Adamjee Insurance - The Golden Umbrella1 We are what you might call the super man of insurance, said

Mr. Abdul Sami Shami the Assistant Sales Manager of Adamjee Insurance, Lahore branch. Mr. Shami has been working in Adamjee insurance for over 15 years now and he has seen all the ups and downs of the company, the changes in the owners and the immense difference that has come over the years regarding the very nature of sales of insurance itself. Adamjee Insurance claims to provide the golden umbrella of insurance, where you can get your life and all the rest of your valuable assets in life insured, and be protected. However the interesting factor is that the rhetoric of giving the comfort of being under the shade of umbrella seems not-so-comforting when you get to know about the internal operations of the company. Adamjee Companys Background The company has a very interesting past and important milestones over the years, which somewhat show in the operations and the policies of the company now. The company was owned for more than 35 years by the Adamjee family till the year 2006. In the year 2006, things took a very different and unknown route for the Adamjee family and Adamjee insurance. Adamjee Company had taken huge amounts of debt from the Muslim Commercial Bank, owned by Mian Mansha. Mr. Mansha, looking at the opportunity proposed that he is willing to set off the loans that the company has taken in exchange for Adamjee Insurance. The management of Adamjee however did not like the proposal that had been made to them and as a result, the management went to the court to fight their case that later became a much publicized event for the nation. The matter became the headlines of the national news, and was later hushed down by Gen. Pervez Musharaf granting the company shares to Mr. Mansha when he was honored with the Best Industrialist award. Over the night, 51% of the shares of the company were then owned by Mr. Mansha, and the rest 49% remained with the Adamjee family, making Mian Mansha the owner of Adamjee Insurance. Restructuring after the change in owners Mr. Mansha takes over, and the next day 122 Deputy Managers are fired said Mr. Shami. The few managers were promoted to the post of Assistant General Manager and the entire line of deputy managers was removed to reduce the cost of the business. In Adamjee Insurance, the older people who had been working in the company for more than 15 years were costing them, so they were laid off giving them the perks and some compensation payments like the gratuity fund, and pension funds that had been accumulated from their pay checks over the years they had served the company. A new younger workforce is now working for the company, who are working double the amount that the senior employees used to work, and given the same salary.

The Golden Umbrella is a report written in case study format, for the academic purposes only. It is a case written under the course Sales Force Management under the instructor Prof. F. A. Fareedy. The case demonstrates the technical knowledge that the students acquired through the text books and practical field work. The case is the intellectual property of students enrolled in the MBA program of Lahore School of Economics, and any duplication of the reports would be considered theft of intellectual property. None of the contents can be reproduced without the consent of the writers, Usman Bajwa, Sobia Sohail and Zahrah Sodhi.

Adamjee Products Adamjee Insurance is a company currently providing insurances of both types to the people of Pakistan. The two broad categories of insurance are Life and General. In life, as the name suggests, only life insurance is covered. It is currently at the initial stages, and is currently the latest offering by the company. This has been done with the collaboration of a South African company (also called Sister company in sales jargon), and the South African company is going to be the company for the reassurance of the life insurances that Adamjee makes. Currently, the companys sales force team treats it a sales tool for the team as the existing sales team is handling life insurance as well despite it being a completely different category. Adamjee has not made a separate sales team designed to deal with life insurance, and perhaps this is the reason why most of the employees of Adamjee themselves have taken up life insurance from State Life Insurance. There is a need to have sister companies in the business of insurance, as it is the demand of the nature of the business. The basic structure of the insurance companies is such that they require to have a sister company, backing their insurance and this process is called re-assurance in the working jargon. The risk of one factory, comprises of millions of rupees, hence if the insurance company faces such claims, then it needs to have another company backing it to cover up the financial side. The other main category of insurance that has Adamjee Insurances attention is general insurance. In general insurance, there are further sub categories, which are: 1) 2) 3) 4) Fire Insurance House Insurance Motor insurance Transit Insurance a. Export & Import Insurance b. Inland/Marine Insurance Crop Insurance Health Insurance Hull Insurance Accidental Insurance Engineering Insurance

5) 6) 7) 8) 9)

Amongst the many sub-categories mentioned over here, the companys biggest account is crop insurance, as they are the only company that is currently giving the facility of getting your lands and your crops insured. Before the flood, this particular insurance type was getting those most of the profits, as the rural branches were earning high commissions for crop insurances and were perhaps performing better than the urban branches. The company however, faced losses when the flood hit the agricultural land of Pakistan, and most of the crops were damaged by the flood water. The company therefore had to face losses due to the natural calamity that occurred and their biggest money generating account was not-so-fruitful in the year 2010. This event could have had an adverse effect on other insurance companies which were trying to enter into crop insurance after looking at the lucrative results that Adamjee was getting. On an average, every general insurance is created for a span of one year, and after that time period it has to be renewed.

