PREFACE

The contribution of the service to the Pakistani economy is increasing at an extra ordinary rate and the present financial services revolution looks certain to reinforce that trend considerably. The context does not claim to exhaustive and the balance must inevitably be open to criticism, but in attempting to give a general insight to the casual inquirer, the needs of those seeking in-depth knowledge within particular areas must inevitably be sacrificed.

This report covers a detail and analytical view of the State Life Insurance Corporation. As the title of this report is the essence of the hard working. This report has been written in the hope that it will help anybody, who read it carefully to obtain a real understanding of the basic structures, functions and techniques of the different departments of State Life Insurance Corporation.

I hope that the report is relatively free of errors and will appreciate if errors are brought to attention.

ACKNOWLEDGMENT

I thank all mighty ALLAH, the beneficent and the merciful, who gave me a chance and enough power to write this report. I want to express my gratitude and thanks to the Zonal Head Deputy Manager PHS. I feel it my bounded duty to acknowledge with deep gratitude and invaluable help extended to me by my respected teacher.

To all these I can only say - Thank You. I hope that the end product is not totally unworthy of the time and efforts they most generously gave.

TABLE OF CONTENTS

INTRODUCTION OF INDUSTRY 12	05
COMPANY AND ITS INTRODUCTION 23	06
MISSION AND OBJECTIVES 43	08
MAJOR ACHIEVEMENT 76	12
ORGANIZATIONAL STRUCTURE 43	14
DEPARTMENTS 56	16
HUMAN RESOURCE DEPARTMENT 12	34
CUSTOMER AND PRODUCTS 34
BONUSES 23
BASIC SALARY AND GRADING 34

INTRODUCTION

INSURANCE

Insurance means that the Probable loss occurring in future can be so shared that the overall impacted of total loss to any individual or section of the society is mitigated.

Insurance can be of life for the compensation in case of normal or accidental death or of property like car, bus ship, airplane, etc. in case of loss caused by fire, floods, earthquakes etc. insurance provides compensation for the loss to a maximum extent.

History of Insurance

The need of sharing losses caused particularly by sea perils was left several hundred-year ago. The merchant ships remaining away for months with valuable cargo carried with them the hope of marketing profits upon their safe return. The perils of the sea however, inflicting extensive damage to the ships and the goods loaded on them resulting in sometimes the total disaster ultimately caused great concern to those involved in the business. They consequently jointed hand to the way out and thus insurance was found to be the only possible means to save individual from total disaster. This idea originated from China and then developed by England and other European countries. In the beginning merchants used to sit together and for certain define amounts, members used to sign documents accepting their share of risk in the ships or cargo carried. This initial arrangement finally developed to highly skilled and most scientific ways for assessment of risk and underwriting and still countries. The persons signing in acceptance of their shares are called underwriters.

LIFE INSURANCE

Life insurance is a contract whereby the insure promises to pay, in exchange of certain premium, the sum insured, on the completion of a definite period, or on the death of the insured person. There is a difference between life insurance and other forms of insurance like fire insurance, marine insurance automobile insurance etc. covering immediate financial and economic losses. In life insurance, it is not easy to ascertain with exactness the total impact likely to occur due to the death of the person. The values placed on the life for possible assessment of the financial repercussions anticipated as a result of death, nevertheless, are related to a great extant and as possible workable solution for maintaining source of income to a maximum possible extant. In short when a man dies, not only he but either the entire source of income dies if he is only responsible for producing the income for the family or important part of source of income for the family, for the family, in such case life insurance takes over the liability and the responsibility of meeting family needs.

BENEFITS OF LIFE INSURANCE

Ø Financial Protection

Ø Necessary Saving

Ø Property Building

Ø Loan Facility

Ø Education and Marriage plan

Ø Income Tax rebate

Ø Retirement Fund

STATUE UNDER WHICH CREATED

Life insurance (Nationalization) order, 1972

(Presidential Order X of 1972)

Date Of Incorporation

November 01, 1972

Legal status

Autonomous Corporation under the control of the ministry of Commerce, Govt. of Pakistan.

Principal Office:

State Life Building No.9

Dr. Ziauddin Road

Karachi, Pakistan.

MISSION STATEMENT

“To remain the leading insurer in the country by extending the benefits of insurance to all sections of society and meeting our commitments to our policy holders and the nation”.

Quality Policy

To ensure satisfaction of our valued policyholders in processing new business, providing after sales service and optimizing return on Life Fund through a quality culture and to maintain ourselves leading life insurer in Pakistan.

OBJECTIVES

Following are the objectives:

Ø To run life insurance business on sound line.

Ø To provide more efficient service to the policyholders.

Ø To maximize the return to the policyholders by economizing on expenses and increasing the yield on investment.

Ø To make life insurance a more effective means of mobilizing national savings.

Ø To widen the area of operation of life insurance and making it available to as large a section of the population as possible, extending it from the comparatively more affluent sections of society to the common man in towns and villages.

Ø To use the policyholders’ fund in the wider interest of the community.

History of Life insurance In Pakistan

Before partition, there were only three major insurance companies named Christian Mutual, Muslim and eastern Federal Union transacting life insurance through their Head Office in the ears, which ultimately formed Pakistan. The need for having a composite insurance company particularly for Muslims was felt by some of the eminent Muslim personalities. And Eastern Federal Union Insurance Company was established in 1932 by the struggle of those Muslim personalities. The Muslim Insurance Company of Pakistan was established in 1949.

Before the nationalization of companies in 1972, there was a big competition between companies involved in life insurance business in Pakistan as there were more than thirty companies offering the insurance facility. Upon nationalization of life insurance business in 1972, State Life Insurance Corporation was formed to take entire liabilities and assets as they related to life insurance business. Starting with three units A,B and C, it was soon merger into a single corporation. Now including Bahawalpur Zone, there are thirty zones of Stat Life Insurance Corporation are working in different parts of the country with Head Office at Karachi.

In Pakistan, life insurance business was nationalized by Govt., Order in March 19, 1972 and in fact this was an important step toward economic development in the history of Pak.

The nationalized process was completed in two phases. In first phase (March 19, 1972), the Govt. has taken over the administration of 32 companies. After this, these were handed over to trustee and sub-trustee in accordance to life insurance nationalization order 1972.

In the second phase of nationalization (November 1, 1972) a single corporation, having three units, came into existence by the name of State Life Insurance Corporation (SLIC) of Pakistan.

