TABLE OF CONTEST

P R E F A C E.......................................................................................................................1

ACKNOWLEDGEMENT....................................................................................................2 HISTORY OF INSURANCE...............................................................................................3 ORIGIN OF LIFE INSURANCE.........................................................................................4 HISTORY OF LIFE INSURANCE IN PAKISTAN...........................................................5 WHAT IS INSURNACE......................................................................................................6 DEFINITIONS OF INSURANCE.......................................................................................6 DEFINITIONS......................................................................................................................7 TYPES OF INSURANCE....................................................................................................8 TYPES OF INSURANCE COMPANIES............................................................................8 LIFE INSURANCE COMPANIES......................................................................................8 PROPERTY AND CASUALTY INSURANCE COMPANIES.........................................8 BENEFITS OF INSURANCE..............................................................................................9 AN OVERVIEW OF INSURANCE INDUSTRY IN PAKISTAN..................................10 GENERAL BUSINESS......................................................................................................10 LIFE INSURANCE............................................................................................................11 STATE LIFE INSURANCE CORPORATION OF PAKISTAN.....................................12 MISSION STATEMENT...................................................................................................15 OBJECTIVES OF SLIC.....................................................................................................15 CONTENTS OF MARKETING MIX...............................................................................16 1. PRODUCT.....................................................................................................................17 1.1 PRODUCT DEVELOPMENT PROCESS HAVE BEEN STOPPED SINCE LONG .............................................................................................................................................17 DEATH CLAIM.................................................................................................................18 MATURITY CLAIM.........................................................................................................18 INJURY CLAIM................................................................................................................18 SURVIVAL BENEFITS....................................................................................................19 1.2 PRODUCT ALREADY AVAILABLE ARE HARDLY SATISFYING DEMANDS OF PRESENT PEOPLE (TARGET MARKET)...............................................................20 1.3 INNOVATION PROCESS IS PRACTICALLY UN FOUND...................................21 1.4 NEW PRODUCT DEVELOPMENT IS BEING IGNORED.................................23 2. PRICE............................................................................................................................24 1.2 LIFE EXPECTANCY HAS BEEN CHANGED........................................................25 2.2 AWARENESS WITH DISEASES HAS BEEN NOTICED......................................26 2.3 INFLATION ROSE UP...............................................................................................28 2.4 Pattern of Death Rate In Delivery................................................................................31 2.5 LITERACY RATE IMPROVED................................................................................32 2.6 Cost of education and marriage increased.................................................................33 Contrary to this:..................................................................................................................33 2.7 Price pattern of State Life Insurance Corporation of ................................................34 Pakistan..............................................................................34 2.8 ADOPTION OF DIFFERENT PRICING STRATEGIES SLIC...............................37 3. PROMOTION................................................................................................................38 3.1 ADVERTISMENT......................................................................................................38 ADVERTISEMENT THROUGH NEWS PAPERS.........................................................39 LACK OF CONSIDERATION OF TARGET MARKET................................................39 SELECTION OF SPACE, SOMETIME DECLINES IMAGE.........................................39 ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET..............................................................39 ADVERTISEMENT LACKS CO-RELATION................................................................39 ADVERTISEMENT THROUGH RADIO........................................................................40

TRADITIONAL ADVERTISEMENT..............................................................................40 PREFERRED TIME...........................................................................................................40 CO-RELATION ASPECT IS IGNORED..........................................................................40 ADVERTISEMENT THROUGH T.V..............................................................................40 ADVERTISEMENT THROUGH MAGAZINE...............................................................41 LACK OF CONSIDERATION OF TARGET MARKET................................................41 SELECTION OF SPACE, SOMETIME DECLINES IMAGE.........................................41 ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET..............................................................41 ADVERTISEMENT LACKS CO-RELATION................................................................41 ADVERTISEMENT THROUGH SIGN BOARDS..........................................................42 ADVERTISEMENT THROUGH BROACHERS.............................................................42 ADVERTISEMENT THROUGH CENIMA ....................................................................43 3.2 PUBLICITY..................................................................................................................43 PUBLICITY THROUGH NEWS PAPER.........................................................................43 PUBLICITY THROUGH MAGAZINE............................................................................44 PUBLICITY THROUGH T.V. / RADIO..........................................................................44 -VE - PUBLICITY ...........................................................................................................44 3.3 WORD OF MOUTH PROMOTION...........................................................................44 3.5 PROMOTION THROUGH BANKS..........................................................................47 3.6 FIELD PROMOTION.................................................................................................48 4. PLACEMENT / DISTRIBUTION.................................................................................49 RIGHT PRODUCT.............................................................................................................49 RIGHT TIME......................................................................................................................50 RIGHT PEOPLE/CUSTOMER.........................................................................................50 RIGHT PLACE...................................................................................................................51 PEST ANALYSIS..............................................................................................................52 POLITICAL INFLUENCE................................................................................................52 ECONOMICAL INFLUENCE..........................................................................................53 SOCIAL INFLUENCE.......................................................................................................53 TECHNOLOGICAL INFLUENCE...................................................................................54 SWOT ANALYSIS...........................................................................................................55 STRENGTHS.....................................................................................................................55 WEAKNESSES..................................................................................................................56 OPPORTUNITIES.............................................................................................................57 THREATS..........................................................................................................................58 COMPETITORS ANALYSIS............................................................................................59 A COMPARISON WITH COMPETITORS......................................................................62 SUGGESTIONS FOR IMPROVEMENT..........................................................................63 AT PRINCIPAL OFFICE LEVEL.....................................................................................63 SUGGESTION FOR REGIONAL OFFICE SET UP.......................................................64 CURRENTLY ZONES HAVE:.........................................................................................65 SUGGESTION FOR SECTOR OFFICES.........................................................................66 SUGGESTION FOR AREA OFFICES.............................................................................66 SUGGESTION FOR FIELD OFFICES OF SALES MANAGER AND SALES OFFICERS..........................................................................................................................67

PREFACE
Assignments, Term reports and Internship programs are the vital teaching techniques of G.C. Universitys MBA Program. The aim of such activities is to develop a practical evaluation approach in students along with their studies. As an integral part of MBA studies, every student has to undergo an internship program in a reputed institution to observe daily life business practices and problems in business life. In order to fulfill this purpose I selected STATE LIFE INSURANCE CORPORATION OF PAKISTAN being the only state owned Insurance of honesty, hard work, skill and determination. I have tried my best to make this report comprehensive to provide the critical analysis of marketing mix of STATE LIFE INSURANCE CORPORATION OF PAKISTAN.

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ACKNOWLEDGEMENT
I express my whole hearted thanks to Almighty Allah who gave us courage insight and knowledge and light out of the darkness. The guidance of Holy Prophet (Peace be upon him) is the continuous source of help for us in what so ever field we are. Through the blessing of ALLAH and the spiritual efforts of the Holy Prophet I have been successful in completing this report. I also want to thank STATE LIFE INSURANCE CORPPRATION OF PAKISTAN for accommodating me as an internee and providing me the opportunity to enhance my practical knowledge. Especially I will never forget Mr. Ramzan Shahid, Zonal Head & Rai Mehboob Incharge (Field Manpower Development Department), who took personal care for enhancing my general view as well as functional knowledge of the Corporation. I whole heartily thank all the Officers & Staff of State Life Insurance Corporation for their generous kind behavior.

