complete internship report
TRANSCRIPT
TABLE OF CONTEST
P R E F A C E.............................................................................................................2
ACKNOWLEDGEMENT................................................................................................3HISTORY OF INSURANCE...........................................................................................4ORIGIN OF LIFE INSURANCE......................................................................................5HISTORY OF LIFE INSURANCE IN PAKISTAN...............................................................6WHAT IS INSURNACE.................................................................................................8DEFINITIONS OF INSURANCE.....................................................................................8DEFINITIONS.............................................................................................................9TYPES OF INSURANCE.............................................................................................10TYPES OF INSURANCE COMPANIES..........................................................................10LIFE INSURANCE COMPANIES..................................................................................10PROPERTY AND CASUALTY INSURANCE COMPANIES...............................................10BENEFITS OF INSURANCE........................................................................................11AN OVERVIEW OF INSURANCE INDUSTRY IN PAKISTAN...........................................12GENERAL BUSINESS................................................................................................12LIFE INSURANCE......................................................................................................13STATE LIFE INSURANCE CORPORATION OF PAKISTAN.............................................14MISSION STATEMENT..............................................................................................18OBJECTIVES OF SLIC................................................................................................18CONTENTS OF MARKETING MIX...............................................................................191. PRODUCT........................................................................................................201.1PRODUCT DEVELOPMENT PROCESS HAVE BEEN STOPPED SINCE LONG............20DEATH CLAIM..........................................................................................................21MATURITY CLAIM....................................................................................................21INJURY CLAIM..........................................................................................................21SURVIVAL BENEFITS................................................................................................221.2 PRODUCT ALREADY AVAILABLE ARE HARDLY SATISFYING...... DEMANDS OF PRESENT PEOPLE (TARGET MARKET)......................................................................231.3 INNOVATION PROCESS IS PRACTICALLY UN FOUND.....................................241.4 NEW PRODUCT DEVELOPMENT IS BEING IGNORED.......................................262. PRICE..............................................................................................................271.2 LIFE EXPECTANCY HAS BEEN CHANGED......................................................282.2 AWARENESS WITH DISEASES HAS BEEN NOTICED......................................292.3 INFLATION ROSE UP.....................................................................................312.4 Pattern of Death Rate In Delivery................................................................342.5 LITERACY RATE IMPROVED..........................................................................352.6 Cost of education and marriage increased..................................................36Contrary to this:......................................................................................................362.7 Price pattern of State Life Insurance Corporation of.......................................37Pakistan..................................................................................................................372.8 ADOPTION OF DIFFERENT PRICING STRATEGIES SLIC.................................403. PROMOTION....................................................................................................413.1 ADVERTISMENT...........................................................................................41ADVERTISEMENT THROUGH NEWS PAPERS............................................................42 LACK OF CONSIDERATION OF TARGET MARKET..............................................42SELECTION OF SPACE, SOMETIME DECLINES IMAGE...............................................42ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET.................................................................................42ADVERTISEMENT LACKS CO-RELATION...................................................................42ADVERTISEMENT THROUGH RADIO.........................................................................43TRADITIONAL ADVERTISEMENT...............................................................................43PREFERRED TIME....................................................................................................43CO-RELATION ASPECT IS IGNORED.........................................................................43ADVERTISEMENT THROUGH T.V..............................................................................43ADVERTISEMENT THROUGH MAGAZINE..................................................................44LACK OF CONSIDERATION OF TARGET MARKET......................................................44SELECTION OF SPACE, SOMETIME DECLINES IMAGE...............................................44ADVERTISEMENT ARE TRADITIONAL, THEY NEED TO CHANGE AS PER CURRENT DEMAND OF TARGET MARKET.................................................................................44ADVERTISEMENT LACKS CO-RELATION...................................................................44