These three units, constituted by merging of one or more insurance companies, were named as A,B and C units. For further improvement of the life business in Pak, these units (A, B & C) were merged together and converted into zones.

SLIC has enjoyed a complete monopoly the life business till 1990 when the Government, had decided to open it to local private sector insurers. At present, besides SLIC, there are four other life insurers operating in the country including two foreign companies. The state Life Insurance Corporation is reinsured by foreign insurance “Swiss RE” (Switzerland).

Major Achievements

The major function of the State Life Insurance Corporation of Pakistan is to carry out Life Insurance Business; however, it is also involved in the other related business activities such as investment of policyholders’ fund in Government securities, Stock market, Real Estate etc. The major achievements of State Life are as under:

Ø On the commencement of the operations, the Corporation took a very important step by effecting reduction up to 33% in the premiums on the past and potential Life Policies for the benefit of the Policyholders.

Ø State Life is profitable organization and it paid Rs.2.242 billion as dividend to the Government of Pakistan since its inception in 1972.

Ø State Life has played very vital role in the economy by providing employment to the people of the country as permanent employees and as part of its marketing force and by investing the huge funds in different sectors of the economy. The Investment Portfolio of State Life as at 31.12.2007 stands at Rs.161.966 billions.

Ø Investment portfolio also includes investment in Real Estate which stands at a book value of Rs.2.331 billion as at 31.12.2007 whereas it fair value is around Rs.22.923 billion in the same period.

Ø The Paid up Capital increased from Rs.10 million in 1972 to Rs.900 million in 2007.

Ø The Premium income increased from Rs.0.317 billion in 1972 to 18.717 billion in 2007. Similarly Investment income including rental income increased from Rs.0.81 billion in 1972 to 17.505 billion in 2007.

Ø Total statutory fund of State Life stands at Rs.156.7373 billion in 2007 as against Rs.1.494 billion in 1972.

Ø State Life is smoothly striving towards its objective of making life insurance available to large section of the society by extending it to common man. As at December, 2007 the total number of policies inforce under individual life were 2.349 million and number of

Ø lives covered under group life insurance were 4.062 million.

BOARD OF DIRECTORS

Mr. Shahid Aziz Siddiqi	Chairman
Mr. Shafqat Naghmi	Director
Mrs. Spenta Kandawalla	Director
Mr. Aslam Faruque	Director
Mr. Amin Qasim Dada	Director
Mr. Rasheed Y. Chinoy	Director
Syed A. Wahab Mehdi	Director
Syed Hur Riahi Gardezi	Director

Mr. Akbar Ali Hussain	Secretary Board

ORGANIZATIONAL STRUCTURE

REGIONAL & ZONAL OFFICES

Regional Office	Zonal Office
LAHORE Region	Lahore (Central)
	Lahore (Western)
	Faisal Abad
	Sargodha
	Gurjranwala
	Sialkot
KARACHI Region	Karachi (Southern)
	Karachi (Eastern)
	Karachi (Central)
	Hyderabad
	Mir Pur Khas
	Larkana
	Quetta
RAWALPINDI Region	Rawalpindi
	Mir Pur
	Islamabad
	Peshawar
	Abbottabad
	Swat
	Gujrat
Multan Region	Multan
	Sahiwal
	Rahim Yar Khan
	Dear Ghazi Khan
	Bahawal Pur

DEPARTMENTS

1. Agency Administration Department

2. Human Resource Development Department

3. New Business Department

4. Policy Holder Service Department

5. Budget and Accounts Department

6. Personal and General Services Department

7. Marketing Department

Audit Department

NEW BUSINESS DEPARTMENT

New Business (NB) is considered the soul of Insurance companies. Profitability and survival of the business depends on the NB.

FUNCTION OF NEW BUSINESS

In this department, as the name shows, new contracts start between proposes and Insurance Company. Proposes is a person who applies for the insurance protection.

Main function of the NB is underwriting.

This department is responsible for processing the new business introduced by the sales force right from receiving a proposal on the counter to mailing the policy document to the policyholder. It has various section to perform the different task relating to the acceptance or rejection of risks for life insurance, the proposal are received and initially is checked in all respects i.e. completion of al columns and then processed by the underwriters depending upon whether they have been introduced under the medical or non-medical scheme. The risk is assessed keeping in view the following factors:

Ø Personal data, occupation, physical and social features, health, family history of the prospect.

Ø Moral hazard, source of income, nomination, relationship between the nominee and the prospect.

Ø Previous life insurance history of the prospect if any.

Ø Field officer’s or sale representatives confidential report included in the proposal form.

Ø Financial underwriting i.e. source of income, its legality and proof, relationship between the prospect’s income and sum assure.

In case of non-medical scheme, the prospects own statement and filed officers or sales representative’s reports have more importance. After this assessment, the underwriting decision is made which may be acceptance of a risk at ordinary rated or with loading, calling additional evidences relating to health or financial status of the prospecting for a define periods or straight way declination. Premium rates, installments are then checked and first premium receipts are issued to the field force, and concerned department like commission payments, agency administration, computer division and marketing. This is brief terms are the function on the new business department. This is also a key function as the underwriters are responsible for the financial health of the life institution. By accepting god risks they promote profitability and growth which help in meeting the financial obligations of the life institution towards the policyholders, its employees and the government.

WORKING OF NEW BUSINESS

The precise working of NB department is as follows:

PROPOSAL NUMBER

In order to fulfill the recognition of the insurance policy, NB department allocates a number t each insurance policy for future references. NB department verifies whether the client is a new customer or a past customer.

UNDERWRITING

Underwriting is the process through which the underwriter assesses the risk associated with the Insurance Proposal. Underwriter verifies the personal information provided in the Proposal form (See annex. No.1). If he feels that client should have a medical checkup then SLIC has its own penal of doctors to provide medical assistance.

PREMIUM CALCULATION

After underwriting the premium of Sum Assured is calculated in Policy Brief Sheet (see annex No.2) in according with the rate book provided by the SLIC. The policy fee is charged of Rs. 100 or Rs 2.5 per thousands of sum assured whichever is less. Further the rates of supplementary contracts are added in premium.

POLICY ISSUE SECTION

After premium calculation the insurance and revenue stamps are embossed on the policy bond and the policy d documents is sent to client (See annex No.3) one copy of policy document is sent of (PHS) department of record purpose.

