by the sender.

NICL thus takes pride that it is becoming the pioneer in Pakistan for providing risk coverage under TIR and CMR to its valued public sector clients like NLC and will be supporting the government’s vision of regional connectivity and trade integration.

It is also exploring more avenues to penetrate the insurance market of Pakistan with a vision to provide multimodal and multidimensional risk coverages for different classes of business.

 

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