State life Insurance Corporation of Pakistan Abbottabad

State Life Insurance Corporation of Pakistan

Submitted by: Hameeda Naz Submitted by: Afaq Waqar Registration # FA06-MBA-o64 Registration # FA10-MBA-030 Supervised by: mam Zohra Saleem Supervised by: Sir Sheraz Ali
This internship report is submitted in partial fulfillment of the requirements for the degree of Bachelor of Business Administration awarded by the COMSATS Institute of Information Technology, Abbottabad. Department of Management Sciences

Internship Report On Internship Report on

COMSATS Institute of Information Technology Abbottabad

May 2012

Department of Management Sciences COMSATS Institute of Information Technology Abbottabad

Internship Report on State life Insurance Corporation of Pakistan Abbottabad

Submitted by: Afaq Waqar Registration # FA10-MBA-030 Supervised by: Sir. Sheraz Ali

This internship report is submitted in partial fulfillment of the requirements for the degree of Bachelor of Business Administration awarded by the COMSATS Institute of Information Technology, Abbottabad.

Department of Management Sciences COMSATS Institute of Information Technology Abbottabad

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May 2012

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Department of Management Sciences COMSATS Institute of Information Technology Abbottabad Approval Sheet
Approval Committee 1. External Examiner

Mr. _____________________________________________Signature_______________

2. Supervisor Ms. ____________________________________________Signature_______________

3. Head of Department Mr. ___________________________________________Signature________________

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DEDICATION I dedicate all my work, efforts, and methodology to Parents who advised me at the outset, encouraged and support me to do MBA (Marketing) degree and my honorable Teachers who help and support me all those years in different aspects of my life and education and gave me motivation that helped me to succeed in every field of studies and life. I am proud of my Parents and my Teachers.

Abstract
There is an essential need for every MBA Graduate to develop the skills so as to perform well in the professional life. The purpose of this study is to familiarize the MBA graduate with the practical and realistic business practices. The main reason of this report is to provide complete information concerning The State Life Insurance Corporation. This report provides a comprehensive overview of state life insurance corporation. It will facilitate the students as well as the customers about diverse policies and procedures which will offer guidance & assistance in their future. This report also envelops how well state life is meeting the international standards and developing good customer relationship. The competitive analysis is also included in this report, which shows what strategies are being adopted by the competitor and what the competitor is doing to compete with state life insurance corporation

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Table of Contents

Acknowledgement....vii Executive Summary.....viii Internship Report On........................................................................................................................i State Life Insurance Corporation of Pakistan..................................................................................i Table of Contents......................................................................................................................vii Figure No Page No................................................................................................................ix Annexure Page No......................................................................................................ix Executive Summary................................................................................................................xi Introduction to the report.................................................................................................................1 1.2. Purpose of study....................................................................................................................1 1.3. Methodology.........................................................................................................................1 1.3.1. Primary data ................................................................................................................1 1.3.2. Secondary Data..............................................................................................................1 1.4. Merits...................................................................................................................................2 1.5. Limitations...........................................................................................................................2 1.6. Scheme of report...................................................................................................................2 Introduction to State Life Insurance Corporation of Pakistan ........................................................3 2.1 Historical Background...........................................................................................................3 2.2 Corporate Profile ...................................................................................................................3 2.3 The major achievements of State Life are as follows:...........................................................4 2.3 Objectives of state life insurance corporation.......................................................................4 2.4 Mission...................................................................................................................................5 2.5 Quality Policy........................................................................................................................5 2.6 Basic structure of State Life..................................................................................................5 2.7 Organizational Structure............................................................................................................7 CHAPTER 3 ...................................................................................................................................8 Sales & Marketing ..........................................................................................................................8 Introduction .....................................................................................................................................8 3.1. Structure of Marketing Department......................................................................................8 3.1.1. Board of Directors..........................................................................................................8 3.1.2. Executive directors.........................................................................................................8 3.1.3. Regional Chief...............................................................................................................8 3.1.4. Zonal Heads...................................................................................................................9 3.1.5. Sector Head....................................................................................................................9 3.1.6. Sub Zonal Head..............................................................................................................9 3.1.7. Area Managers...............................................................................................................9 3.1.8. Sales Managers............................................................................................................10 3.1.9. Sales Officers...............................................................................................................10 3.1.10. Sales Person ..............................................................................................................10 vii

3.2. Number of Employees working in the State Life at each level..........................................10 3.3. Marketing Operations.........................................................................................................11 3.4. Functions of Marketing Department...................................................................................12 3.4.1. Regional Chief.............................................................................................................12 3.4.2. Zonal Heads.................................................................................................................12 3.4.3. Sector Heads................................................................................................................12 3.4.4. Area Managers.............................................................................................................12 3.4.5. Sales Managers............................................................................................................13 3.4.6. Sales Officers...............................................................................................................13 3.4.7. Sales Representative....................................................................................................13 3.5. Marketing Strategy..............................................................................................................13 3.6. Service Planning, Development and Management.............................................................13 3.6.1. Planning.......................................................................................................................14 3.6.2. Development................................................................................................................14 3.6.3. Management.................................................................................................................15 3.7. Pricing Strategy...................................................................................................................15 3.8. Distribution Strategy...........................................................................................................15 3.9. Promotional Strategy..........................................................................................................16 3.10. Critical Analysis of the Theoretical Concept....................................................................16 3.11. Success and failure of the different services of the Corporation......................................17 3.11.1. Whole Life Assurance Plan.......................................................................................17 3.11.2. Endowment Assurance...............................................................................................18 3.11.3. Anticipated Endowment Assurance Plan...................................................................18 3.11.4. Shad Abad Assurance Plan........................................................................................19 3.11.5. Jeewan Sathi Assurance Plan.....................................................................................19 3.11.6. Child Education and Marriage Plan...........................................................................20 3.11.7. Reasons for Success...................................................................................................20 3.12. Major Competitors of Corporation...................................................................................21 3.13. Future Prospects of Corporation.......................................................................................21 CHAPTER 4 .................................................................................................................................22 SWOT Analysis of SLIC...............................................................................................................22 4.1Strength.................................................................................................................................22 4.2 Weakness.............................................................................................................................23 4.3 Opportunity..........................................................................................................................24 4.4 Threats..................................................................................................................................24 CHAPTER 5 .................................................................................................................................26 5.1 Recommendations................................................................................................................26 5.2 Conclusion...........................................................................................................................27 Reference.......................................................................................................................................30

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List of Diagram
Figure No Page No.
Figure 2.1 Organizational Structure....7

Annexure Page No.