UNDERWRITING GUIDELINES

· Taking of Authentic Age Proof

· Verification on Nominee Relation with Policyholder

· Analyzing of health and financial status of Prosper.

· Verification of stated information on Proposal Form.

· Requirement of Medical Reports and Tests.

· Analyses of Medical Reports and Tests.

· Analysis of health history and family background.

· Others requirements.

BUDGET & ACCOUNTS DEPARTMENT

This department deals in:

· Cash Collection

· Cash Disbursement

· Salary Preparation

· Budget Preparation

· Inter-Zone Transaction

· Agents Commission

· Imprest

CASH COLLECTION

There are two mode of cash collection i.e., by Cash and by Cheque. The collection is made for II Renewal Premium and I .The premium is paid by cash in SLIC, and it is also paid by cheque. These cheques are sent to the department. These cheques are attached along with “ daily collection sheet” (DCS) with full detail i.e. Banker’s name, location, date of issue etc. and this sheet is sent to the SLIC’s authorized bank (UBL) in Bahawalpur for collection.

CASH DISBURSEMENT

For cash disbursement, first the voucher is prepared, singed and prepared by authorized officer, for the person to whom the payment is made. This voucher is audited in case of having the amount in excess of Rs.10000. these voucher are punched (feeding) in computer. Voucher listings are maintained, cheques are prepared, and these cheques are sent to concerned party. Bank Statement is prepared by daily the authorized bankers regarding total coactions and payments of cheques i.e. realization of cheques. These banks Statements are punched into the computer. The data in floppy regarding Cash Book and Bank Statement is sent to Principle Office (PO) Karachi. Different lodgers are prepared in P.O and these are sent to SLIC Zone for further reconciliation. Errors and commissions are corrected.

Following list are prepared by this section:

Ø Data Wise Total List of Cheques Encased.

Ø List of Cheques Issued (Cash Book)

Ø List of Unmatched Cheques of Bank & Cash Book Files.

Along with the above mentioned lists, a “Daily Cheques Realization Report” is prepared in the following manner:

Total No. Of Cheques Deposited in Dec. 19—	*****
Total Amount of Cheques Deposited in dec, 19---	*****
Total No. Of Cheques Realized to day	*****
Total Amount of Cheques Realized Month To date(MTD)	*****
Total Amount of Cheques Realized (MTD)	*****
Realization Ratio	*****

SALARY PREPARATION

In B&A Department Salary of the employees is calculated. Different allowances are offered to the employees. Loan facilities are availed for the employees. Tax is deducted from Salary. A provision of recoveries of the loan is made.

Following are the addition to the salary of the employees: (see Annex No.)

Ø Basic Pay.

Ø Special/Technical Pay

Ø House Rent Allowance @80% and 75% of Basic Pay for staff and officer respectively.

Ø Conveyance Allowance @Rs. 600 and Rs. 500 p.m. for officer & staff respectively.

Ø Car maintenance Allowance @ Rs.550 and Rs. 750 for, only staff, unmarried and married respectively.

Ø Tea Expenses @ 7% of Basic Pay.

The deductions from salary are as follows:

Ø Provident Fund (PF) Contribution @ 1/12th of the Basic Pay.

Ø Union Subscription @ Rs. 50 and Rs. 30 for officer & staff respectively.

Ø Salary Advance Repayment (24 monthly installments).

Ø PF Loan Installement-2 (50 monthly installments).

Ø Pf Loan Installement-1 (26 monthly installments).

Ø Convince Loan Recovery (40 monthly installments).

House Building Loan Installments

House Rent Installment (18 monthly installments).

Following are the different types of loans, which can be availed by employees of SLIC managed by salary section:

Ø Two-Month Advance Salary.

Ø Loan-I against PF (3 Basic Pay).

Ø Loan-2 against PF (12 Basic Pay or 90% of Pf employee own contribution, whichever is less).

Ø Conveyance Loan @ Rs. 55000 and Rs. 150000 for staff & officer respectively.

Ø House Building Loan.

Ø After preparation of salary payable (Additional & Deduction) the data is purchased (feeding) into the computer database. Different types of lists are prepared such as total loan payment, allowances etc.

BUDGET PREPARATION:

Budget is prepared annually. Proposed Budget is sent to PO. The funds of different heads of proposed budget are transferred to Zonal Offices wholly or partially. It is assumed that each year First Year Premium (FYP) is increased by 25%. According to this base the commission of the agents are calculated and budgeted.

Following are the main types of budget:

Ø Income Budget

Ø Claim Budget

Ø Commission Budget

Ø Admin, Expenses Budget

Admin & Claim Budget is estimated by considering previous year actual expenses. Zonal & Regional Offices have separate budgets. If the funds transferred from PO Karachi are less than the proposed budget, additional funds are acquired from PO whenever required. The Budget Register is maintained in the department for employee/party/expense is debited and cash is credited. No additional expense is made when the budget is in short.

Employee Grade	Loan	% age Rate (interest)
1,2,3	Rs. 150000	6
4 to 7	Rs. 200000	6
7 & onward	Rs. 2155000 (or 30 Basic Pay whichever is high)	10

INTER-ZONE TRANSACTION

There is separate section for inter-zone transaction in budget and accounts. Whenever any expense is made on behalf of any other zone, the debit note is issued to the concerned zone for that expense. Similarly, other zone can issue debit note to Bahawalpur Zone is they have occurred the expenses on behalf of Bahawalpur Zone.

The expense incurred on behalf of other zone can be claimed, salary, TA/DA, claim investigation expense, utility, Meeting expense, entertainment, repair & maintenance, rent, Medical expense etc.

COMMISSION SECTION

In B&A Department, the commission Section calculates the commission. First Premium Receipt (FPR) is prepared by the New Business Department is sent to Commission Section to calculate the commission of agent. It has four copies, one for commission section and other three for agents (SR,SO,SM).

The commission rates vary with the amount of FYP and term of the policy. The Mode Bonus is given to SR if the premium installment is annually, @1.5% of FYP. Allied Bonus is given to SO,SR @4.35% of FYP P.A., paid by monthly if they have 72% of II year persistency, 90% renewal persistency, 10 SRS and last year FYP of Rs.120000 and Rs.150000 respectively. Production Bonus is given SR,SO & SM if they have last year FYP of Rs.6000,Rs.15000, Rs.50000 respectively and have minimum 70% of II year persistency. Further the tax is deducted @10% of commission from the commission of agents. In commission section different types of loans are given on fulfillment of certain requirements and targets to agent i.e. Emergency Advance, Eid Advance, Conveyance Loan, House Building Loan.