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HISTORY OF INSURANCE
The need of sharing losses caused particularly by sea perils was felt several hindered years ago. The merchant ships remaining away for months with valuable cargo carried with them the hope of making 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 concert to those involved in the business. To find the way out and thus Insurance was found. The idea originated from China and then developed by England and other European Countries.

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ORIGIN OF LIFE INSURANCE

The story of origin of life insurance is very inspiring. The idea of guarding against risk is almost as old as mankind. We know that Joseph recommended storing grain during seven years in Egypt against the impending seven lean years. Centuries ago in England, little groups banded together in to guilds and societies. Members of those guilds and societies by paying small sums were assured that a certain measure of relief would be give to their families if the breadwinner were taken away. In 1705, Amicable Society for a perpetual Assistance Office was founded and it became Englands Fist successful Life Insurance Company.

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HISTORY OF LIFE INSURANCE IN PAKISTAN

Pakistan inherited eighty-two insurance companies including five local and seventy foreign companies at the time of independence in 1947. The bulk of insurance business then was enjoyed b the latters. Before partition, there were only three major insurance companies named Christian Mutual, Muslim and Eastern Federal Union transacting life insurance. Insurance company particularly for Muslims was felt by some of the eminent Muslim Personalities. EF Insurance Company was established in 1932. Muslim Insurance Company of Pakistan was established in 1949.

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WHAT IS INSURNACE
Forecasting is hard, particularly when it is about future: Life is the name of uncertainty and risk. We are quite sure bout our present and past but God knows what our future will be. Therefore people living in the society have to device some way to reduce this uncertainty and risk. People suffer not only mentally but also financially. Financial crises are so bad that they can lead somebody easily towards social evils. So one method to avoid all these complications is to help people financially. The Origin of the word insurance is Assurance both words have the same meaning.

DEFINITIONS OF INSURANCE
Insurance is an agreement by contract to pay money to someone if something especially a misfortune, such as illness, death or an accident or a mishap happens to him. It is a contract in which a person agrees to pay some cost for the compensation of any misfortune occurring in future. There are two terms frequently used in insurance, which are the INSURER (and insurance company, which enter into contract with policyholder to compensate in case of any mishap to him, and the INSURED (who seeks the insurance coverage on the payment of premium).

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DEFINITIONS
Change is beautiful, like a fresh blood but it is not accepted easily. According to Ordinance 2002, define the different terminology is as under: Corporation means the State Life Insurance Corporation of Pakistan. Direct Unit means the body of State Life Agents supervised by a Supervisor Agent without the intervention of any other Supervisory Agent. Entire Unit means the entire body of State Life Agents being supervised by Supervisory Agent, including both his di4rect unit and his indirect unit, if any. Indirect Unit means the body of State Life Agents supervised by a Supervisory Agent through the intervention of other Supervisory Agents. Sales Manager means a Supervisory Agent who has and indirect unit and may be also a Direct Unit, and has a valid and subsisting contract with Corporation to act as a SM. Sales Officer means a Supervisory Agent who has only has Direct Unit, and has valid and subsisting contract with the Corporation to act as a SO. Sales Representative means a State Life Agent who procures insurance business himself, with on other State Life Agent intervening between him and the policyholders. Group Insurance Policy means a policy where ten or more lives are insured under a single policy.

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TYPES OF INSURANCE
Basically, insurance is of two types: 1. 2. Life Insurance: General Insurance:

Life insurance provides financial protection to the dependents of the breadwinner while non-life insurance covers material possessed and used by a person for his personal comfort and well-being.

TYPES OF INSURANCE COMPANIES

There are two types of insurance companies: LIFE INSURANCE COMPANIES The principal event that the Life Insurance Company insures against is death. Upon the death of a policyholder a life company agrees to make either a lump-sum payment or a series of payments to the beneficiary of the policy. Life Insurance protection is not, the only financial is product sold by these companies; a major portion of the business of life companies is the area of providing retirement benefits. PROPERTY AND CASUALTY INSURANCE COMPANIES Property and casualty insurance companies insure against wide variety of occurrences.

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The under noted perils can be covered under the property casualty insurance: Fire Atmospheric Disturbances Earthquake Riot Strike Damages Explosion Theft Other Damages

BENEFITS OF INSURANCE
The existence of sound insurance market is an essential component of any successful economy and the proof of this can be seen in the many parts of the world. The main benefits of insurance are: It provides financial protection in any mishap Food Clothing Shelter Education & Medicines

For the following situations people may run short of their earnings Sudden Death Old Age Disability

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Unemployment It provides peace of mind It enables loss control It is source of investments of funds it is a source of invisible earrings.

AN OVERVIEW OF INSURANCE INDUSTRY IN PAKISTAN

Insurance industry in Pakistan is dominated by a small number of players. Top three insurance companies of the country control more than 50% of the total Premium paid. The biggest market in Pakistan is of Accident Insurance which accounts for 37% of the total insurance business. The second most popular category is fire insurance, which claims another 37%. The remaining 26% business is a accounted for by marine business. Admajee Insurance is the outright winner in each of the three categories. The second largest insurance company in each of the sectors is EFU. The Government of Pakistan has recently allowed life insurance business. Premium for life insurance business, which is collected by the SLIC, exceeds all other categories put together by at least 10%. The Government decision to allow life insurance in the private sector will increase the market size for this type of insurance due to growing awareness level.

GENERAL BUSINESS
The general insurance business enjoyed a satisfactory annual growth of 15% for past many years, which declined substantially to, as low as 4.33% 1997 over 1996 indicating a negative growth rate compared to double digit inflation rate of the country. According to statistic compiled by the Insurance Association of Pakistan (IAP) the representative body of 58 general insurers in the country including 6 foreign

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operators, the volume of gross direct premium written by it members, totaled Rs.7.6 billion which was only 321 million more than they wrote in 1996. During 1996, the gross direct premium totaled Rs.7.26 billion that showed an increase of Rs.1.02 billion or 16.42% over 1995. The general insurer blame the drastic decrease in the annual growth rate to a number of factors including an un-precedented increase in auto theft which increase loss ratio in the motor business much beyond the profitable margin, decrease in imports, decline in industrial activities. The general insurer also blame the slowing down of the economic activities notwithstanding big power projects which became operational during the last two years. They claim that any increase in the insurance business is only possible through a combination of three factors: New Business Continued Business Revision of the insurance policy

The general tendency to buy insurance only when it is absolutely necessary to meet a legal requirements, the declining of economic and industrial activities, the shrinking volume of new, continued and revision business and decreasing imports and to cut costs, pose many challenges and concerns for the general insurers particularly in a country where the per capita premium on general insurance is the lowest in the region.

LIFE INSURANCE

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Like general insurance, the life insurance business also remains involuntary business. The per capita life insurance premium is even lower the general business in Pakistan $1.5-compared to $ 1.7 which is the smallest in the region. With the deregulation of life business in 1992, Eastern Federal Union became the first life insurer in the life sector in 1992. it was followed by another local life insurer, Metropolitan , which commenced operation in February 1993. The two foreign life insurers; American Life Insurance Company and Commercial Union which is the biggest of the four life operators in the paid up capital of Rs.300 million commenced operations in May 1995 and July 1996 respectively. The annual market of new life insurance in Pakistan is estimated at 500,000 policies of which the State Life Insurance dominates over 60% or 300,000. the rest of the 200,000 policies still offer the four private sector life insurer to have a substantial business.