ADVERTISEMENT THROUGH SIGN BOARDS.............................................................45ADVERTISEMENT THROUGH BROACHERS...............................................................45ADVERTISEMENT THROUGH CENIMA......................................................................463.2 PUBLICITY....................................................................................................46PUBLICITY THROUGH NEWS PAPER.........................................................................46PUBLICITY THROUGH MAGAZINE.............................................................................47PUBLICITY THROUGH T.V. / RADIO..........................................................................47-VE - PUBLICITY.....................................................................................................473.3 WORD OF MOUTH PROMOTION...................................................................473.5 PROMOTION THROUGH BANKS...................................................................503.6 FIELD PROMOTION......................................................................................514. PLACEMENT / DISTRIBUTION...........................................................................52RIGHT PRODUCT.....................................................................................................52RIGHT TIME.............................................................................................................52RIGHT PEOPLE/CUSTOMER......................................................................................53RIGHT PLACE...........................................................................................................53PEST ANALYSIS.......................................................................................................56POLITICAL INFLUENCE.............................................................................................56ECONOMICAL INFLUENCE........................................................................................57SOCIAL INFLUENCE.................................................................................................57TECHNOLOGICAL INFLUENCE..................................................................................58SWOT ANALYSIS.....................................................................................................59STRENGTHS............................................................................................................59WEAKNESSES..........................................................................................................60OPPORTUNITIES......................................................................................................61THREATS.................................................................................................................62COMPETITORS ANALYSIS.........................................................................................63A COMPARISON WITH COMPETITORS......................................................................66SUGGESTIONS FOR IMPROVEMENT.........................................................................67AT PRINCIPAL OFFICE LEVEL...................................................................................67SUGGESTION FOR REGIONAL OFFICE SET UP..........................................................68SUGGESTION FOR ZONAL OFFICES.........................................................................69CURRENTLY ZONES HAVE:......................................................................................69SUGGESTION FOR SECTOR OFFICES.......................................................................70SUGGESTION FOR AREA OFFICES............................................................................70SUGGESTION FOR FIELD OFFICES OF SALES MANAGER AND SALES OFFICERS.......71
P R E F A C E
Assignments, Term reports and Internship programs are the vital teaching
techniques of G.C. University’s 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.
Page 1 of 73
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 England’s 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 latter’s.
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. Life Insurance:
2. 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
Unemployment
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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
operators, the volume of gross direct premium written by it members, totaled
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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 policyholder’s funds in the wider interest of the community.
Page 17 of 73
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. Product2. Price 3. Promotion4. Placement
Page 18 of 73
Product
Price Placements
Promotion
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 to State Life Insurance
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.
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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. PLANS TABLEPERCENTAGE
(Nearest to 0.1 )1 Whole Life Assurance 01 0.6 %
2Whole Life Assurance by Limited Payment 02 0.3 %
3 Endowment Assurance 03 92%4 Progressive Assurance 04 0.1 %5 Anticipated Endowment Assurance 05 0.2 %6 Joint Life Endowment Assurance 06 1.4 %7 Child Protection Assurance 07 0.4 %
8Endowment Assurance by Single Premium 09 0 %
9 Family Pension Assurance 12 0.2 %10 Big Deal Assurance 14 0.1 %11 Optional Maturity Assurance 17 0 %12 Rural Life Assurance 18 0 %13 Jeevan Sathi Assurance 19 1.4 %14 Mortgage Protection-Annual Premium 22 0.4 %15 Mortgage Protection-Single Premium 23 0.1 %16 Term Assurance - Annual Premium 24 0 %17 Term Assurance - Single Premium 25 0 %18 Annuities 26 0 %19 Annuities 27 0 %20 Annuities 28 0 %21 Annuities 29 0 %22 Annuities 31 0 %23 Shad Abad Assurance 36 0.9 %24 Personal Pension Scheme 71 0.2 %25 Sunehri Policy 73 0.1 %26 Sadabahar Plan Nil 0.3 %27 Child Education & Marriage Assurance 75 0.7 %28 Child Education & Marriage Assurance 76 0.5 %29 Shehnai Policy 77 0 %30 Muhafiz Plus Assurance 78 0 %31 Salary Saving Plan Nil 0.1 %
TOTAL 100%
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Pie is representation of selling pattern
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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Prodcut Selling Pattern
03/2092.00%
Others8.00%
03/20 Others
“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.