COMMISSION RATES

First Year Rate
For Sales Representative
Premium	Term (Year)			Prod. Bonus
	14-Oct	15-19	20 Above
Rs. 1-3999	25%	30%	35%	--
4000-5999	25%	30%	35%	2
6000-7999	25%	30%	35%	2.5
8000-9999	25%	30%	35%	3
10000 above	25%	30%	35%	3.5

FOR SALES OFFICER
Premium	Term (Year)
	10 To 14	15-19	20 Above
1-19999	13.13%	14.88%	17.50%
20000-34999	15	17	20
35000-49999	16.88	19.12	22.5
50000-74999	18.75	21.25	25
75000-above	19.5	22.1	26

FOR SALES MANAGER
Premium	Term (Year)
	10 To 14	15-19	20 Above
1-49999	4.50%	5.10%	6.00%
50000-99999	6	6.8	8
100000-1490000	7.5	8.5	10
150000-199999	8.25	9.35	11
200000-above	9	10.2	12

SECOND & ONWARD YEARS RATES
FOR SALES MANAGER
	SR	SO	SM
II Year	10.00%	2.00%	1.00%
Onward	5	1	0.50%

COMMISSION PAYMENT PROCEDURE

Following are three methods used by SLIC for payment of commission to agents:

Ø Payment by cheques

Ø Authority Card.

Ø Payment by Post.

In first method, the payment is directly made to the agent by cheques. In the second method, the payment is made to other person authorized by agent by signing the “Authorized Card” (See Annex NO0.5) in the third method the commission is paid by post to his postal address on his direction.

PRIZE AND AWARD

The prize and award are given to field force who are achieved the highest FYP at any time announced by SLIC.

EMERGENCY ADVANCE

It is given to SO,SM on the previous year earning on the renewal premium. For SR previous 2 year earning become entitlement of loan.

EID ADVANCE

Previous year total earning of SR, SO and SM becomes entitlement.

CONVEYANCE LOAN

It is given to SO, SM only on the condition of having 5 year service association with SLIC and two guarantors. The loan can be taken up Rs.40000.

HOUSE BUILDING LOAN

To obtain to this loan minimum association with SLIC is 15 years and pervious year renewal premium becomes entitlement.

IMPREST SECTION

Imprest is the additional privileges given to the employees (Area Managers). Annually, the Imprest Entitlement is made for the AM by considering the previous progress in the business. Different Circulars arrive from PO to Zones mentioning the different type of privileges on different FYP targets. These privileges are free petrol, telephone, electricity, clerk wage, stationary and other facilities etc.

POLICY HOLDER SERVICE DEPARTMENT

PHS is the abbreviation of "Policy Holder's Service" department. As the name indicating that all the services for policy holder are performed here. We can also call these services, after sale services. It is the most busy department of SLIC in each zone. Every service process was taken very carefully in the last conference of SLIC. It was announced that every service would be completed within 15 days. Otherwise State Life pays restriction plenty to the policy holder. The head of PHS is also sitting in P.O, Karachi. His post is G.M, and then each region contains D.G.M lastly the head of PHS department. In each zone is deputy manager.

Followings are the functions performed in PHS department.

DEATH CLAIM

When a person dies, his relatives or heirs tell SLIC agent or directly to the zonal office. SLIC demands certain documents like;

1. Application for disease.

2- NIC.

3- Disease and nominators are attested.

4- Death certificate from union council.

5- Original documents (ORs).

Firstly department manager or his colleagues is appointed for the investigation of this case. He also checks FIR from the nearest police station. If case is clear, then SLIC tries his best to give claim as soon as possible.

In case of accident, same process and way of investigation is performed. The place of investigation is also checked by the investigators seriously.

SURRENDER

Another service of this department is surrendering. If a policy holder wants to finish his policy due his compulsory need of money. Then he has two options. Firstly, he can take loan, from his own property. After requirement's completion he pays 13% interest and continues his policy. Secondly, if his need is not fulfilled with this amount then he can surrender his policy. But he can't gain his entire amount because he is breaking the contract.

Followings are the required documents.

1- Application.

2- NIC & attestation.

3- Original receipts.

After all these completions surrender value is based on your cash value.

ALTERATION

When policy holder wants some changing in his term, sum assured then this changing is called Alteration of policy.

e.g. A policy holder has a policy of sum assured 2,00,000 and he is not satisfied to this. He wants to increase it. This is called Alteration.

TERM CHANGING

A policy contains 20 years to be matured, but policy holder wants to decrease it. He thinks that after 15 years he would need this amount. This is another type of Alteration.

Followings are the requirements for Alteration.

1- Original receipts.

2- Alteration fee = Rs. 25

3- Alteration Performa.

4- Form.

5- Application.

6- I.D. card.

NOMINATION CHANGE

3rd kind of alteration is nomination change. First a policy holder nominated his wife but after some time he gave divorce to her wife and now he wants another person for nomination.

FILE TRANSFER

If your policy record is in Multan zone and now you are in Lahore. Then you can transfer here by application.

MATURITY CLAIM

When a policy goes to its maturity, it means that its term is completed. SLIC sends a letter to its policy holder. If documents, original receipts, all premiums are right, then a healthy amount with bonuses goes to policy holder's account. Otherwise if you had taken loan and could not return 13% interest and having certain cash value in your policy, then this loan plus interest of that period would be deducted. All maturity claims goes to your account.

LOANING

Other facility of SLIC is loaning. You can get loan from your account. Most of the people are allowed 70% loan from their own accounts. In case of serious need 80% is allowed to be taken as loan. But with an emergency case and with the help of an authority you would be awarded 90%.

But it is beneficial for policy holders to take a minimum loan from their account.

e.g - if you take 70% loan, then 30% will remain in your account and its cash value will remain take it enforce for more time. If you take 90% loan, then only 10% will remain in your account and it will cover less time to take policy enforced.

No deduction of Zakat from death claim. While Zakat is charged from both surrender and maturity claim.