STATE LIFE INSURANCE CORPORATION OF PAKISTAN

At the time of independence in 1947, Pakistan had 77 Insurance Companies out of which 7 were local and 70 were foreign resident companies. There was neither reinsurance nor a public sector at that time. This situation remains till 1952. In 1952, the Government of Pakistan established Pakistan Insurance Corporation as Reinsurance Company and asked all the insurance companies to cede 10% of all their business to Pakistan Insurance Corporation. For these reasons, in addition to other factor, 40 of these foreign companies wound up their business and left Pakistan. In 1993, there were 57 insurance companies in the private sector and three in the public sector. In 1972, all life insurance business was nationalized and a corporation under the name of State Life Insurance Corporation (SLIC) was formed which consisted of 35 companies. Eastern Federal Union (EFU) was the largest among these companies. Since the SLIC is the only Life Insurance Company in Pakistan. But

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no under the liberalization program of the government many insurance companies have been given licenses to start life insurance business. These are: Metropolitan Life Insurance American Life Insurance Co. (ALICO) Commercial Union Life Assurance Eastern Federal Union Assurance (EFU) New Jubilee Insurance

In Pakistan, life insurance business was nationalized by Govt., Order in March 1972 and in fact this was an important step toward economic development in the history of Pakistan. The nationalized process was completed in two phases. In first phase (March 19, 1972 to October 31, 1972), the government 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 & C units. For further improvement of the life business in Pakistan, these units (A, B & C) were merged together and converted into zone. SLIC has enjoyed a complete monopoly the life business till 1990 when the Govt. 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 the foreign insurance company Swiss Re (Switzerland).

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Up till now there are 10 foreign resident insurance companies, 47 local (national) insurance companies and 3 public sector insurance concerns.

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MISSION STATEMENT
To ensure satisfaction of our valued policyholders in processing new business providing after sales services and optimizing returns on life fund through quality culture and to maintain our position at the leading life insurer in Pakistan.

OBJECTIVES OF SLIC
Following are the objectives: To run life insurance business on sound lines,. To provide more efficient services to policyholders. To maximize the return to policyholders by economizing on expenses and increasing the yield on investment. To make life insurance a more effective means of mobilizing national savings. 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 efficient sections of society to the common man in town and villages. To use policyholders funds in the wider interest of the community.

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State Life is very big organization with its Assets in billion of rupees and with
its 28 branches (Zones) throughout the Pakistan and one Zone at Dubai. It was very difficult to take the data of each and every Zone to analyze the marketing mix. I took Faisalabad Zone for the formation of my thesis. It is assumed that picked sample (Faisalabad Zone) is truly representing the whole population (State Life Insurance Corporation).

CONTENTS OF MARKETING MIX

1. 2. 3. 4. Product Price Promotion Placement

Product

Price

Placements

Promotion

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1. PRODUCT
1.1 PRODUCT DEVELOPMENT PROCESS HAVE BEEN STOPPED SINCE LONG

The last product of the SLIC was SONERY POLICY Which was developed in 1992. Since that time no further development was seen. From that time till to date many changes in Life Style were noticed e.g. Urbanization Knowledge of Risks with Cigarette. Usage of clear drinking water Improvement in education Safe Mode of transportation Avoidance with self medication Aware-ness with killing disease. Increased life expectancy.

Having all these major changes in the life style of people, the product of State Life Insurance Corporation of Pakistan remained same and similar even today which was resulted in comparative disadvantage Corporation of Pakistan. 2nd dimension of the product of SLIC is CLAIM to be received by insured people or their nominees. The claims dealt by SLIC are of following types: Death Claim Maturity Claim Injury Claim Survival benefit. to State Life Insurance

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DEATH CLAIM
As far as the death claim is concerned the product carries following deficiencies : The procedure of issuance of claim form is difficult and tedious Claim form is in English and is designed lengthy. Early death claim are enquired and reliance on the under-writers are ignored. Investigation takes long time. Claim weather of Rs. 50,000/- or 500,000/- or more is to move through a committee known as ZCC. Claim Process takes average six months to be settled

MATURITY CLAIM
Form is lengthy and is in English. Automatic maturity claim process is not there, claimant have to visit State Life Insurance Corporation of Pakistan.

INJURY CLAIM
In certain cases (many cases) claim of Rs.125, Rs.200, Rs.250 are paid. More than the amount of claim, claimant has to spend to submit the claim (in most of the cases). Even for passing the claim of Rs.125, Rs.200 or Rs.250, file is to more through a committee called Zonal Claim Committee (ZCC).

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SURVIVAL BENEFITS
This benefit is available in only one policy know as (05).Customer/ life insured is not properly taught about the time when this benefit will be available and what are the advantage and disadvantage of Receiving or non-receiving the said benefits. ======================================================

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1.2

PRODUCT ALREADY AVAILABLE ARE HARDLY SATISFYING DEMANDS OF PRESENT PEOPLE (TARGET MARKET)

Following products are available at State Life Insurance Corporation of Pakistan The marketing strategy is designed in way that the selling one product in volume varies with other un-believably. The selling pattern of the product is given here under:-

S.NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

PLANS Whole Life Assurance Whole Life Assurance by Limited Payment Endowment Assurance Progressive Assurance Anticipated Endowment Assurance Joint Life Endowment Assurance Child Protection Assurance Endowment Assurance by Single Premium Family Pension Assurance Big Deal Assurance Optional Maturity Assurance Rural Life Assurance Jeevan Sathi Assurance Mortgage Protection-Annual Premium Mortgage Protection-Single Premium Term Assurance - Annual Premium Term Assurance - Single Premium Annuities Annuities Annuities Annuities Annuities Shad Abad Assurance Personal Pension Scheme Sunehri Policy Sadabahar Plan Child Education & Marriage Assurance Child Education & Marriage Assurance Shehnai Policy Muhafiz Plus Assurance Salary Saving Plan TOTAL

TABLE 01 02 03 04 05 06 07 09 12 14 17 18 19 22 23 24 25 26 27 28 29 31 36 71 73 Nil 75 76 77 78 Nil

PERCENTAGE (Nearest to 0.1 ) 0.6 % 0.3 % 92% 0.1 % 0.2 % 1.4 % 0.4 % 0% 0.2 % 0.1 % 0% 0% 1.4 % 0.4 % 0.1 % 0% 0% 0% 0% 0% 0% 0% 0.9 % 0.2 % 0.1 % 0.3 % 0.7 % 0.5 % 0% 0% 0.1 % 100%

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Pie is representation of selling pattern

Prodcut Selling Pattern

Others 8.00% 03/20 92.00%

03/20

Others

The pattern of

selling clearly show that instead of (31) products State Life

Insurance Corporation of Pakistan just has only one product, that is 03 (Endowment Plan), which was developed more than 30, 40 years before, needs to amend according to current demand of the people (market). 1.3 INNOVATION PROCESS IS PRACTICALLY UN FOUND

Innovation is said to be fresh blood for making the product parallel to the demand of people. During the last 10 years, no considerable innovation process was seen at SLIC however following two innovative techniques have been adopted by SLIC Back dating in policy issue. Benefit of Healthy Life Style (free of cost). These innovative techniques might be fruitful, but these developments were disseminated in Complete Silence. Even after the lapse of more than 10 years hardly 1 % of the No. policyholders know about the same. If we compare the innovation of other competitors, we may be in a position to conclude in better way

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New Jubilee Insurance Co Provided

free health insurance with a life

insurance of Rs.200,000/- & above (with imposing certain condition). Though the company (New Jubilee) charged the fees for the health insurance but such fee was merged in different heads.