Annex A ...31

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Acknowledgements
Allah Almighty is praiseworthy of all acknowledgments. I humbly thank Allah almighty, the Merciful and the Beneficent, who gave me health, thoughts and co-operative people to enable me achieve this goal. I also thank my brother Zain for his never ending moral support and prayers which always acted as a catalyst in my academic life. My deepest gratefulness also goes out to my supervisor Sir Sheraz Ali who is responsible for the successful completion of my report. Her untiring effort, commitment, encouragement, guidance and support helped me greatly in the understanding and writing of the dissertation. I highly appreciate the help and cooperation of Mr Shafqat Husain Jafri manager marketing sector head state life insurance corporation Abbottabad zone for their support and collaboration. I wish to express my deepest and sincere appreciation to all my uncles their help, cooperation, and moral support. I am grateful to my parents for all their prayers & strong support ; they have always been giving to me

Executive Summary
The role of life insurance is becoming increasingly important in a developing economy such as Pakistan where changing industrial structures and expanding demand for skilled human resources call for greater mobility of the workforce. In an environment of increasing urbanization, traditional methods of social protection through support from families and rural communities are difficult to maintain. The availability of life insurance means that individuals can use current cash income to provide for their retirement, or protect their dependents in the event of premature death of the breadwinner or other contingencies. A greater participation in particular for the low income segment of the population can be achieved through more competitive pricing and management efficiency, regulatory support as well as product innovation and marketing. Among the key reasons for the low participation rate in life insurance in Pakistan have been SLICs bureaucratic structure and lack of market forces to improve performance, as well as an unfavorable regulatory environment. Life insurance business was nationalized in Pakistan in 1972, and SLIC enjoyed a monopoly until 1990 when local interests were gain permitted to establish privately owned life insurance companies. Since 1994, the market has been open to foreign shareholders, but SLIC continues to dominate the market with about 90 percent of premium income. The first chapter of the dissertation provides an overall opening to the report as well as the purpose for which this particular organization (SLIC) was preferred to conduct internship. It highlights some of the basic and core values of the organization that can prove to be a potential learning ground for a MBA graduate. The second chapter of the report concerns with the organization itself and tries to underline the background history, milestones achieved business volume, its product lines and its manufacturing processes. Moreover some emphasis is laid on the organization hierarchy and structure including information relating to its regional offices and their marketing operations. Chapter three constitutes a thorough analysis of the Sales & Marketing operations of and how the organization capitalizes upon its core competencies along with corporate values. It starts by outlining the departmental structure and the functions performed by each unit within the marketing department. The marketing functions are generally distributed through market research, strategy formulation and implementation. A detailed overview of the companys marketing strategy is also affirmed which highlights the product quality procedures, pricing strategies, placing and transportation strategies, promotion strategies xi

as well as competitive strategies. The fourth chapter is centered around a critical analysis of the organization as well as the practices experienced by the internee. It is actually a meticulous comparison of the Strengths, Weaknesses, Opportunities and Threats to the organization. It is also accompanied by an overall analysis on the industry. Chapter 5 draws round the experience and skills acquired and practiced by the internee. It incorporates the recommendations and conclusions drawn by the intern and includes some future prospects of the industry.

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CHAPTER 1

Introduction to the report

This report is based upon the findings related to the companys marketing operations. A ten week internship was conducted at state life insurance corporation of Pakistan Abbottabad zone as the fulfillment of the course requirement of the degree of Bachelor of Business Administration COMSATS Institute of Information Technology. 1.2. Purpose of study The purpose of the study possesses objectives which are as follows: 1. This study has given us chance to learn something new practically and this is also the partial requirement of the degree of MBA. 2. This study has given us chance to get the practical experience in large organization, and it also endows us the knowledge of different departments and their working in the organization. 3. This study is very beneficial for me, it provide me an opportunity to acquaint myself to the actual work, place and writing of its project requires to use all the skills, abilities during the course of study. It makes me more practical, confident and professional. 1.3. Methodology Methodology means way of collecting the data of report writing. There are two methods to conduct research. 1.3.1. Primary data a) By meeting/asking questions from different personal of different departments. Mr. Shafqat Husain Jafri manager marketing sector head state life insurance corporation Abbottabad zone was the main source of getting information. b) Practically working, carefully watching the working procedure of the organization. 1.3.2. Secondary Data a) Study of written martial of state life insurance b) Study of different books of insurance, booklets, broachers. 1

c) Study the Annual Report of state life. d) Visiting the website of state life 1.4. Merits This report proves beneficial for all marketing students because it contains all the information about marketing. The intention of this report is to make it easy to understand the extent of theory and its difference from practical implications 1.5. Limitations During my internship training I had face to many problems/limitations which were sometimes really discourage me to collect the basic and important information to make a strong and very good report on state life insurance. Despite of the following limitation I tried my best and honest effort to collect data and compile this report. Due to lack of time it is very difficult to get all information of departments of state life Officers had not enough time to help us. I have limited time for internship

1.6. Scheme of report This report has - chapters including the present one. The chapter titles are: Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Introduction to the Report Introduction to the Organization Human Resource Management Analysis and findings of the Report Conclusion and Recommendations.