REVIVAL

Charging of late fee or extra fee is called Revival, if the given premium date has been passed. Then till 30 days there is no extra fee, because these 30 days period is called grace period. Then from 30 to 90 days when you go to submit premium without late fee, then it may be demand "DGH" (Declaration of Good Health) by the head of this department. But from 90 days late fee will start. At this time PS (Personal Statement) can also be demanded. These all are the benefits of suspense accounts. But the loss of suspense account is, party will never get the claim. Because it is non-credit in account, another term is Special Revival, which means if you have forgotten your policy after paying at least two premiums and then within 5 years it remains enforce, then policy holder has the chance to renew it, e.g., he is unable to pay the remaining premiums plus their late fee. Then he can renew it by the starting of running year. In other words if you got your policy in 97, then now it will skip to 2002.

CONSTITUTION OF CLAIM COMMITTEE

The claims committee of principal office for taking decisions on all the death & injured claims refers to the principal office is reconstituted as follows.

1:- D.G.M (PHS) P.O. Conveyor.

2:- Manager (PHS) P.O Secretary.

3:- Manager (PHS) P.O Member.

4:- Manager (Oversees) Member.

5:- Manager (C&P) Division. Member.

PERSONAL & GENERAL SERVICE

DEPARTMENT (P&GS)

The office & general matters are dealt in P&G Department. This department has the sole responsibility and authority of the disciplinary action of the employees. Selection, recruitment, termination of the employees is the main functions of the P&G Department. This department also deals in medical facility to the office employees, leaves and similar other general services. The daily correspondence is dispatched in this department. Following are the main section of this department

MEDICAL SECTION

All this hospitalization expenses are beard by SLIC provided that these are incurred in approved hospital. The expenses of medicine are reimbursed. The reimbursement of medicine is not allowed to staff (having grade 1 to18) but they are given Rs.600 p.a. in shape of salary as medical allowance.

RENT SECTION

When sale Manager (SM) is promoted to Area Manager (AM),he is categorized as A,B,C and he has entitle to have his own office at his choice at the expense of SLIC. A good location is selected by the A.M. after selection of place, Zonal Head is informed about the location, by application written by A.M. this application is transferred to P&GS Department for the analysis of location of the office. The Zonal Rent Committee (ZRC) annualizes this location. A lease agreement is made with the landlord after analyzing the approved map for the location and property registration form.

The office rent entitlement for the categories of A,B,C of Am is Rs.2000, Rs.2000, & Rs.1000 P.M respectively.

CAPITAL SECTION

This section responsible for purchase, sale and maintenance of furniture & fixture, equipment etc. a Zonal Procurement Committee (ZPC) is constituted for the purchase of assets. The assets are purchased from the suitable supplier after critically analyzing the quotation offered by different venders.

Each year assets are depreciated @10% p.a. the entry for the purchased assets is made in the Register for Fixed Assets. Each ear the closing balance is intimated to PO Karachi.

STATIONARY SECTION

This section maintains the record of stationary such as paper, pencil, envelops, printed letters, form, calculators, dustbin, etc. whenever any department requires the stationary, the concerned department fills a Requisition Slip. The stationary is issued to the concerned department and it is recorded in the register.

LEAVE SECTION

Following are the main two types of leaves:

Casual Leave

Medical Leave

20 days casual leaves are allowed to all employees in a year. The medical leave or application leave is allowed for 48 days in a year. Unused leaves are accumulated and after two years these leaves in excess of 180 das can be encased. In case of death all leaves, not utilized, can be encased.

PERSONAL SECTION

All the employee matter such as appointed, promotion, demotion, transfer and allowances are dealt by personal section. Annual Confidential Report-ACR (see annex N. 10 for ACR) the employees are prepared, under the supervision of this section, by the departmental heads.

For the appointment of the staff, an advertisement is initiated in the Newspaper. Zonal Head is computer authority for this appointment of officers is done by Principle office (PO) Karachi or Regional Office. Selection Committee constituted by Zonal Head conducts a test and interview.

For promotion of the employees, there ACR’s are necessary and minimum three years are required to remain in one cadre. Each year he employees are promoted by the criteria and instructions set by PO Karachi. PO or Regional Office does promotion of officers.

AGENCY DEPARTMENT

Service provided by the SLIC is intangibles and therefore are not acquired at the counter by the people, who need it, so it must be sold them through persuasive method. Field force of SLIC plays an effective role in selling of tangibles products (Insurance Plans). In order to maintain the record of the field force agency department was established. The main function of this department includes recruitment, promotion, and termination of the field force, allied and medical facility for field force. This department is also responsible for insurance and renewal of license to the field force.

RECRUITMENT

The Sales Representative (SR) is appointed by SO/SM. The requirement and conditions for the appointment of SR is as follows:

Minimum qualification is required metric.

Age at entry must be than 18 years.

Annual quota for SR is Rs. 10000.

Application for the insurance of license is necessary and it is renewed after each 3 years.

An application Form, along with license fee Rs. 50, attested photocopies of documents and Nomination Form is submitted to the agency department. A code number is allotted at the submission of application to SR and he can start working as agent of the SLIC of Pakistan.

PROMOTION

SR is promoted, upon fulfillment of certain term and condition and on achievement of business targets, to SO. Similarly SO is promoted to SM and SM to A.M. following is the criteria:

TERMINATION & DEMOTION

Any agent of SLIC, who behave negatively, violates the rules & regulation or indulge fraud or mal-practice, can be termination by the Zonal Head. Any agent who fails to meet the annual quota of FYP is demoted to immediate lower rank of the field force.

LICENSE

The license to work as agent for SLIC is issued by the Controller of Insurance Karachi. At specific of time, a list of the field force is transferred to controller of Insurance Karachi for new and renewal of license. The list of license fee is given below:

SR (New License for Ist Year)	Rs. 59
SR (Renewal of License)	Rs. 70
SR (Renewal with late fee)	Rs. 125
SR/SM (Renewal of License)	Rs.150
SO/SM (Renewal with late fee)	Rs.200

INTERNAL AUDIT DEPARTMENT

This department plays a supervisory role of all of the all the other departments by checking and verification of all the working done by the departments according to the rules and regulations provided b PO Karachi time to time. These rules and regulation are provided to all the Zone through Pakistan in shape of circular. These circulars are attached in the book, which is called “Key to PO Circular Volume”. All working of the departments are verification according to this book. In this way, the frauds, errors, and omission are detected.