Further, the company (New Jubilee) promoted its innovative development in way that their sales increased by more than 100% in that year (Year 2002 in comparison with year 2001). Similarly American Life Insurance Company (ALICO) is using the different innovation techniques from time to time and getting the benefit of it. So we can conclude the following. Innovation should be as per demand of the market. Its promotion should be proper and hitting. General aware-ness about innovation must be created. Long and continuous innovation normally fails; it must be changed from time to time according to market need.

250% 200% 150% 100% 50% 0%

P ro p e r U s e o f In o v a tio n T e c h n iq u e s b y N J I 250%
N J I, 10 0 % N J I, 200%

Improper use of Inov ation T echniques by NJI

SLIC, 100% SLIC, 120%

2001

2002

200% 150% 100% 50% 0%

2001

2002

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1.4

NEW PRODUCT DEVELOPMENT IS BEING IGNORED

Obviously any product has is own Life Cycle as Described below:Boom

Decline Growth

Planning for New Product Introduction The contents of Life Cycle are elaborated below: Introduction Growth Boom Decline Planning for new Product Development

As we have already discussed that State Life Insurance Corporation of Pakistan has practically One product that is 03 (Endowment). Said policy has taken its boom, and in forthcoming era, its decline is expected. If new product, according to the need of the market was not developed, competitors will enjoy and State Life Insurance Corporation of Pakistan has to face great trouble.

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New Product emergence is depicted in following diagram:Product New Product Further New Product

2. PRICE
The 2nd segment of marketing mix is price. State Life Insurance Corporation of Pakistan has developed its break-even price under table 03/20 (Endowment Plant) at the age of 38. This price was fixed at inception of State Life Insurance Corporation of Pakistan (in 1972) from that time till to date the price structure is same and similar not in endowment plan (03) but also in all other plans which are being sold rarely. From 1972 till todate following Extra-ordinary changes have been seen which should resultantly be affecting the price pattern of State Life Insurance Corporation of Pakistan. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Pakistan. 2.8 Insurance Adoption of different pricing strategies by State Life Life expectancy has been changed. Awareness with diseases has been noticed. Inflation rose up. Death rate at the time of delivery declined. Literacy rate improved. Cost of education and marriage increased. Price pattern of State Life Insurance Corporation of

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Corporation of Pakistan Now we will discuss all above points and its impact on price in detail.

1.2 LIFE EXPECTANCY HAS BEEN CHANGED .

There was a time when average life was just 40 years. The average was lower due to inclusion of the death in child hood, More-over, reduced average was also due to death of Ladies during delivery. With the average 40 Years State Life Insurance Corporation of Pakistan made its Break-even Pricing Level at the age of 38 (Table 03/20) with the passage of time life expectancy increased and in current era average life in Pakistan is about 48 years with such an increase of 8 years in average life State Life Insurance Corporation of Pakistan continued its Break-even Prices level at the age of 38 years. Being a student of Life Insurance, I am of opinion either previous break even was wrong or current break-even of 38 years age is wrong but it is clear and proved that keeping the break even age at 38 years with major change in average life is not logical at any angle of perception. The whole dilemma is represented in the diagram given below :-

50 48 Average Life 46 44 42 40 38 36

Average Life & B.E Price Under Endowment Plan

48 46 44 42 40

At 38 Years Price Break Even

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2.2 AWARENESS WITH DISEASES HAS BEEN NOTICED.

There was a time when people used to have their shaves by one knife (Ustra) at a barbers shop. This was due to their un-aware-ness towards killing diseases, that can be transformed from person to person through that Ustra. These diseases includes : Hepatitis C Hepatitis B AIDS Malaria

Having aware with fact that diseases may be transformed through Knife (Ustra) from one person to another, people started using separate disposable erasers for their shaves. Now even no village is there where traditional ustra system is practically operating. Like-wise, about 20 years back, there was a common trend to use one syringe for all / several patients. The mode of sterility was just boiling that steal syringe after using it for 10-15 patients . Now with aware-ness about diseases, the trend has completely been changed and disposable syringes are being used even in the most back-ward areas of the country. Similar type of many examples can further be quoted but present scope of assignment does not permit to go in such details. The fore-going discussions clearly show that aware-ness of the people for killing diseases. Having been awared with such disease, following questions arises : Whether with such aware-ness, the life risk is changed or not ? If Life risk has been changed, weather its tendency is upward or downward. The changed pattern of life risk, needs any change in pricing pattern?

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The answer of all above questions is one and only one i.e. Yes but factually no change in price pattern has been noticed. In Life Insurance Risk and Price move in similar direction Mathematically we can say:-

Risk Price

12 10 Price 8 6 4 2 0 1

Risk Price Line

3 Risk

Price and Risk line is not being following by State Life Insurance Corporation of Pakistan. State Life Insurance Corporation of Pakistan is currently following the under-given pattern.

Risk Price Line Followed By State Life Insurance Price

Risk

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Price Risk Line following by State Life Insurance means with every risk, the price of the product is constant it can further be described as following :-

Risk Price Relationship at SLIC

Price

ii

iii

Risk

The width of Bar-I is showing small risk and length is showing the price. In Bar-II width (risk) has been increased but price is still same (as in Bar-I). In Bar-III width (risk) has further been increased but price remain un-changed.

2.3 INFLATION ROSE UP

Obviously, inflation means rise in price. In previous five years is shown below inflation is

increased with such an intensity that is beyond expectations the trend of inflation

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Increase In Inflation During Last 5 Years

Years

Inflation
With such a tremendous increase in inflation, State Life Insurance Corporation of Pakistan retained their price structure unchanged which was resulting in following problems: Bonus rates announced by State Life Insurance are fixed from last several years. Several, one time bonuses have now been withdrawn. Maturity Claims are mis-matched with inflation rate. Death claims and surrenders are below expectations. Injury Claims rates remain same as these were ever before.

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State Life Insurance Corporation of Pakistan can make reasonable increase in all above area (a,b,c,d, and e). If State Life Insurance Corporation of Pakistan applies the inflation at its price pattern. If inflation is considered by State Life Insurance Corporation of Pakistan then it may result in the ways :-

Increase in profitability Increased customer satisfaction

Customer Satisfaction

Placement

Increase Bonus

Increase In Price Of Product

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2.4 Pattern of Death Rate In Delivery

There was a time, when about 30% ladies died at the time of delivery stage. At that time, people used to opt home delivery, and avoid Hospitals and Maternity Homes for the purpose. Resultantly any complication, emergency at the time of delivery caused either i) ii) iii) death of mother Death of baby Death of both.

With the increase in education, the trend changed and home delivery culture converted to Hospitals & maternity homes delivery. With such change in trend the death rate deadlines 30 % to 6 % in current period. PATTERN OF DEATH RATE IN DELIVERY

2010 2008 1990 1980 1970 1960 0 10% 20% 30%

Again astonishing enough that no price benefit were given to such ladies, when their death risk declined by 24 % (from 30% to 6 %)

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2.5

LITERACY RATE IMPROVED

Literacy is said to mothers of all rewards and enemy of all risks. In Pakistan rate of literacy is improving rapidly. In last 10 years this rate is improved by more than 17 %. The Literacy where en-lighted the different trades and agriculture, it also left its positive affects on Life Insurance. The positive affect of the education in life insurance described here under : Besides, today, sense of tomorrow created. Sense of saving emerged. Sense of security and safety developed . Sense of Long term planning developed Desire to make progress emerged.