Chapter 2 Introduction to State Life Insurance Corporation of Pakistan

2.1 Historical Background The Life Insurance Business in Pakistan was nationalized during March 1972. Initially Life Insurance business of 32 Insurance Companies was merged and placed under three Beema Units named A, B and C Beema Units. However, later these Beema Units were merged and effective November 1, 1972 the Management of the Life Insurance Business was consolidated and entrusted to the State Life Insurance Corporation of Pakistan.State Life Insurance Corporation of Pakistan is headed by a Chairman and assisted by the Executive Directors appointed by Federal Government. Up to July 2000 the Corporation was run by Board of Directors constituted under Life Insurance (Nationalization) Order 1972. In July 2000, under Insurance Ordinance 2000, the Federal Government reconstituted the Board of Directors of State Life which runs the affair of this Corporation. The basic structure of the Corporation consists of 4 Regional Offices, 26 Zonal Offices, a few Sub-Zonal Offices, 111 Sector Offices, and a network of 461 Area Offices across the country for Individual Life Insurance; Four Zonal Offices and 6 Sector Offices with 20 Sector Heads for Group & Pension are involved in the Marketing of Life Insurance Plans policies and products offered by State Life and a Principal Office. The Zonal Offices deal exclusively with Sales and Marketing. Underwriting of Life Insurance Policies and the Policyholders Services. Regional Offices, each headed by a Regional Chief, supervise business activities of the Zones functioning under them. The Principal Office, based at Karachi, is responsible for corporate activities such as investment, real estate, actuarial, overseas operations, etc 2.2 Corporate Profile

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. 3

2.3

The major achievements of State Life are as follows: 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. State Life is profitable organization and it paid Rs.1.729 billion as dividend to the Government of Pakistan since its inception in 1972. 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 31.12.2005 stands at Rs.124.983 billions. Investment portfolio also includes investment in Real Estate which stands at a book value of Rs.2.309 billion as at 31.12.2005 whereas it fair value is around Rs.17.625 billion in the same period. The Paid up Capital increased from Rs.10 million in 1972 to Rs.900 million. The Premium income increased from Rs.0.317 billion in 1972 to 13.820 billion in 2005. Similarly Investment income including rental income increased from Rs.0.81 billion in 1972 to 13.106 billion in 2005.

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, 2005 the total number of policies enforce under individual life were 2.044 million and number of lives covered under group life insurance were 3.731 million. 2.3 Objectives of state life insurance corporation To run life insurance business on sound line. To provide more efficient service to the policyholders. To maximize the return to the policyholders by economizing on expenses and increasing the yield on investment. To make life insurance a more effective means of mobilizing national savings. 4

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.

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To use the policyholders fund in he wider interest of the community. Mission

To remain the leading insurer in the country by extending the benefits insurance to all sections of society and meeting our commitments to our policy holders and the nation. 2.5 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. 2.6 Basic structure of State Life

The basic structure of the State Life Insurance Corporation consists of Zonal Offices in all-important towns, Regional Offices and a Principal Office. The Zonal Offices deal exclusively with the sales and marketing of policies underwriting of Life Insurance Policies and the policyholder services. Regional Offices (South, North, Central and Multan) each headed by Regional Chief who supervises business activities of the zones in their Region effectively and the Principal Office, based at Karachi, is responsible for activities such as Investment, Advertising, Sales Promotion, Real Estate, Actuarial and International Operations etc. The Chief Executive of the Corporation is Chairman, who is presently assisted by three Executive Directors. State life is effectively providing life insurance cover to cater to individual needs of the countrys peoples through an organized and professionally trained field force comprising several thousand field workers and field supervisors. The policies issued by the state life are backed by the life fund exceeding Rs 94 billion at the end of April 2003. In addition, the government of Pakistan guarantees all individual life insurance policies. State lifes performance both in individual and group and pension, has been characterized by exemplary growth, brought about by the concerned efforts of its dedicated employees and members for its dynamic field force, under the guidance of a 5

top management comprising men with a vision and wisdom. State life offers a large number of plans for the benefits of Pakistani families. Insurance Companies all over the world have provided economies to maximize the amount of credit in their possession. Economies like that of Europe and North America with premium income of $1753 billion and $1346 billion respectively. Placing your money in insurance companies not only provides security to the policyholder, but also provides money in the form of investment to be spent on developing the economy of a nation. In Pakistan, less than 10% of the population is insured. The main competing companies are State Life Insurance Corporation (SLIC) and EFU. Majority of the population is not aware of the policies and their benefits. Insurance is commonly linked with death, and people do not really care about the money, if they are not present to spend it. Also, there have been religious concerns among the Muslim scholars about insurance policies that earning an interest as being a form of riba. While other scholars even consider the policies that dont earn interest as gharar.

2.7 Organizational Structure

CHAPTER 3 Sales & Marketing Introduction

Sales are the lifeblood of any business. This department also takes part in the marketing decisions of the company. All the staff in this section is qualified and trained for their professional duties. These are the people who are responsible to create image of the company and its products. Leading personality of this department having a smiling look on his face is always ready to solve the customers problem. All the members in this section are very frank as to their behavior. They are very hard working and conscious as to the customer care and their marketing targets. Marketing division is soul of companys goodwill. it is the marketing effort of this department who win the confidence of consumers and distributors. Sales and Marketing sections are combined. The marketing and sales division of the company faces all the competition. First objective of marketing staff is to attract the customer and next is to gain his customers confidence through providing solution to their problem, if any. 3.1. Structure of Marketing Department The marketing department of State life insurance Corporation of Pakistan is the biggest amongst all. The basic structure constitutes of the following main headings: 3.1.1. Board of Directors There are five members of the board of directors under whom regional chiefs and whole corporation operates. 3.1.2. Executive directors There are four executive directors who works accordingly as the board directs and they disseminate their orders into the corporate employees. 3.1.3. Regional Chief Regional Chief is the main body to whom each person has to report in order to get the final targets. There are four main regions through out the country and each of the regions 8

in Pakistan has got its own regional Chief. The duties of Regional Chief are to keep complete information of his region such that assigned targets are being achieved and each person in the region is working as a group or a team. 3.1.4. Zonal Heads The second to the Regional Chief is Zonal head. There are 26 zones throughout the country and each of the zonal head has to coordinate as a liaison between the regional chief and his zone such that there is complete coordination between all the zones in order to maintain the success. Zonal Head has maximum powers with in the zone and he is answerable for all the dealings with in his zone. 3.1.5. Sector Head Each zonal head has one sector head that assists him in managing the zone. He is the liaison between the management and the employees. There are 111 sector offices throughout the country, but there are only 20 Sector Heads who have to take care of each of the office of group insurance and pensions plans. He is to arrange the meetings for the targets and he is to ensure the training for the new and existing employees. He enjoys liberty to do majority of the work for the organization like to increase the motivation by arranging various events and he is the person who monitors the performance of everyone in the down line. 3.1.6. Sub Zonal Head Sub-zonal heads are the people who operate the sub zonal offices under each zone. They are subordinates to both Zonal Chiefs and Sector heads and is responsible to be answerable for all the events of their zones. Usually big cities are announced as subzones for the purpose of managing the business easily. Recently two new sub-zones are created in the Hazara Devision under Abbottabad Zone that is Haripur and Mansehra and both of these are allotted with own sub Zonal Heads. 3.1.7. Area Managers There are several of the areas under the zones and each of these is also provided with separate offices. There are 583 area managers who are working under the sector offices. Area manager is promoted with the efforts of the sales persons themselves. Area manager 9