TYPE OF AUDIT

Pre-Audit

Post-Audit

When the audit is done before making payments, it is called pre-audit. Audit conducted after making payments is called post Audit. Pre audit is conducted for all the big payments such as purchase of assets, payment at maturity of policy, payment on death claim etc. Post audit is conducted for all-to-day expenses such as traveling expenses, stationary etc.

HRD DEPARTMENT

HRD is the abbreviation of "Human Resource Development ". This dept. trained the field force to enhance the people. It teaches throughout the Marketing channel with their special courses.

Followings are the courses for field forces, because this team is a front line of SLIC.

Training and courses give the following benefits:-

1:- Professionalism.

2:- Service Upgrading.

3:- Likelihood habits.

4:- Planning.

Target attaining:-

· Time.

· Income.

· Place.

BUDGETING (PRACTICAL PLANNING)

Monthly Expenditures	Forecasting.
House rent	3000
Utility bills	1000
Food , Dressing	3000
Transportation	1000
Customer dealing	1200
Other expenses	800
Total.	10,000.00

To cover these expenses you have to income through this forecasting.

MONTHLY INCOME FORECASTING

Income	10,000
Premium	25,000
Policies	10
Meeting	100
Name obtained	200
Working days	20
Meeting / day	5

The main purpose of the course is " To think in advance " and this is the basic planning.

SALARY AND GRADING

Grade	Initial Pay	Increment	Max. Pay
1	80	1545	3456
2	100	1788	3868
3	102	1849	3991
4	118	2037	4515
5	133	2105	4898
6	149	2652	5781
7	288	3374	11990
8	350	4990	13454
9	490	7200	15530
10	610	8970	18120
11	640	12630	22230
12	680	13660	23860
13	710	15920	26620
14	900	18420	30120

HR PLANING

If the company feels the requirement of new employees then Human resource department of SLIC is the main department which is responsible to perform this process. HR department of SLIC will make a proper planning that what type of workers is required to the company. The department will decide that what strength of employees is required to company and what is the eligibility criterion for this process.

So HR department plays a effective role for the selection of the employees.

DERECRUITMENT

It is that stage of the HRM model at which the department directly asks the candidates to leave the job. The main reason of this action is that department considers the strength of the employees which are required for the job and the extra candidate become victimized of the order to leave the job.

RECRUITMENT

In this stage the department of the company made complete description of the job and tries to attract good candidates for the job. Recruitment clears that what type of people are required for sale purpose, for marketing and for advertising etc. The main purpose of recruitment is,

“To attract right type of people for right job

at right time.”

The resource which State Life Insurance Company is using for this is only the adds which it gives in the newspapers, television. The job of the SLIC Company is for all type of people but there is limitation of qualification only bachelors of any category are eligible for their job.

SELECTION

For the selection of the workers the applications of the candidates at this stage are completely check by the company. Relevant Applications Company accepts and irrelevant applications company rejects at this stage.

This is the stage at which the candidates either selected or rejected by the company. The selection criterions of the company are very different and consist of 30 day training program. In this training period the company delivers the lectures to the candidate and at every evening the candidates have a test of which they have studied during the day by the company. The applicants who pass these tests company select them for the job.

They have training period of 30 days but for many they also call the employees on next day.

ORIENTATION

The basic purpose of orientation in State Life Insurance Company is to provide clear guideline, company rules and regulations, missions and objectives to the employees. The orientation period of the company can be short or long according to the nature of the job.

TRAINING

SLIC Company is using the following tools of training,

Ø Seminars.

Ø Conferences.

Ø Short courses.

Ø On- the - job training

PERFORMANCE EVALUATION

SLIC is using MBO APPROACH performance evaluation.

COMPENSATION MANAGEMENT

MONITORY

SLIC Company is giving good salaries to its employees.

FRINGE BENEFITS

SLIC Company is providing very good Fringe benefits to its employees. SLIC Company is giving medical insurance to its workers. It also gives bonuses to its workers. SLIC Company is giving 30% commission to its employees on the basis of sales of the company. The company has also announced many prizes to the workers on the basis of best sales within one month.

LEAVE POLICY

There is much restriction on leaves in the SLIC Company. An employee can afford only three leaves within a month without any particular reason.

CAREER DEVELOPMENT

There are very high chances for the career development in the SLIC Company. If an employee works hard in the company then there are very bright chances for its promotion in the company.

DEPARTURE

Like other many organizations there are also three conditions for the departure of the employee,

Retire on at 60 years or take extension but after this extension there are no chances of promotion in the company.

Before limits without benefits.

De recruitment.

RATIONAL DECISION MAKING PROCESS

This process involves 8 steps by which we can achieve a best alternative. State Life Insurance Company uses this process to make decisions on different issues which concern to them. The 8 steps regarding the problem of the State Life Insurance Company are as follows.

1. IDENTIFYING A PROBLEM

State Life Insurance Company has faced different problem in the previous years. They are at top position in insurance market in the Pakistan. In the previous years they were providing the products which other insurance companies were not providing in the market.

They have needed to differentiate themselves from the other companies. They felt that this problem is the main difference between them and other companies so consider it a major problem which should be solved. For this purpose they started work considering it a major problem.

2. IDENTIFYING DECISION CRITERIA

As the State Life Insurance Company realized that are on the same lines on which other companies are also working in market they started to work to know that what factors should be adopted to solve this problem.

There were different criteria’s relevant to this problem. These might include the produce differentiation, start up costs, financing availability, failure rate, growth potential, geographical location, the history of the State Life Insurance Company and financial qualification. These were the factors on the basis of which SLIC can solve the problem which they were facing in the market. From these factors relevant to the problem they selected after critical decision the start up costs, financial qualification, history of SLIC and geographical location.

3. ALLOCATION WEIGHTS TO THE CRITERIA

In this step State Life Insurance give the importance to each criterion on the basis of weight age. Every criterion selected on the basis of priority and decided that what criteria should be given the importance. From these criteria’s they found that making differentiation is the most important criteria and it should be given the priority. So they selected the criteria to solve the problem and started work on this criteria.

4. DEVALOPING ALTERNATIVES

In this step State Life Insurance Company tried to look at the all available alternatives. They just selected the alternatives but not gave the importance to them because their importance was only to produce differentiation in the market. In these alternatives they can include differentiation from other companies, lowering the costs of the products, increasing the duration of the different plans and improving the quality of the plans.