Now question arises, weather the price of the product (Life Insurance) should be same, before and after having all above stated senses or it should be changed? The answer is Change Obviously, similarity in the price will result in similarity in the claim, which may result in dissatisfaction disadvantage. The situation can be exposed in economic terms also. If the education about the product is termed as demand the:of the customer and may cause competitive

Price Demand
12 10 Price 8 6 4 2 0 1 2 3 Demand 4 5

Demand Price Line

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The conclusion of the topic is that with increased literacy/increased demand of the product, requires to move for increased price pattern for survival and to meet the tough competitions of coming days.

2.6 Cost of education and marriage increased

In Pakistan, education is too costly sometimes, talent are wasted just due to heavy educational expenses. In last 10 to 15 years, the trend of private education in Pakistan has multiplied the expenses of education. It will not be wrong, if we say that there exists trading even black trading (Marketing) of education in Pakistan. The same problem lies with marriage and other ceremonial functions. To meet this challenge, State Life Insurance Corporation of Pakistan needs to improve its child education and marriage plan (table 75, 76). The target of such improvement should be: To provide such a quantum of claim that can be used for higher education/marriages.. To fix the price in a way (Ascending, descending or flat), so that the purchaser (customer can easily offered the price. To market the product at appropriate time.

Contrary to this:
A) State Life Insurance Corporation of Pakistan is not focusing/selling these products (table 75, 76) properly. The sales of these products are just 1.20 % of total sales which is too small to be checked and rechecked.

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B)

State Life Insurance Corporation of Pakistan sometimes, sale these products for such a small sum assured that the claim cannot be useful and useable for higher education/ marriage.

C)

Selling these product (table 75, 76) as saving plan are without logic and mis-leading. The installment of this product are high and claims are less.

In short to meet High Expenses of Education / marriage the plans should be amended price-wise as per correct demand of the people.

2.7 Price pattern of State Life Insurance Corporation of Pakistan.

Keeping 03/20 as basic product of State Life Insurance, its price pattern is given in following table.

Endowment Assurance With Profits Annual Premiums For An Assurance Of Rs.1,000/Terms of Assurance Age nearest Birthday 20 21 22 23 24 25 26 27 28 29 30 31 32 20 years Basic Premium Rs. 47.73 47.77 47.82 47.87 47.93 47.99 48.05 48.13 48.22 48.31 48.42 48.54 48.67 Page 34 of 71

TABLE 03

Age nearest Birthday 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

20 years Basic Premium Rs. 48.83 49.00 49.20 49.43 49.69 49.99 50.32 50.71 51.14 51.63 52.17 52.79 53.47 54.23 55.07 56.00 57.02 58.13 59.35 60.66 62.09 63.62 65.27

Break Even Point

70.00 60.00 50.00 40.00 30.00 20.00 10.00 52 54 32 34 36 38 40 42 44 46 48 50

Ages

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Break Even Point

70.00 60.00 50.00 40.00 30.00 20.00 10.00 32 34 36 38 40 42 44 46 48 50 52
5 2

Ages

Though this price pattern is just parallel to the companies engaged in same business, but it is needed that the pattern may be changed upward or downward according to the other factor prevailing in the market.

U w rd S iftin o th B a E e P in d eT p a h g f e re k v n o t u o P eC a g ric h n e
9 .0 0 0 8 .0 0 0 7 .0 0 0 6 .0 0 0 5 .0 0 0 4 .0 0 0 3 .0 0 0 2 .0 0 0 1 .0 0 0 3 8 4 0 4 2 4 8 5 0

A es g

By shifting the trend upward & downward break even age changed which have already been explained at the foregoing paragraphs.

5 4

3 2

3 4

3 6

4 4

4 6

54

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Downward Shifting of the Break Even Point due To Price Change

50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 32 34 36 38 40 42 44 46 48 50 52

A ges

2.8 ADOPTION OF DIFFERENT PRICING STRATEGIES SLIC

Generally following pricing strategies by different trading/service providing entities are adopted: Cost plus pricing. Uniform pricing. Odd pricing Psychological pricing Unique pricing Buy & get pricing

Being typical nature business, State Life and other like companies are not following any of above mentioned strategies. The insurance companies including State Life Insurance used to have their own pattern of pricing which was developed by their actuarial consultants. The pattern has already been shown in (2.7).

54

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3. PROMOTION
The following techniques are used by State Life Insurance for promoting its products. 3.1 3.2 3.3 3.4 3.5 3.6 Advertisement Publicity Word of mouth promotion. Out-lets / Branch Offices Promotion through Banks Field Promotion

3.1 ADVERTISMENT
Advertisement if followed by three R give its maximum affect. These three R as described below :_ Right Time For Right People (Market) At Right place.

Un-fortunately State Life Insurance Corporation of Pakistan is not following even one R It is advertising haphazardly, By chance some time no R is hitted some time one or more R are hitted by State Life advertising personnel State Life used to advertise its product through following media : News paper Radio Television Magazines Sign Boards. Brochures

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Cinema

ADVERTISEMENT THROUGH NEWS PAPERS

The advertisement of State Life Insurance has been seen many times in News paper, but the affect of the advertisement has been found less then desired due to following reasons :LACK OF CONSIDERATION OF TARGET MARKET Means, If rural population (market) is being addressed, the advertisement should be simple, in urdu, and must be at any prominent place and at the same time must be attractive. For Urban population/educated market parameters may be reversed. Similarly, if children are being focused, then advertisement must have something high-lighted for children. SELECTION OF SPACE, SOMETIME DECLINES IMAGE Proper space must be selected by State Life Insurance so that the proper and effective message is conveyed to target market. ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET. Advise to avoid cigarettes is no doubt valuable, but the message to

avoidance of cigarette must has addition and product description should be added to it to have maximum benefit of it.

ADVERTISEMENT LACKS CO-RELATION The affect of the advertisement multiplied when it co-related with certain event. For example if advertisement is placed with news of a train accident causing several deaths will give more affect then giving without correlation?

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ADVERTISEMENT THROUGH RADIO

State Life Insurance Corporation of Pakistan used to advertise its product through Radio too. If ads. are observed critically, following deficiencies come to scene. TRADITIONAL ADVERTISEMENT Advertisement must be changed from time to time as people feel boring an listening traditional words. PREFERRED TIME Maximum people (Target market) listen FM, and in FM Song program are liked more. Giving advertisement before agricultural program is the example of lacking in selection of preferred time. CO-RELATION ASPECT IS IGNORED The affect of advertisement may be multiplied. If it is co-related with certain event. For example, if advertisement of State Life Insurance is given before or after the news of several death due to suicide bombing, then it will be more effective.

ADVERTISEMENT THROUGH T.V

Maximum people (Target market) watch Television out of so many programs. Some programs are liked more some are liked less. We should give ad before or during that program which relates to target market.