Impact of Premia Software In the year 2008, Adamjee Insurance shifted to new documentation software by the name of Premia. Premia was a software update that was bought from India and it was brought into the system to overcome the documentation and accountability issues that were occurring in the company due to the previous system, and also the structure through which the outside agents were handled by the business. The previous system was MIS, and all the employees of Adamjee were quite comfortable with that system yet the banks used to complain that the documents were not correctly filled for which they used to complain to the officers, for which the administration usually had to make excuses. When Premia was introduced, there were of course problems with the switching of the software and the problems are still there as most of the employees are still not comfortable with Premia. The cost of purchasing the software was Rs.10 crore and Rs.4 crore were spent over and above the purchasing expense just to train and implement the software in the companys processes. Senior management was sent to India for the purpose of training, however further issues came up when the trained employees started training other employees of the company. Overall, the transition due to the up gradation of the software was not a successful maneuver, as even after 3 years of the change older problems have not been solved and further new ones have been added. Sales Department Organizational Structure The sale department is headed by the managing director of the company followed by the director sales. Organization is divided into six divisions each headed by the General Manager/ Divisional head. There are currently in total of six divisions; Four in Karachi (as 60% of the companys business is in Karachi), one in Lahore, which cover areas like Gujranwala, Multan, Faisalabad and Islamabad, and last one is Peshawar. Few years back each city had a separate division but recently there has been a cut down to reduce cost and increase profit. Under these six divisional managers come the assistant general managers or the branch head. In the first year there were 85 branches which have been reduced to 50 this year. Each division has 8 to 9 branches. Each branch has its own team that includes marketing officer and sales officer. Each marketing officer had to go in the market and discuss the business. Sales officers have further hired agents to make sales. This is done practically, but not stated on papers. Agents are the brokers who are working for different companies. This particular agent can be manager in a bank or can be in an import department or brother, sister or any one. Sales officer make their own decision while hiring an agent. These agents and sales officers are not part of the company. They are only given commissions. In order to motivate these agents to bring maximum business back home, MD of the company has set a benchmark which once met, can make them part of the company. This Benchmark is of Rs 5,000,000 that is same of all the products. Once this is achieved, that person becomes part of the companys payroll and is promoted accordingly. The Bench mark that is set by the MD is based on to the brand name and the goodwill that is created in eyes of people for Adamjee. Pricing is all done according to the market, as it is a high quality company affiliated with all the big companies. Although on papers Adamjee has stated that they are operating as Geographic organization in which each salesperson is assigned to different geographic territories. But practically they are not following this structure. No territory is specific for any sales person. One can sell any product in any territory in any division. Each sales person needs to have knowledge about everything. Once the sales are made they have

to report to their respective division. In total there are 500 employees; 300 in Karachi, 60 in Lahore and remaining in Peshawar division. Currently no new sales persons are hired.

Managing Director

Director Sales

GM /Divisional head (KHI)

GM /Divisional head (KHI)

GM/ Divisional Head (KHI)

GM/Divisio nal Head(KHI)

GM/Divisio nal Head (LHR)

GM/Divisio nal Head(Pesh)

AGM * 8

AGM *8

AGM*8

AGM*8

AGM*8

AGM*8

TEAM*8

TEAM*8

TEAM*8

TEAM*8

TEAM*8

TEAM*8

Commissions given to Sale people Commissions that are offered to the agents vary from product to product. There are four main products that are offered by Adamjee which include: Fire, Motor, Transit insurance, and Accidental Insurance. Commissions are percentage of gross premium. Following list shows different percentages of commission offered on different products: On Fire its 10% of gross premium per 1000 On Marine its 12% of gross premium per 100 On Motor its 5% of gross premium per 100 (sum is very high) On Health its 5% of gross premium per 1000

On Engineering its 5% of gross premium per 1000 On Crop its 5% of gross premium per 100 On Hull its 5% of gross premium per 100 On Accidental its 10% of gross premium per 1000