5. ANALYZING ALTERNATIVES

In this step State Life Insurance company critically analyzed the alternatives. For this purpose they analyzed the weaknesses and the strengths of the State Life Insurance Company with the alternatives. They just make the assessment of these alternatives but do make the weight age of these alternatives which was given in the 3rd step of this process. For this purpose they checked the costs, open geographical allocation, products and financial qualification of the alternatives very critically to understand the problem effectively.

6. SELECTING AN ALTERNATIVE

This is the step in which the State Life Insurance company selected the most suitable alternative which would be helpful in order to solve the problem. They decided that making differentiation of the products in the insurance market is the most appropriate alternative to handle the problem.

7. IMPLEMENTING THE ALTERNATIVE

So State Life Insurance Company made the differentiation in the market by providing the products in the market which other companies were not providing. For this purpose they two new products in the market. They started the insurance at most advanced level by increasing number of offices in different zones. They started to provide a large range of products. So by these products they made the differentiation in the market to prove themselves as the leader in insurance company in the Pakistan.

8. EVALUATING DECISION EFFECTIVENESS

In the last step of the decision making process they checked the effectiveness of their decision. There was also the chance that if the decision of the company will prove wrong to solve the problem they will alter their decision and will try to look that what mistake they have done in the decision making.

As a result of this decision making, there was about 10% increase in sales in the State Life Insurance Company.

DECISION MAKING TECHNIQUES

There are three types of decision making techniques

Ø Decision making under Certainty.

Ø Decision making under Uncertainty.

Ø Decision making Risk.

From these techniques State Life Insurance company is using decision making under certainty.

STYLE OF DECISION MAKING:

There are four different styles of decision making which are following,

Ø Behavioral decision making.

Ø Analytical decision making.

Ø Conceptual decision making.

Ø Directive decision making.

All these styles of decision making State Life Insurance Company is using on the basis of requirements of decision making.

ORGANIZING

Arranging and structuring work to accomplish organizational goals.

STRUCTURE OF ORGANIZATION

There are different structures of organizations which are following,

Ø Functional organizations

Ø Process organizations.

Ø Product organizations.

Ø Customer organizations.

Ø Geographic organizations.

The structure of State Life Insurance organization is Customer based and geographical. They are working on the basis of customer orientation and geographical.

TYPES OF ORGANIZATIONS

There are different types of organizations.

Mechanistic	VS	Organic
Centralized	VS	Decentralized
Bounded	VS	Boundary less
Team	VS	Matrix
Branch	VS	Sole

The State Life Insurance Company is a mechanistic organization. Their structure is a bit rigid but they work with attachment to one another. There is cooperation in their organization from top level to lower level.

The State Life Insurance Company is a centralized organization. They workers have officers but all give assistance and cooperate with one another.

The State Life Insurance Company is boundary less it is working in all over the country in different cities.

INTERNAL ENVIRONMENT

INTERNAL COMMUNICATIONS

SLIC firmly believes in the use and influence of Internal Communications to create a working environment that is based on the hallmark of professionalism and on the concept of ‘service above self’.

The idea is to create a relationship between the organization and its people, encourage excellence, and inculcate a spirit of achievement.

As an organization that lays great emphasis on Human Resource, its training and development, inevitably it realizes the meaningful contribution of its team that has worked passionately to make the channel grow and achieve unprecedented results.

SLIC’s HR Department plans and executes cohesive and integrated communication designed specifically for its people to share the sense of pride and joy in Brand Stewardship. This of course is in addition to numerous events and occasions that it holds to allow social, cultural and sporting activities as one big team.

Managers interact with their employees and communicate with everyone on an open forum culture. Managers communicate on the phone and over the internet the head office in based in Islamabad.

LEVEL OF FORMALITY

SLIC organization is partially formal. They follow an “Open door Policy”. Formal conversations are less because SLIC believes in Teamwork and working in a friendly environment. Despite a friendly atmosphere, no such incident has occurred yet in which different kinds of rumors have spread. Everyone has the right to give ideas and opinions regarding improvement.

INTERNAL CULTURE:

The culture of SLIC is CUSTOMER RESPONSIVE

There is a code of conduct that all employees have to follow strictly. For example:

· They have a No-Smoking environment however; they have specified a zone for smoking only.

· Every employee has to display the SLIC Identity Badge.

· All employees should conduct the display of Discipline strictly because of too much interaction with the other departments.

· There is no formal dress code except for certain levels such as, the Heads of the Departments.

· Eatables are not allowed everywhere in the office except in the Café. Employees mush reach and leave the office in time at the 10-7 office timings.

MOTIVATING THE EMPLOYEES

Some of SLIC’s tools of Motivation for employee welfare are:

Performance based incentives.

Annual evaluation of the employee’s performance is discussed with the employee.

There is and Idea Box in the reception room available to employees and even visitors. All ideas are implemented and the generator of the idea is rewarded with a prize. The C.E.O of the company is heading this campaign himself.

Annual Employee Functions.

SUCCESS STORY OF THE MONTH

A success story of the month in each department is mentioned for employees who have gone that extra mile in achieving their objective. Their stories are discussed; the committee reviews them and selects the best one. The winner of the best success story is rewarded with a dinner for two prizes

MARKETING PRODUCTS

POLICY NO	Name
01-	Whole Life Assurance.
03-	Endowment Assurance.
04-	Progressive Premium.
05-	Three Payment Plan.
06-	Joint Life.
07-	Child Protection.
09-	Single Premium Endowment.
17-	Optimal Maturity.
18-	Rural Life.
19-	Jeevan Sathi.
36-	Shad Abad.
73-	Sunehri Policy.
75-	Child Education and Marriage(built in)
76-	Child Education and Marriage(Non built in)

SWOT ANALYSIS

“There is an old Spain saying that to be a

bullfighter you must first Lear to be a bull”.

SWOT stand for strength, Weakness, Opportunities and Threats. The main aim of this analysis is to identify the extent to which the current strategy of the organization and its more specific changing taking place in the business environment. The idea of SWOT analysis is to undertake a more structured analysis so as to yield so as to yield finding, which can contribute the formulation of strategy.

STRENGTHS

SWOT Analysis of SLIC is as follows:

Ø Field force Management

Ø Good image

Ø Excellent set up

Ø Real estate division (investment portfolio)

Ø Training academies & training centers

Ø Marketing division

Ø Advertising & Sales promotion

Ø Computerization

Ø Market leader

Ø Return (bonus to policyholder)

Ø Government security

FIELD FORCE MANAGEMENT

SLIC has ful-fledge HRDD in most ZONAL Offices organized by qualified trainers and equipped by modern equipment to mange and train field force.