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ADVERTISEMENT THROUGH MAGAZINE

State Life Insurance Corporation of Pakistan used to advertise its product through Magazine too. If ads. an observed critically, following deficiencies come & scene. LACK OF CONSIDERATION OF TARGET MARKET Means, If rural population (market) is being addressed, the advertisement should be simple, in urdu, and must be at any prominent place and at the same time must be attractive. For Urban population/educated market parameters may be reversed. Similarly, if children are being focused, then advertisement must have something high-lighted for children.

SELECTION OF SPACE, SOMETIME DECLINES IMAGE Proper space must be selected by State Life Insurance so that the proper and effective message is conveyed to target market. ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET Advise to avoid cigarettes is no doubt valuable, but the message to

avoidance of cigarette must has addition and product description should be added to it to have maximum benefit of it. ADVERTISEMENT LACKS CO-RELATION The affect of the advertisement multiplied when it co-related with certain event. For example if advertisement is placed with magazine of a train accident causing several deaths will give more affect then giving without correlation.

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ADVERTISEMENT THROUGH SIGN BOARDS

The life of advertisement through Sign Board is quite long as compared to News paper, Ratio and T.V; News paper has one day Life. Radio and T.V. has seconds of Life. Magazine has normally One month life. (If magazine is monthly).

But sign board has years of Life. The advertisement of products by State Life Insurance Corporation of Pakistan through Sign board carries effective role in selling these product. But, if the following drawbacks are removed, the effectiveness of the advertisement will be increased considerably. Boards are placed at buildings of State Life Insurance, if boards are further placed at some prominent places it will be more effective. Mostly board carries name STATE LIFE INSURANCE CORPORATION OF PAKISTAN. If further message about the product is also given at boards, it will became more effective. The Offices of State Life Insurance (including field Officers) are in very large numbers. If Direction of Boards are further be placed, it will improve the image of State Life Insurance.

ADVERTISEMENT THROUGH BROACHERS

Another media of promotion used by State Life Insurance is Broachers. The media is very good but carries following flaws : Broachers are printed in very small quantity.

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Broachers are available at cost to the Field Personnel for presenting to customers/prospective customers.

Broachers do not drop any hint regarding current bonus rate expected maturity benefit etc.

ADVERTISEMENT THROUGH CENIMA

State Life Insurance used to advertise its products through reputed cinemas also. The advertisement is effective and carries less cost. If message is converted into simple and understandable language, then its effectiveness can be enhanced.

3.2 PUBLICITY
Publicity differs with advertisement due to its instinct characteristic of being unpaid. For advertisement State Life Insurance Corporation has to pay sufficient amount of money but publicity is always un-paid and is done by third party without involvement of State Life Insurance

PUBLICITY THROUGH NEWS PAPER Many times different writers opt. to write about the services provided by State Life Insurance in terms of :o Claims o Employment o Boosting Stock Exchange. o Loan to Government o Multi storied buildings

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o Life Fund. Obviously writers write as per their own thinking but simultaneously readers get the message and inspired to take the product of State Life Insurance. PUBLICITY THROUGH MAGAZINE Like News paper some times some writer inspires to take the topic of State Life Insurance and writes about its certain considerable/remarkable service (s) which resultantly promoted the products of State Life Insurance Corporation of Pakistan. PUBLICITY THROUGH T.V. / RADIO T.V. and Radio conducts program regarding the General Matters of the Nation. Some times when host discuss the positive points of State Life Insurance on : Radio T.V.

The automatic promotion of State Life Insurance Corporation of Pakistan generated. -VE - PUBLICITY For example if any fraud at any office came to scene, or some dis-satisfied customer came to focus of the media then not only that particular news came to the notice pf the public but General Negative publicity for all products of State Life Insurance is to be faced by State Life Insurance Corporation of Pakistan

3.3 WORD OF MOUTH PROMOTION

It is said that a single satisfied customer causes another customer to purchase same product. But a single dissatisfied customer stops 10 prospective customers to purchase the product.

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The most effective media of promotion of State Life Insurance is word of mouth. The media of promotion may be more effective if following drawbacks were removed by State Life Insurance Corporation of Pakistan. Contract papers are be made presentable. Contract papers be made easy to understand for maximum General Public.

Presentation & Timely delivery of documents

Positive image in customer mind

Customer satisfaction attained.

Other People inspired.

Product sale increased

Profit Maximum

On the other hand if the above stated deficiencies persists or enhanced reverse process may start and sales may decline due to word of mouth phenomena . Un-presentable & delayed delivery of document. -ive image in customer mind. Un-satisfied customer

Decline in Sales

Decline in Profit

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3.4

OUT-LETS / BRANCH OFFICES

State Life Insurance Corp. of Pakistan can be said to premier in having its branch officers, through the Pakistan. The chain of the offices of State Life Insurance Corporation of Pakistan is shown in the diagram :Zonal Office / Main Office

Sector Office1

Sector Office-2

Sector Office-3

Sector Office4

Sector Office5

Sector Office6

Sector Office7

Sector Office8

Sector Office-9

Sector Office10

SECTOR OFFICES
A.M-3 A.M-4 A.M-5 A.M-1 A.M-2

AREA OFFICES
S.M. Office-2 S.M. Office-3

s.M.
Office-4

S.M. Office-1

S.M. Office-5

S.M. Office-6

S.M. Office-7

S.M. OFFICES
S.O-1
S.O-2 S.O-3 S.O-4 S.O-5

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With such multiple chains of offices, each zone averagely has more than 367 offices. There exists 28 zones means total number of offices come to 10,276 offices which is largest number of offices in Pakistan at corporate level. The existence of such number of offices, including their staff and sign board, their time to time meetings in Hotel become source of promotion of State Life Insurance. This source is strongest source of promotion of the product of State Life Insurance. This source can further be improved by; Standardization of offices. Standardization of sign board. Selection of proper space of offices, Training of the staff of the offices, Fixing direction Boards of the offices. Entry of phone numbers of offices at PTCL and other phone

directories.

3.5 PROMOTION THROUGH BANKS

In certain areas normally less developed or in rural areas, State Life Insurance has managed its premium (installment) collection through banks. Such system is referred as Memorandum Account . On the other hand banks and HBFC when grant the loans they took insurance from State Life Insurance Corporation of Pakistan (Mortgage Insurance Cover). With such an involvement of the banks, in State Life Insurances product creates +ve image in the eyes of public and such +ve image became source of promotion of State Life Insurance. For strengthening this image of State Life through banks following suggestions are being given : There must be in-writing message that Premium of State Life Insurance collected here. is

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The message should be ligible and should be at some prominent place. There should be separate counter for State Life Insurance at Banks (especially) where transactions are more). There should should be display of products feature of State Life Insurance. On-line facility should be provided at Banks too, to given policy (product) detail to the customer.

3.6 FIELD PROMOTION

The field staff of State Life Insurance, are very large in numbers. Though I am little shaky in saying that the number of field staff are largest in Pakistan but I can confidently say that State Life Insurance field staff come in first five companies/corporations having largest number of field staff. The field is supervised and controlled by marketing personnel as given here-under. Zonal Head (Head of Marketing in Zone). Sector Head (Head of Sector one unit of Zone). Area Manager (Head of the Area-one unit of Sector, Sales Manager (Head of Sales Group one unit and of Area), Sales Officer ( Head of Sales representatives one unit of Sales Group). Sales Representative (this basic sales personnel).

The whole structure is described in the following diagram.