Life insurance offers 5% of premium where as competitors offer 2.5% of premium. Sales Forecasting Sales target are set by the director of the company along with their teams. Jury of executive opinion approach is being followed where all the heads of the company sit together and forecast future sales based on the sales of pervious year. In order to make forecast first they view the data of the whole country which will include competitor like EFU. Adamjee will see, analyze their risks and achievements like product on which they incurred loss. Strategy of the company varies from competitor to competitor. Decision making can be either aggressive or nonaggressive. Once the data is being analyzed then they see where the company stands and set targets accordingly. Process of Making Sales At the heart of any company is the sales, which means that no matter how much planning you do, the company cannot flourish or sustain in the future unless and until it is making the sales. For the purpose of sales, Adamjee Insurance hires agents. When a new person is hired by the company as an agent, they are given training of 15 to 20 days, and the agents hired have to have education till matriculation. The criteria, how sales actually take place through agents is as follows: New person enters Referrals Gets questionnaire filled

Insurance is finalized

Quotations Produced

As the saying goes charity begins at home so does the business of insurance at Adamjee. The system under the chaos is the usage of references and networking. The newly hired employee is going to go to people that he/she knows, then ask them to fill out the questionnaire that they have relating to the kind of insurance that they need for the coverage of their assets, or for the fulfillment of the bank requirements. The agent is going to bring the filled out details to the branch, then a quotation will be produced by the AGM and the quotation would be presented to the client and if the client agrees, the insurance will be finalized.

Once the referrals have been exhausted, the agent turns to Blind Calls. They would take up the yellow pages, and start calling up people, institutes, business and most importantly banks. They would follow the same process and continue to make sales. Banks are the main clients for any insurance company, as the banks are the ones that produce letter of credit, they cover import and export of goods, they own their own assets that have to get insured and they also have to insure lockers. Sales representatives impressions In evaluating the job of a sales representative, Mr. Athar Hussain working as a sales rep at the Garden town branch said: I joined Adamjee insurance company because I didnt have the qualifications to work elsewhere. I handed over my resume along with my matriculation degree to a friend who knew a relationship manager working at garden town branch. On the day of interview with the RM, I expected him to ask me lot of questions but instead he just told me about the types of insurance plans they were selling along with the target I had to achieve for that particular month. And I was being told that I wont get any base salary but just the commission basing on the amount of sales I will be able to make per month. Even if I were to be the companys permanent employee I wouldnt have got a base salary more than Rs. 10,000. This was being made clear to me while I was taking the interview. RM himself had done B.A. from Bahauddin Zikkria University situated in Multan and didnt seem to be a knowledgeable worker as he used to consult his note book after every other second in order to tell me about the basic rules of the game. Moreover the sales targets that were being given to me were virtually impossible to achieve especially at that point of my career where I knew very little about the insurance and the prevailing market conditions. Moreover they didnt provide me with the necessary training that could have helped me in mastering my job. Its been six months, I havent been able to achieve my monthly sales target even once, not only this, I have to wait for many days to get one sale registered under my code number from the account department because it has to checked by different people sitting in different departments. The transition in Insurance The usage, frequency and the concepts regarding insurance have changed drastically during the last two decades. Firstly, in the older times around 15 years ago there was lesser finance available to the people so people were less willing to get insurance and pay premiums to the insurance companies. Then there were less cars and motors hence it means lesser car insurances of the vehicles and lastly, there was also lesser export and import of goods so fewer consignments were insured. However, now there is more international trade involved now. Trading companies have to send their consignments through banks, and it is the banks requirements that they have to get the goods insured hence it means more business for the insurance companies. The number of vehicles on the road has increased immensely and it automatically means that their insurances have increased by an equal amount again resulting in more business for the insurance companies. The religious factor of resistance against insurance has also reduced to a larger extent and the resistance is not so string any more, meaning easier sales for the insurance sales agents. Most of the businesses (read Seth businesses) also have to deal through banks, so they also have to get insurance albeit only for the fulfillment of the bank documentation requirements.

Conclusion Adamjee Insurance after the change in the ownership has gone through a lot of changes within the company. The new owner Mr. Mansha has tried to cut down cost and make the company more lucrative and efficient, yet there are still loop holes in the system. The company is working on the networking roots that it has established over the years in the industry. The older employees are not happy by the changes, yet they are adjusting to it and trying to make a middle ground between what they were doing and what is not required of them.