is directly the team leader and under him there is a proper team that deals with the marketing, promotion and sales. He enjoys a unique liberty of permanent salary and the commissions as well. 3.1.8. Sales Managers It is a temporary post which is assigned to the senior sales persons such that who are upgraded from the sales officers but still have not become the area managers or are not subject to be area managers. They too are paid as on the basis of commissions but the fact is that they will have to act as a team and as well as individual sales person. Their job is easier than that of the other sales persons because they get benefit from the sales of the sales persons under them no matter they work or not. 3.1.9. Sales Officers Sales person is promoted to be a sales officer as he achieves the first two years targets. He too has the benefit of the commissions and as well as the commissions earned from the sales of his team. There are at least twelve sales people in this team and each helps him to achieve his goals. 3.1.10. Sales Person Sales person is also known as the sales representative and he is the life blood of the State Life and is responsible for the survival of the corporation in the market. Therefore each and every person of the State Life has to remain sales person for certain time period or to achieve certain targets. Sales persons have the toughest job amongst all the employees and have a vast number of it. On the daily basis there are so many sales persons hired to benefit the company as well as the people and to increase the sales. 3.2. Number of Employees working in the State Life at each level Although there are so many sales persons who are joining and leaving the organization on daily basis but still there is a body which monitors at zonal basis that how many people have been hired and how many have been dropped. Therefore, there is no exact number of the employees working in the state life insurance corporation of Pakistan; still the raw number of the employees is as under.

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Board of Directors: Executive Directors: Regional Chiefs: Zonal Heads: Sector Heads: Area Managers:

05 04 04 26 111+20 = 131 583

Besides these there are so many of the sales managers, sales officers and sales representatives Therefore, it is difficult to provide their exact numbering. 3.3. Marketing Operations The marketing operations of the state life insurance corporation of Pakistan vary for each of the sales presentation and therefore some of the examples of marketing operations could be noted down as follows: Initially a sales person has to identify his own prospect for the purpose to increase the sales of the organization and hence therefore usually one begins with their own relationships and contacts when first steps into the market. This process is known as prospecting where the name, contact number, address, occupation, expected estimated income, time when prospect is free to give time, all the data is piled up into a processing sheet for ease of work. Then each of the prospects is studied as an individual and then time is taken from then through call option for a meeting purpose. Then a presentation is prepared for the first meeting with the prospect such that in which all the data is verified with a bit introduction about the organization in a formal way. As the sales person meets the prospect for the first time he introduces the corporation and then he asks him/her a series of questions so that to get as much information about prospect as he can. Sales person notes down all the data on a survey form which constitute of various questions (see appendix 1). 11

Then that data is analyzed and a completely prepared that best suits to prospect with the help of the area manager and supervisors. The plan is completely an individually customized plan and varies with prospects. Then the prospect is called again and time is taken from him to finalize the insurance. This is the phase where all the information about the insurance is provided to the prospect and the benefits associated to the plan being serviced. Then all the queries of the prospect are resolved and all the objections are handled. The prospect could be met either at his place or at office of area manager or at any place which suits to prospect.

If the sales deal comes to a closing then the proper documentation and medication of the prospect is done and the same day as the policy is closed a bonus certificate is issued to him / her as a source of reliability. A follow up is observed over the period of term agreed and decided for the insurance and its maturity.

3.4. Functions of Marketing Department 3.4.1. Regional Chief The function of the Regional Chief is to look after all the zones and to make sure that the zones are working as they were directed. 3.4.2. Zonal Heads Zonal heads are responsible for the procurement of the business to achieve the set business targets of the corporation and let them to delegate into the downstream effectively. 3.4.3. Sector Heads The function of sector head is that he sets the targets for each area manager and helps them to cope up with all kinds of problems those come into their way. 3.4.4. Area Managers The function of area manager is to report sector heads on the weekly basis and to report the progress and updates to him. Besides this they work as field officers and help them to finalize the prospects and call each of the potential prospects on behalf of the Corporation. 12

3.4.5. Sales Managers Sales managers have to maintain a team of minimum of four sales officers and they work directly as sales representatives as well as the team leaders and sometimes helps the sales persons to deliver the presentations to potential customers as well. They check the progress of the sales officers and respond to the area managers. 3.4.6. Sales Officers Each sales officer must have a team of twelve sales representatives working as a team with him such that whatever problem occurs to any of the sales rep they can solve it and they are continuously in search of the new recruitment and hiring such that to employ as much people as they can to benefit both corporation and the individuals. 3.4.7. Sales Representative It is the lowest ranked position in the State Life insurance Corporation of Pakistan but it is the most important of all. They bring all the business to the corporation besides this they sustain and expand the business which is why they are most important of all in the whole corporation and are being treated as all individuals with some empowerment in taking immediate but correct and true decisions when needed. 3.5. Marketing Strategy The marketing strategy of State Life Insurance Corporation of Pakistan is allow the organization and its workforce to use its resources to increase sales and scope of the business, such that achieving competitive advantage, and obtaining the maximum level of customers satisfaction. Besides this ensuring satisfaction level for the valued policy holders and enabling the quality sales service facility to them. 3.6. Service Planning, Development and Management As State Life Insurance Corporation of Pakistan is deeply involved in to the servicing sector as a customized service provider to the whole country therefore there is huge involvement of proper planning, development and management. All the three portions could be explained as follows under the roof of State Life Insurance Corporation of Pakistan. Some other places where these elements are observed are mentioned below:

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3.6.1. Planning It is the most important where to ensure the quality of the services First of all planning is done to find out various opportunities for the corporation at sector level and then at global level. Therefore, a proper planning committee is formed at each sector that is responsible to identify various opportunities for the corporation in order to be successful in the market and ensure the best quality services. Besides this before any of the potential prospects is contacted a proper planning is done by the sales person that how will he go and act in front of it such that the customer should not feel shy or any restriction or hesitation in order to meet and listen him. Planning aspect is commonly observed at the preparation of the insurance plan for the customer in which proper documentation, and its analysis study is conducted and way of implementation and contact is also discovered with the help of the area manager or sector head. The next level of planning is observed when after sales services are being provided and the time when future installments of the policy plan are being taken from the same customer and the method design with which customer feels safer and convinced to submit it. The final level of planning is observed when new customers are being attracted or when the existing business is being expanded. 3.6.2. Development Development is now not just the need but the cry of State Life Insurance Corporation of Pakistan. As it was formed in 1972 since then there is very minor development in the managerial tactics; though there is huge development in the reserves, infrastructure, business, money, savings and corporate worth but still the managerial and marketing aspects needs to be upgraded. Like the management it uses traditional techniques rather than the total quality management tools to control and manage the whole organizational setup. This is why the processes are not that much effective and efficient. Secondly, the sales reps of corporation are being given trainings in the same old traditional fashion which do not even uphold up with the need of the day, people feel insecure if they are treated in the traditional way. Therefore, there is huge opportunity in the development of the organization for which there is a separate department working under marketing department where training and developmental programs are carried out. 14

3.6.3. Management The management at corporation is well aware of all the pros and cons of the organization which is why they are continuously acting upon to resolve up into a better ending. The management is completely empowered up to a certain level such that an employee can take immediate decision at his own to resolve any problem in a best manner. The management hierarchy at State Life is one of the best hierarchies and is well arranged. Everyone knows that who has to report whom and how, there is no confusion between the roles and all the top managers of the corporations have passed through the fundamental sales representative approach as a result of which too few management issues are observed even though there is a very large number of the employees of the organization. The management has got no complexities or misconception but if any problem arises it is resolved at once. The management is well trained and is very cooperative, as it is the corporation of the public not individual; hence all the rules and regulations followed are up to the public opinion. 3.7. Pricing Strategy There is no fixed pricing strategy which is adopted as a standardized one, because all the policy plans are customized, besides this the actuarial of the firm has made different pricing schemes under different plans for each age group varying from ten years of policy duration till the maximum life span. Therefore the pricing strategy depends upon the sales representative, the prospect and the negotiation between them, i.e. what suits them the best. An example could be given as a person who is having average income per month below than ten thousand cannot be offered a policy of ten lack rupees for the time period of twenty years whereas a person who has average income of three lack rupees per month could be offered with a policy of ten million rupees, therefore the pricing strategy varies from prospect to prospect and as well as from sales rep to sales rep. 3.8. Distribution Strategy For the purpose of distribution State Life uses the personal selling technique that is there are a vast number of sales representatives such that in each area there are thousands of sales persons to deliver the corporate value. This provides the benefit in many ways first of all the customers of such services needs greater time to understand the service being 15

offered, more detail is needed to adopt it, more information is needed regarding the benefits associated with it therefore such distribution strategy ensures achievement of all the mentioned targets. Secondly, such technique is cheaper than all other distribution strategies, because corporations prime focus is to hire the sales people from the region where they are operating which minimizes all kinds of the costs and ensures the increase in the sales. 3.9. Promotional Strategy For the purpose of the promotions Corporation uses various techniques, the most commonly used is to promote the corporate value through the sales representatives, besides this monthly newsletters are published, broachers are being published and distributed amongst people, newspapers advertisements and sponsoring the events. Besides this the major promotion is being done through infrastructure development throughout the country, like motor ways development, play lands projects development, and job offering to every individual. Still the promotional strategy could be improved if the sales reps are well trained and well dressed with their physical appearance mode of conveying the corporate message. Corporation is working upon how to put the message into the hearts of the people and let each and everyone realized that how important it is to be insured and how can it be beneficial for individuals and as well as for the country. 3.10. Critical Analysis of the Theoretical Concept The theoretical concepts which we studied during the past eight semesters were all observed at various levels and were quiet helpful to understand and manage the things properly but the theory which best suits this case if of Sales Force Management. In the sales force management we studied a complete process of sales which includes various steps all of those exactly correlate with the practical experiences; some of the resemblance between the two is mentioned as below: The initial step which we study was to go for various techniques of prospecting; in practical life the training department teaches how to do prospecting and helps to identify the initial prospects. The second step involves to analyze the prospects at own, which too is taught by them that how to prioritize and categorize the prospects and on what conditions. The third step is to be prepared for the initial meeting in the theory whereas 16

Corporation bona fide helps in how to get prepared before any contact with the customers; rather virtual training sessions are conducted so that one gets completely prepared before stepping into the market. The next step is to go for the call option that how to contact the prospect at first; the organization helps in telling that one should contact the prospect through the telephone call such that when the sales person go and meet him he should not realize that sales person has come just to waste my time, rather I have given him this time because I am mostly doing nothing at this time. The next step in theoretical studies is the meeting or presentation; the corporation prepares well the sales rep such that as he goes to meet some prospect here remains none chance for the sales rep to do any mistakes because he is actually representing the Corporation not himself. After the presentation is over then there is a sequence of trail closure which gives an idea that whether the prospect would end up into the satisfying customer or will reject the sales. The next step is to take data and make up a policy plan for the prospect and call him again so that you can go and close the dealing. The final step which the theory suggests is to have a follow up; which in practical life is observed in Corporation such that the follow up does not remains for a limited time period but for the minimum duration of eleven years and maximum of the lifelong; because it is believed by the Corporation that one satisfied customer provides five more satisfied customers so never take any chance to lose any of the prospects reliability and same does the book say. 3.11. Success and failure of the different services of the Corporation At present, Corporation is offering more than 117 types of services which were once just three. The reason behind this is the dynamic change in the corporation culture and acting actively according to the needs of the customers, which is why on regular basis corporation, had to increase the number of services being offered. There are ten major policy services which are huge success amongst which some of the mostly liked are as follows: 3.11.1. Whole Life Assurance Plan It is a unique combination of protection and savings at a very economical premium. Death at any time before age 85 years terminates payment of premiums and the sum insured and attached bonuses become payable. In the event the insured survives to the 17