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Zonal Head / Main Office

Sector Head

Area Manager

Sales Manager

Sales Officer

Sales Representat ives

The profit and commission of each and every field staff depends its sales procurement. Hence the field in itself act as promotional test for State Life Insurance Corporation of Pakistan.

4. PLACEMENT / DISTRIBUTION
The rule of placement is Four R Right product. At Right Time To Right People. At Right Place.

RIGHT PRODUCT State Life Insurance Corporation of Pakistan and field of State Life Insurance failed to provide the Right Product to Right person. I can prove my contentions by quoting the selling pattern of State Life Insurance.

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The pattern clearly depicting that product is being sold haphazardly without considering the Right product option

RIGHT TIME Right time formula is also not being observed by State Life Insurance. Right time formula requires Right age selection Time of Income arrival. Time of claim be considered. Time and age of the children Education plan of the children.

RIGHT PEOPLE/CUSTOMER The Right customer is the person who really needs our product. A Land Lord with his assets in Billion of Rupees does not need any policy of sum assured of Rs.1 (M) or Rs.2 (M). Similarly a shopkeeper having his monthly income of Rs.20,000/is not a right person to be offered policy of Rs.1 (M). For selection Right

customer one should consider the following points :-

The income of individual Age group of individual No. of dependents of the individual Age of the dependents. Educational & Marriage plan for the kids of the individual.

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RIGHT PLACE Right place selection carries vital importance in delivery of tangible product. In intangible products (services) especially the product of insurance policy, Right place is normally considered. The customer place. This place may be : The Residence of the customer The office of the customer The Agri Land of the customer Third place as desired by customer.

If the trend is little changed and customer/prospective customer is convinced to visit main or Sector Office, then selling became easy and be followed by Rs. due to proper and positive image of the office by seeing the number of the customer depositing their installments at the counter of the State Life Inusrance. The age of the marriage of the children be considered. When we consider all above points, then we may conclude the right time to offer insurance plan for the customer.

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PEST ANALYSIS
It consists of the following influences at the different segments of State Life Insurance Corporation of Pakistan. Political influence Economical influence Social influence Technological influence.

POLITICAL INFLUENCE State Life Insurance Corporation is a Semi-Government autonomous body governed by Ministry of Commerce. Being part of Government Organization, it is affected politically by the different Government policies. This affect has been seen in: Employment Posting and Transfers. Rewards and punishment Promotions Increments (salary) Bonus to employees.

Above mentioned influences may be named as influence on H/R Management but no direct influence has been seen in: New product development Improvement of existing product Influence in changing the price of the product. Influence in promotional and placement activities.

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Hence the flaws in 4 Ps may the result of indirect influence of the political pressure, but no direct political influence has been noticed at 4 Ps of the State Life Insurance Corporation of Pakistan. ECONOMICAL INFLUENCE Economical changes always effect directly or indirectly each and every segment of Life. Obviously economic influence also affect the State Life Insurance, its product price promotion and placement.

Product Price Economical Influence Promotion Placement

Unfortunately, State Life Insurance took the economic influence as an increase in cost Ratio and they did not shift the influence in its 4 Ps. SOCIAL INFLUENCE No direct impact of social influence has been seen in State Life Insurances, different segments but its indirect affect has been emerged in the shape of: Healthy Life Style benefit (Free of cost) Increase in non-medical limits cases. Giving the insurance policies to house wives without their own income. Giving the policies to the declared ill persons (N.D Policies).

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TECHNOLOGICAL INFLUENCE State Life Insurance is being influenced due to increased technological changes. Being influenced State Life Insurance has planned the following : Making all branches on-line. Converting the file culture to computerized culture. Making possible to transfer the premium (installment) through ATMs. Using the e-mail ad cell phone facility for providing the information to the Customer / policyholders.

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SWOT ANALYSIS
The SWOT analysis consists of following Knowing strengths of State Life Insurance Corporation of Pakistan. The week-nesses of State Life Insurance Corporation of Pakistan. Opportunities available with State Life Insurance. Treats for State Life Insurance.

STRENGTHS
Following strengths are being enjoyed by State Life Insurance Corporation of Pakistan : Government touch (Semi Govt. Organization) Having huge assets (In billion) Having so large field Having large No. of Officers. Having good salary structure. Enjoying team of professionals including FCMAs, FCAs and Actuaries. Having covered the maximum portion of the target market
20 % by all other Insurance Companie s

SLIC 80%

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Having own buildings at different cities. Having two subsidiaries

Alpha Insurance & State Life (Lackie Road) Properties Pvt. Ltd. State Assets Management Company.

Having 31 products in its product Line. Having confidence of the people from last 40 years. Having experienced staff. Having Life Funds in Billion of Rupees. Having more than 3 Million policyholders confidence.

WEAKNESSES
Following weaknesses has been noticed. Poor services. Field Training is being ignored. Education level of Sales Representative is matric. Defalcation by Field No proper punishment after establishing defalcation Political appointment Political transfers. Political Promotions. Political Rewards. Involvement of Union. Involvement of Field Association. Page 56 of 71

Involvement of Officers Association Involvement of Area Managers Association Using traditional system of files and minimum use of Computer. Other than building issuing hand-written Receipts (Provisional Receipts. Slow delivery of Contract Paper Delivery of contract documents in un-presentable way. Lack of training of staff and Officers. Relaxed environment at Office side. Straight bonuses for staff instead of productivity linked bonuses. Overtime consciousness Centralization of budget. Involvement of committees (specially ZCC) regardless of amount of claim e.g. for the injury claim of Rs.200 , ZCC is necessary. Undue delay in processing the paper/request. High cost ratio (in compensation with limit prescribed ratio by SECP). Non reconciliation of different Accounts. Accumulation of suspense. Improper division of work and assignments.

OPPORTUNITIES
Vacant market, just 2 % of the population of Pakistan is insured remaining 98 % is vacant. Computerization Acquiring more educated people in Field. Developing new product as per demand of the people (market). Hitting the emerging need of the market in current scenario of inflation. Contracting with Banks for selling their products. Improving their under-writing and paying claim promptly. Getting the staff and Officer trained. Getting the field trained.

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Making reconciliation Avoiding accumulation of suspense. De-centralization.

THREATS
Competition High cost ratio (above the standard fixed by SECP). Privatization. Expected frauds on reconciling the long outstanding accounts. Political influence. Economical influence. Social and sociological influence. Technological influence. Terrorism- (More claims are expected due to increased terrorism). Strong Union a threat. Strong Field additional threats.