GOOD IMAGE

SLIC is an old insurance company operating in the Pakistan and has created the good image and good will in the eyes of general public. This is the strength of SLIC.

EXCELLENT SETUP

SLIC is a large Life Insurance Company in Pakistan and have 27 Zonal Offices and 5 Regional Offices throughout the country.

REAL ESTATE DIVISION (INVESTMENT PROTFOLO)

SLIC has well-equipped and computerized Real Estate Division in principal office (PO) Karachi supervised by highly qualified staff, engineers and investment analysts.

TRAINING ACADEMIES & TRAINING CENTERS

SLIC has 3 training Academies at Karachi, Lahore and Rawalpindi and 26 Training Centers in zonal offices. In 1998, 1946 courses and seminars, ranging from Basic Courses to advanced Programs like ADP, MOP and MMS of LIMRA (USA) had conducted.

MARKETING DIVISION

This division is backbone of SLIC. During 1998, 25486 young and educated people were inducted as SR in the sale force, this raising its strength to 256,814, inclusive of SO & SM.

ADVERTISING & SALES PROMOTION

During 1998, a new penal of four advertising agencies was selected. Outdoor advertising such as installation of Unipole Hoarding display of commercials in PTV is done and other publicity materials such as Calendars, Stickers, Eid Cards, and Posters are produced to boost business activities.

COMPUTERIZATION

About 2/3 working is computerized in SLIC. The plan to computerized total working is under review.

RETURN (BONUS TO POLICYHOLDER)

SLIC provides different types of bonuses as Reversionary, Terminal, Interim, One time, Golden and Special Reversionary Bonus to the policyholder.

GOVERNMENT SECURITY

It is the main strength of SLIC. Due to this factor, the image and good will for SLIC is further enhanced.

OTHERS

Ø It is old and most experienced organization.

Ø PO conducts marketing survey to analyze environment and develop new plans.

Ø Employees are fully devoted and highly paid workers as compare to other organization.

Ø It has highest paid up capital.

Ø It is reinsured by Swiss Re (Insurance Company Switzerland).

WEAKNESSES

Ø Incompetent field force

Ø Internal setting & culture

Ø Centralized Decision Making

Ø Internal department inefficiency

Ø Selection & recruitment

Ø Feed back

INCOMENTENT FIELD FORCE

In term of quantity, it is strength but in term of quality it is weakness. Most workers are not highly educated. They are promoted by fulfilling targets.

INTERNAL SETTING & CULTURE

Internal office setting and arrangement is not satisfactory as compare to its competitors. Dominant Culture needs further improvement but sub culture (i.e HRDD, Group Insurance) of some department is stationery. Yet there is need of further improvement.

CENTRALIZED DECISION MARKETING

Managerial decision-making is totally centralized in the PO Karachi, Zonal Offices follow the instruction and rules & regulations provided by PO. Sometimes decisions is taken by PO is not strategic and adjustable in the local environment. For prosperity & survival of the organization, decentralization (to some extent) is necessary.

INTERNAL DEPARTMENT INEFFICIENCY

Underwriting process (in NB Department) takes longer time period, which irritates the prospects.

Loan section takes 10 days to process.

Normally 1 to 2 months is required to surrender the policy and take the Survival Benefit, which is not justified.

SELECTION & RECRUITMENT

SR are selected and recruited by SO & SM irrespective of their education and unique internal attributes.

FEED BACK

The Corporation does not have any effectives and efficient feed back channel to disseminate sales force suggestions to upper management. Further, organization has no well organize system for feed back between office employees and manager, managers and Board of Directors.

OTHERS

Frauds done by some deceives field workers who deteriorate the good will & image of the organization.

Ineffective downward and upward communication channels.

OPPORTUNITIES

PER-CAPITA PREMIUM

In Pakistan per capita premium payment is 1.5 and $1.7 only for life & general insurance respectively. There is an opportunity to enhance this nominal rate. In Japan per capita premium for life insurance is $3810.

POPULATION GROWTH RATE

In Pakistan, population growth rate is approximately 3%. It is a great opportunity for insurance sector.

INSURED POPULATION

In Pakistan 2% to 3% population is insured while rest of the population provides opportunity to life insurances to enhance their business.

GOVERNMENT REGULATION

Section 10-B of Pakistan Commercial and Industrial Standing Ordinance 1968 provides the compulsory insurance of all the employees of the organization (whether private or Govt.). So it is a great opportunity to SLIC.

ENTERY BARRIERS

To enter in the insurance business he investment is required. Further 40% of premium is compulsory for the private insurances, to cede to Government of Pakistan security purpose creating the entry barrier.

THREATS

COMPETITORS

The existence of local and government insures such as EFU, CU, Metropolitan. ALICO etc. is threat to the survival of SLIC.

POLITCAL INSTABILITY

Political instability looses the confidence of the policyholders. Further rules and regulations of government are subject to change creating threat to insurance business.

FEAR OF WAR

The relationships of Pakistan with India are not satisfactory due to Kashmir dispute. There is always a fear war creating the threat to corporation and policyholders.

INVESTMENT CLIMATE

Due to the political instability and government changeover the investment climates are not satisfactory in the country. So the return from real estates and other activities is deteriorated.

CONCLUSION

From this research we conclude that State Life Insurance Company is a very old gun in the field of insurance in Pakistan. It is basically the pioneer in the insurance industry. At the time of its establishment it was enjoying monopoly. The company was not much focused about its employees. Its major concern was to cater customers but in this new era, the company is aware of the value of its employees and their impact on the customers. State life also has changed its policies by keeping in view the increasing number of competitors and with advent of HR in the field of business.

RECOMMENDATIONS

Ø State life insurance company has win over the hearts of people of Pakistan but still there is a scope of improvement on the basis of the formal organizational structure. As they are an insurance company so they should not be that much formalized.

Ø They should empower their employees to get desirable goals while competing in the industry.

Ø They should give more benefits to the employees to give them job satisfaction and increase organizational commitment.

Ø Althugh they have are moving towards decentralizing the structure but still they have rigid boundaries and there are barriers of communication which are yet to be covered.

BIBLIOGRAPHY

LOKOI

Saturday 31 December 2011

Ob Life Insurance Project Pakistan