policy anniversary at age 85 years, the policy matures and the sum insured plus bonuses become payable. Under this plan the rates of bonuses are usually much higher than the other plans and they help in increasing not only protection but also the investment element of the policy substantially. This plan is best suited for youngsters who have at initial stages of their careers and cannot afford to pay high premiums. Individuals who anticipate requirement of a lump sum in far future can also opt this plan. 3.11.2. Endowment Assurance Its a safest and surest method of guaranteed cash provision either at a specified time or at death (Allah forbid). Under these policies, the sum insured plus bonuses are payable at the end of the specified number of years or at death of the life insured if earlier. Premiums are payable for the specified number of years or till death, if earlier. The benefits under the plan can be further increased by attaching supplementary covers. For details of supplementary covers, please click here. The plan serves the requirements of a family in various shapes by way of financial help at retirement, education of children or provision of capital for business. 3.11.3. Anticipated Endowment Assurance Plan This is a modified form of endowment assurance and is also called Three Payment Plan. Besides fulfilling the long-term financial needs, it also helps in meeting the short-term financial exigencies. As the name suggests, the plan offers three payments throughout term of the policy. The plan offers survival benefits equal to 25% of sum insured on completion of 1/3rd and 2/3rd term of the policy. If the policyholder does not withdraw the survival benefits, a very attractive special reversionary bonus is available. On completion of term of the policy, the remaining 50% sum insured plus accrued bonuses shall be payable. If the life insured expires during term of the policy, sum insured, accrued bonuses, unclaimed survival benefits and special reversionary bonuses are payable. The plan is suitable for the individuals who have long-term financial needs but also anticipate requirement of money relatively earlier. Three payment plan helps fulfilling these short-term financial needs without terminating the actual contract.

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3.11.4. Shad Abad Assurance Plan Shad Abad Plan is an extended form of endowment assurance. The benefits under the policy increase manifold in the event of death of the life insured. On completion of term of policy, sum insured plus bonuses attached to the policy are payable. However, on death during the policy term, the death benefit consists of double of sum insured with accrued bonuses. In case of death due to accident, the death benefit consists of four times the sum insured plus bonuses. The coverage can be further widened by attaching supplementary covers with the policy. This plan meets the requirements of those who appreciate the basic savings purpose of endowment assurance but also like some additional cover to protect loved ones in case they die, Allah forbid, before maturity. 3.11.5. Jeewan Sathi Assurance Plan This is a joint life plan and covers lives of two partners say husband and wife simultaneously. Premiums are payable till the end of the specified term or till death of either of the insured persons, if earlier. The plan contains extensive benefits; an overview of which appears as under: On the death of the first life, the sum insured will be paid to the survivor. Further premiums under the policy will be waived, but the insurance protection of the second life will continue. Also, the policy will continue to participate in profits of the Corporation. On death of the second life, again the sum insured will be paid together with the attaching bonuses. In this event the policy will terminate. If the second life survives the term of the policy, he or she will be paid sum insured together with the attached bonuses, even though the sum insured has been paid once, on the death of the first life. If both the lives survive the term of the policy, the sum insured will be paid to them jointly, only once, together with the attached bonuses. Different supplementary covers are also available for increasing coverage under the policy. Jeevan Sathi Plan is best suited for those married couples who want to enjoy insurance coverage for a comparatively lesser premium. Moreover, housewives who are otherwise not insurable can also enjoy the benefits of insurance policy through this plan.

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3.11.6. Child Education and Marriage Plan Child Education & Marriage Assurance is a plan for the protection of childs future. It provides a lump sum benefit for the child at the completion of the policy term. On completion of term of the policy, full sum insured together with the accrued bonuses become payable to the policyholder. Please click here for the details of bonuses currently available for this plan. If the policyholder dies (Allah forbid) before completion of the term, a family income benefit of Rs 240 per 1000 sum insured per annum is paid to the child until the completion of policy term. Further, future premiums under the policy are waived and policy remains in force with full sum insured and continues to participate in State Lifes surplus and receive bonuses. Upon the completion of policy term, the child gets two options of either getting the proceeds in a lump sum or in five equal installments. Continue the policy in the same manner as earlier by switching the plan for the benefit of another child. Get a refund of all the previous premiums paid till the death of the child or the cash value of the policy, whichever is higher and terminate the contract. Continue the policy without naming another child in which case the benefit of Refund of Premium will not be available. Child Education & Marriage Plan is suited for the parents who are conscious about the future of their children. The term of the plan is such that the lump sum benefit becomes payable when the child attains a predetermined age of 18, 21 or 25 years. These ages may be selected considering the occasion at which children generally need financial assistance for higher education, marriage, or setting up business. Depending upon your individual needs, the plan is available in two separate versions of with and without built-in family income benefit. In addition to parent, this plan can also be affected by grandparents, uncles, aunts or any other person who is paying for the maintenance of the child. 3.11.7. Reasons for Success The reason for the success of these policy plans are that each of the policy provides the bonus right from the first day along with the guaranty by Government of Pakistan. And the bonus rates announced are hundred percent of the sum assured for the first five years, one hundred and eighty eight percent for the next five years and one hundred and thirty 20

percent for the remaining years. Besides these special riders offerings are an area of attraction for the customers and hence against each rider special incentives are being provided. The best plan that is being issued by the firm which has got no match in the market is that NDS plan according to which the medical of the person is being exempted and waved off by paying a rider charge above than the policy premium and as a result even if the person is sure that he will not survive for long and he couldnt save ample amount of money for his family can be insured, but certain conditions do apply on that as well. 3.12. Major Competitors of Corporation The major competitors of the corporation are EFU (Pvt.) Limited, NJI (Pvt.) Limited and Shaheen Insurance (Pvt.). There are several other insurance corporations as well which offer the same kind of services. The competitors of the organization are too weak to grapple the maximum market because they cannot offer the returns which State Life are offering and they competitors are themselves uncertain about their stability. The maximum reserve which competitor has is EFU with 14 Billion rupees whereas State Life enjoys the Reserves above 194 billion Rupees and Life fund of above 200 billion Rupees. 3.13. Future Prospects of Corporation The future prospects of the Corporation depends upon the capabilities of the Sales rep, such that the list of the future prospects is updated on the daily basis and as a result the appointments form the expected prospects are taken few days before than they are presented so that the client remains in a state where he is interacted regularly with the sales persons. The futures larger prospects includes the employees of the large corporations and organizations like Askari Bank and National Bank to be provided individual life insurances and as well as the Group insurance policies. Takaful insurance is another line of business which offers bright prospects in the future. The Takaful rules were finalized by the Government in 2005. Presently existing insurers are not permitted to carry on Takaful business. If and when the rules are amended, State Life would actively consider commencing Takaful operations. Takaful insurance is another line of business which offers bright prospects in the future. The Takaful rules were finalized by the Government in 2005. 21