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COMPETITORS ANALYSIS
In order to beat your enemy, you should know him To plan effective marketing strategies, the company needs to find out all it can about its competitors. It must constantly compare its products, prices, channels and promotion with those of close competitors. In this way the competitors can find areas of potential competitive advantage and disadvantage. And it can launch more effective marketing campaigns against its competitors and prepare stronger defenses against competitors actions. Sate Life Insurance Corporation enjoyed a complete monopoly on the life business till 1990 when the government decided to open it local private sector insurers. The deregulation of the business was extended to foreign companies in 1992. At present, besides SLIC there is four other life insurers are operating in the country including two foreign companies. Currently, there are four life insurance companies operating in the countries. 1. 2. 3. 4. Eastern Federal Union Metropolitan Insurance Company American Life Insurance Company Commercial Union

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COMPANY Eastern Federal Union Metropolitan Insurance Company American Life Insurance Company Commercial Union

YEAR OF ESTABLISHMENT 1992 February 1993 May 1995 July 1996

Two decades of monopoly and established infrastructure and network inducing the rural areas gives SLIC a big edge over its four competitors in the private sector. The annual market of new life insurance in Pakistan is estimated at 500,000 policies of which 60% or 300,000 policies is dominated by the SLIC. Though the rest of the 200,000 policies still offer the four private sector life insurers to have a substantial business. EFU Life earned its first ever profit of Rs.1.4 million in 1999 compared to a loss of Rs.4.3 million in the previous years. Life insurance is along-term business and it usually takes between 5-7 years for a company to make a profit. EFU lifes first profit proves that point. The total premium written by the four life insurance companies in the private sector totaled Rs.272 million of which EFU life wrote 60% or Rs.159 million. It wrote 57% of the total new individual life and 63% of group life premium.

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Meanwhile, Commercial Union has emerge as the second top life insurer in the private sector to write 15% of the total premiums of the four private companies particularly as it has been in operation for 18 months ended December 31, 1997. it captured 12.5% of the individual life and 28% of the group life business. However, CUs individual life business remained 17% than that by Metropolitan and 14% of that ALICO. While Commercial Union has emerged as the second top company in group business it remains to be seen if it will be able to increase its share of the individual life market. While SLIC enjoy 95% of the individual life market the EFU has emerged as the top contender to compete for a substantial share of the market followed by Metropolitan. The biggest share for group life business is enjoyed by the EFU life followed by the CU. Unlike EFU life and Metropolitan, the two local life companies CU is paying more attention to attract the business of the affluent class which is more quality conscious than the price of the various products. Nevertheless, the EFU and CU top two contenders to compete for the life business.

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A COMPARISON WITH COMPETITORS STATE LIFE

Govt. Organization. Provide State / Guarantee. Corporation having

OTHER COMPANIES

Private Organization. Constitutional No guarantee 30 years New companies having 08 years old.

experience of Life Insurance. Declared & Guaranteed Bonuses. Assumed Bonuses. Offers a wide range of plans fulfilling Having limited plans. requirements of every individual. Accept proposals without medical Accept each proposal on medical requirement upto 3 lacks. It shows the grounds and can not afford risks even financial strength of Corporation. Minimum premium 2500 per annum. of Rs.50,000/-. Minimum premium Rs.6000 per

annum. Life fund Rs.6000 Crore through which No life fund unit value fluctuates by annual profit is Rs.900 Crore per changing situation of country. annum @ 15% as an average. Capital Rs.3000 Crore. About market share 85% We discuss sum assured plus bonuses Policyholder service Capital Rs.600 Crore. Market share about 5% to 7% They highlight presumed

and

assumed figures. available Policyholder service available from

throughout Pakistan in each zone i.e Karachi only. 26 Zonal Offices. No individual owner and all the profit Individually owned companies thus divided to the policyholders. their interest is in return on personal investment.

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SUGGESTIONS FOR IMPROVEMENT

Following suggestions are given for improvement. AT PRINCIPAL OFFICE LEVEL Existing products (Policies) be reviewed. Innovation in existing policies must be introduced. New Policies (product) as per current demand of the people (market) must be introduced. Effective promotional tools be used. Focus must be placed to cover 98% empty market by introducing effective and hitting insurance policies. Little de-centralization in promotional budget is needed. Effective Theaters and plays be conducted, giving the practical Demonstration of the benefits of the insurance policies. To cover high expense ratio, price trend of different policies must be touched. Proper field recruitment policy needs to be announced for recruiting high profit educated field staff. Defalcation must be dealt with iron hands without compromising at any stage. Enquiries at under-writing level should be introduced, at the time of claim enquiries should be reduced to considerable level. All injury claims upto the level of Rs.5,000/- should be allowed to settle by Incharge of Claims without undergoing into ZCC Process. Other death claims upto Rs.100,000/- (sum assured) and having non early be made under competency of claim department, exceeding claims be processed through ZCC. Effective and market oriented training be provided to field and other Marketing personnel through experts of marketing.

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F&A, Audit and New Business Department should be made totally independent of the Zonal Head. Their leaves and other matters be looked after through their respective Regional Incharge.

Effective training be given to Officers and staff of the State Life Insurance having

Islamic concept of duty. Human concept Moral aspect Social aspect.

Training session be conducted from time to time within and outside the Organization.

SUGGESTION FOR REGIONAL OFFICE SET UP

Regions should either be empowered or Regional set up be abolished. At present Regional set up is just an expense (cost) centre having no power and duties at all. Regional Chiefs and other Regional Incharges must be selected on considering the following. Education. Knowledge of the respective Jobs (In case of R/C knowledge of all Departments). Personality Previous record and conduct. Ability to express his ideas in :Urdu. Other Languages

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SUGGESTION FOR ZONAL OFFICES

Selection of Zonal Head should not merely be on his marketing skill. selection must be on : Education Experience Knowledge of all Departments. Personality Previous record and conduct. Ability to express his ideas in Urdu, English and other languages. Departmental Head should be selected in the same lines as mentioned above. Issuance of contract papers be made speedy. The documents must be made presentable. Proper air-conditioning be made at Zonal Office level. Office furniture must be provided in same scheme His

CURRENTLY ZONES HAVE: More than 20 types of table. More than 10 types Chair. More than 10 types of different cabins. More than 10 types of curtains and window blinds at different windows. More than 15 types of table sets (Pen stand, cutter etc). More than 5 types computers and printers at different desks. More than 5 types of carpets at different offices. More than 10 types False ceiling style More than 5 types of Fans. More than 5 types of tube rods and energy saver. More than 3 types of Air Conditioner.

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More than 5 types of Centre Table set.

With such a variety of item in an office gives look of Patwari Office instead of financial institutions. Zones should fully be computerized. ATM facility be given to Policy holder for shifting their installments to their respective policies. Proper reconciliation of Accounts must be emphasized. Accumulation of suspense must be avoided. Reception Offices be opened at prominent places of the cities for helping policyholders. Proper sitting arrangements for policyholders be made.

SUGGESTION FOR SECTOR OFFICES

Similarities in offices be maintained. Sector Offices be equip with cash counter and other services necessary for policyholders. Accumulation of offices in vicinity of Zonal Office has no value or less value. Sector Offices must be at certain distance considering the population/market to be covered. Proper Air-conditioning be provided at Sector Offices too. Direction Board be fixed for locating the Sector Offices.

SUGGESTION FOR AREA OFFICES

Similarities in offices be maintained.

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Area Offices

be equipping with cash counter and other services

necessary for policyholders. Accumulation of Area offices in vicinity of Zonal Office has no value or less value. Area Offices must be at certain distance considering the population/market to be covered. Proper Air-conditioning be provided at Area Offices too. Direction Board be fixed for locating the Area Offices.

SUGGESTION FOR FIELD OFFICES OF SALES MANAGER AND SALES OFFICERS

Some similarity among the offices be ensured. Should totally be dispersed and should cover individual small town/Union councils. Equipped with all product information in the form of Broachers. CDs for audio visual display. Proper recruiting procedure be described at each field office. Direction Board be fixed from main road to office. A Board having all product details be installed at each field office. A Board/Banner having the detail of: o Target recruitment o Target premium o Target persistency Must be installed at each field offices

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