CHAPTER 4 SWOT Analysis of SLIC

It is an important tools to analysis the overall situation in which an organization is conducting its affair. Each issue remains relevant and useful for corporate strategy formation 4.1Strength Adequate financial resources

SLIC has adequate financial resource this is strength of SLIC. Because it can invest in different project and can earn more, financially they have no problem. Better advertising campaigns

As SLIC is market leader, and big organization so it can lunch a better advertisement campaign through any kind of media. Adequate human resources

As SLIC is a large organization, and there are large number of people who are working . So they have adequate human resource, and they can meet any challenge relate to human resource. Capable top management

As they follow strict rule for promotion, so the top management of SLIC in a very much competent experience, so their decision gives benefit to the organization. Competitive skills of employees

Employees of SLIC are very competitive and very much skillful they know the corporation activities, which increase the efficiency of an organization. Good will

As SLIC is a old organization, so it develops a goodwill, so policyholder built trust 22

on it, and people want to invest in it. Government security

As SLIC is government organization, so there is also government support to organization which also increase their, stability and goodwill. Distribution strategy SLIC has branches throughout Pakistan, but is also operating in the United Arab Emirates, Kuwait and Saudi Arabia. SLICs distribution system is dominated by agents, of which it has more than 100,000. A large number of SLICs regional managers are agents rather than employees. The ability of SLIC to control such a sales force is doubtful, although its legal ability to do so is strengthened by the provisions of the proposed new Insurance Ordinance. The suitability of many agents, particularly in the context of increasing innovation in the industry,may also be doubtful. In past years, attempts to discontinue agents whose performance is unsatisfactory have led to protests against SLIC. While SLIC may now be on sounder legal grounds, the possibility of such action cannot be ruled out 4.2 Weakness Turnover of field force

As field worker are commission based, so turn over in SLIC is high because those who fail to bring business, leave the organization. Increasing rate of surrender

Because of economic condition, when the saving of people lower they cant continue their policy. So they surrender the policy, and this is one of the important weaknesses of SLIC. Economic conditions

Economic condition of Pakistan is not so good, due to which people have lass saving, so when saving will be less they are not able to start a policy. 23

Less awareness of mass

A large part of population are leaving in rural areas, and people of that area are not aware about life insurance. Weak marketing efforts

As SLIC is market leader, and there is no other close competitor, so they not give Proper attention to marketing activities. 4.3 Opportunity Growth of financial sector in Pakistan

As financial sector of Pakistan is starting better which will make better the financial Position of people and will increase saving of people. So this is an opportunity for SLIC to increase their business. Diversification

As SLIC is providing services in just only in life insurance, it can also start general Insurance, like the insurance of property etc. Favorable government policies

As SLIC is a government organization, so all policies of government is in the favor of SLIC. Innovation

SLIC also bring so many innovation in their present product, like they decrease the maturity duration of policy or can decrease sum assured of policy etc. 4.4 Threats New competitors

With the passage of time so many organization are coming to insurance business, so there will be tuff competition for SLIC to face in future. 24

Recession in economies

As Pakistans economic condition is not so stable so recession in economy can effect its performance by increasing the surrender rate of policy by policy holder.

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CHAPTER 5 Recommendations and Conclusion

5.1 Recommendations The state life Insurance Corporation has a monopoly in the life insurance business. The only one competitor is postal life insurance. But as whole the market is monopolized by SLIC and market share of SLIC is about 80%. For the promotion development of the business of the corporation the following suggestions and recommendation is given: As the union in SLIC is very strong, so many time it interfere in the working of SLIC specially in the recruiting low level employees from grade 1 to 8. Because employees of these grade are appointed according to the wish of union. This often leads to recruitment of incompetent people, which may affect the efficiency of SLIC. So the role union should be minimized. Recruitment problem also faced by SLIC at managers level. For the manager level posts relevant qualified people should be appointed e.g. MBAs will be suitable for such type of job, but they also appointed lawyers which is totally irrelevant for the job they perform. There is also found the lack of proper and channelized communication among the different deportment of SLIC. The communication should be properly channelized and should not be so much complicated. As it is accepted that field workers are very essential factor in bringing business. So turn over of sale force is another sever problem of SLIC. To reduce turn over and retain experience and competent field workers their commission rate should be increase, in order to motivate them for better performance. SLIC also adopted a procedure for promotion of their employees which includes their performance and passing of test. This is conducted by an American institute, it consist of 10 papers, and cost of each paper is from Rs. 5000 - 6000. So this is very expensive test. And this may effect a person who is competent but cant

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offered this expenses. So, SLIC should reduce this cost or should help the competent employees in monitory terms. As the field workers are commission based so they are not considered the permanent employees of the organization, therefore they have no role in policy making while they face the real problem on ground, so they must include members of field force when they are making policy for them. So many policy holders are facing problems in depositing their premium, especially people of rural area. Because most of the cash counter are situated in district cities which are far away from the side area of district. So SLIC should open cash counter in side areas also, this will help the people to deposit their premium easily. Surrender of policy means the end of policy. So many people surrender their policy because of less saving they cannot deposit their premium. So to stop the surrender of policy the SLIC should increase the time period for revival of policy. This will give extra time to policy holder to continue their policy if they want. Lapses in policies should also be reduced, and this can be done by continuous motivating of policyholder to deposit their premium regularly. This will also help them to attain persistency. State life insurance has more than 52 building throughout the country. And when there is recession in economy. Most of the companies leave the offices in state life building because of its high rent, which leads to reduction in net income. So the state life should facilitate the rent of offices according to the economic condition. 5.2 Conclusion It is concluded from the report and other documents which were consulted for the completion of this repot, that State Life Insurance is one of the leading cooperation of the country. It has provided a life Security Protection to about 5 million people within country. Apart from this it provides self finance jobs to thousands of the countrymen, and mobilized the countrys economic and financial resources, and also contributes a lot to Government in terms of providing funds. We hope that the corporation will play its role 27

significantly in the development of national economy. In the case of life insurance there is a vast scope. State Life Insurance Corporation of Pakistan should be immediately privatized. Their Mission Statement should be reviewed and revisited and on war-footing Insurance Policy of a vibrant nature should be developed so that Insurance Sector starts serving the economy of the country. As of today, excluding Group Insurance, there are hardly 2.5 million people in a total population on 166 million who enjoy the life insurance cover. This percentage requires to be given a quantum jump so that its expansion is seen for the benefit of the community. In this respect, we plan to develop a draft Insurance Policy for submission to the democratic Government of Pakistan so that they give a serious attention to this critical area and also develop insurance Conventional Product research is an ongoing area at State Life which is manifested in the innovative solutions to continue product development. In a bid to provide value added life insurance plans and policies to its prospective and millions of existing valued policyholders, State Life aims to launch new saving friendly products in the near future. As a market leader in life insurance industry State Life has the ability to deliver the financial services. Mr. Shahid Aziz Siddiqi, Chairman State Life intends broad initiatives such as introduction of insurance scheme for the rural populous increase the urban presence of State Life through mass media publicity, repositioning of Gulf Zone (Kingdom of Saudi Arabia, Bahrain, Kuwait and the UAE) operations, highlighting in the media that State Life's policyholders get claims payment during their life time and provide optimum financial benefits and savings to the policyholders and their families by expanding marketing operations. The prudent investment initiatives of senior management, State Life has resulted in better returns to its millions of valued policyholders in terms of "bonuses" that grows from year to year in billions of rupees. In fact, the zealousness of our fully committed marketing force extends to all the urban and rural areas of the country by promoting savings through life insurance. There is a greater need felt on the part of State Life's higher management to provide state-of-art training and groom its marketing force to create mass awareness about the benefits of life insurance with State Life. This would untap vast potential in life insurance market, ensure that optimum number of families across the country are provided the benefits and financial coverage of their hard earned money through life

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insurance that could ultimately raise the 'saving' ratio and contribute meaningfully to economic development of the country.

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Reference
Annual Budget Report (2010-2011) Statel life Insurance Corporation Dickinson, J. (n.d) Encouraging A Dynamic Life Insurance Industry:Economic Benefits And Policy Issues [online]. [Accessed 29 june, 2010]. Available from world wide web: <http://www.oecd.org/dataoecd/40/11/1857811.pdf > Kotler, P. Keller, K. (2000) Marketing Management, Edition 12, publisher, National Book Foundation, pp: 431-595. State Life Insurance Corporation of Pakistan (2005) [Online] [Accessed 4 February, 2010]. Availabe from world wide web: <http://www.statelife.com.pk> Jafri, Shafqat (2010) [Personal Communication]. 10 February

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Annex-A

Article 11(1) of the Life Insurance (Nationalization) Order, 1972, (Presidents Order No. 10 of 1972) Ministry of Trade, Federal Government of Pakistan; Abbottabad Sector and Abbottabad Zone. Survey Form The information by State Life for the beloved Pakistanis Dear, Respectable and Honorable, Assalam-o-Alaikum! You would be surprised to know that State Life Insurance Corporation of Pakistan is the only Institution which is having current Life Fund over Rs. 194 Billion throughout the Asia continent. At present all over the country State Life has got 84 Commercial Buildings, 18 Commercial Plots, 17 Housing Buildings, and 14 Play-land projects. State Life Insurance Corporation of Pakistan is in process to start with a project to form a building on a plot in the Abbottabad City. In Islamabad a State Life building comprising of 19 Floors is under construction. By the Grace of Allah Almighty during working hours Rs. 40 Lack per hour, Rs. 28 million daily, Rs. 610 million monthly is being paid by State Life Insurance Corporation of Pakistan. We present you a gentleman of State Life Insurance Corporation of Pakistan, kindly cooperate with him, and response gently and soothingly to his all questions, because in actual he is an Economic Activity Advisor. About yours children education, growth and marriage expenditure About yours nearer and long term future; and its planning

About the financing during the times if disabilities About going on Hajj and support or serious illness occur at old age About natural journey (death) of yours and the About loan for businesses or other

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benefits associated with your family necessities,

necessities About love for beloved country with Savings, Protection, and Reliable Investment

1. Then please fill below about yours identity kindly: Full Name:_______________________________ Name:_________________________________ Age:_________ Profession:___________________ __________________________ Profession Fathers Address:

_______________________________________________________________________ ____________________ Monthly Income:_________ Phone Nos.:_______________________________ Are you Married: yes/no If yes name:_______________________ Age: _________ then Spouse

Number of Daughters: ____________________ Their ages: ___________________________________ Number of Sons: ___________________ Their ages: _________________________________ 2. Are you the only one who earns living for your family? Yes / No 3. Have you started saving a minor portion of yours earning for yours daughters marriages? Yes / No 4. Are your family members (parents, children, spouse, brothers and sisters) relying upon you for their future wishes and desires to come true? Yes / No 5. Have you made a plan to spend yours old age life in a pleasant way? Yes / No 6. Have you prepared any plan about better education and better grooming of yours children? Yes / No

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7. Have you found a way of protection for your savings; with plan against its devaluation? Yes / No 8. Are you having any group insurance policy, pension policy or medical facilities from the govt.? Yes / No 9. Are you satisfied of yours present income, in a sense that Allah Forbids if the earner passes away, then yours family would be able to fulfill the daily based financial commitments in future as well? Yes / No 10. Have you ever purchased a policy from State Life Insurance Corporation of Pakistan? Yes / No If yes then; how much are you saving in a year _____________________________ Being the agent and Economic Activity Advisor, keeping a deep eye upon yours better and bright future and for its protection, State Life Insurance Corporation of Pakistan believes that it is its primary area to focus upon; with ensuring you the guarantied future. Yours decision and comment is worthy for us. Please suggest with your views about our representatives way of speaking, personality, dressing, dealing, and cooperation towards you? _______________________________________________________ ________________ Signature:

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