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Improper use of Inovation Techniques by NJI
SLIC, 100%
SLIC, 120%
0%50%
100%
150%200%250%
2001 2002
Proper Use of Inovation Techniques by NJI
NJ I,
200%
NJ I,
100%
0%
50%
100%
150%
200%
250%
2001 2002
1.4 NEW PRODUCT DEVELOPMENT IS BEING IGNORED
Obviously any product has is own Life Cycle as Described below:-
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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Planning for New Product
Decline
Boom
Growth
Introduction
New Product emergence is depicted in following diagram:-
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 Life expectancy has been changed.
2.2 Awareness with diseases has been noticed.
2.3 Inflation rose up.
2.4 Death rate at the time of delivery declined.
2.5 Literacy rate improved.
2.6 Cost of education and marriage increased.
2.7 Price pattern of State Life Insurance Corporation of
Pakistan.
2.8 Adoption of different pricing strategies by State Life
Insurance
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Product New Product Further New Product
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 :-
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Average Life & B.E Price Under Endowment Plan
40
42
44
46
48
36
38
40
42
44
46
48
50
At 38 Years Price Break Even
Ave
rag
e L
ife
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 barber’s 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 down-ward.
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 α Price
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
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Risk
Risk Price Line
0
2
4
6
8
10
12
1 2 3 4 5Risk
Pri
ce
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 :-
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 inflation is
increased with such an intensity that is beyond expectations the trend of inflation
is shown below
Page 30 of 73
Price i ii iii
Risk
Risk – Price Relationship at SLIC
Increase In Inflation During Last 5 Years
Inflation
Yea
rs
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.
Page 31 of 73
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
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Placement
Increase In Price Of Product
Increase Bonus
Customer Satisfaction
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) death of mother
ii) Death of baby
iii) Death of both.
With the increase in education, the trend changed and home delivery culture
converted to Hospitals & maternity home’s 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 %)
Page 33 of 73
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 of the customer and may cause competitive
disadvantage.
The situation can be exposed in economic terms also. If the education about the
product is termed as demand the:-
Price α Demand
Page 34 of 73
Demand Price Line
0
2
4
6
8
10
12
1 2 3 4 5Demand
Pri
ce
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 re-checked.
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.
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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.
TABLE 03Endowment Assurance With Profits
Annual Premiums For An Assurance Of Rs.1,000/-Terms of Assurance
Age nearest Birthday
20 yearsBasic Premium
Rs.20 47.7321 47.7722 47.8223 47.8724 47.9325 47.9926 48.0527 48.1328 48.2229 48.3130 48.4231 48.5432 48.6733 48.8334 49.0035 49.2036 49.4337 49.6938 49.99
Page 36 of 73
Age nearest Birthday
20 yearsBasic Premium
Rs.39 50.3240 50.7141 51.1442 51.6343 52.1744 52.7945 53.4746 54.2347 55.0748 56.0049 57.0250 58.1351 59.3552 60.6653 62.0954 63.6255 65.27
Page 37 of 73
Break Even Point
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
32 34 36 38 40 42 44 46 48 50 52 54
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.
By shifting the trend upward & downward break even age changed which have
already been explained at the foregoing paragraphs.
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Break Even Point
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
32 34 36 38 40 42 44 46 48 50 52 54
Ages
Upward Shifting of the Break Even Point due To Price Change
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Ages
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).
Page 39 of 73
Downward Shifting of the Break Even Point due To Price Change
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Ages
3. PROMOTION
The following techniques are used by State Life Insurance for promoting its
products.
3.1 Advertisement
3.2 Publicity
3.3 Word of mouth promotion.
3.4 Out-lets / Branch Offices
3.5 Promotion through Banks
3.6 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
Cinema
Page 40 of 73
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 un-
paid. 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
o Life Fund.
Page 45 of 73
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.
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 .
Page 47 of 73
Customer satisfaction
attained.
Other People inspired.
Product sale increased
Profit Maximum
Positive image in customer
mind
Presentation & Timely delivery of
documents
Un-presentable & delayed delivery of document.
-ive image in customer mind.
Un-satisfied customer
Decline in Sales
Decline in Profit
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 :-
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
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Zonal Office / Main Office
Sector Office-1
Sector Office-2 Sector Office-3Sector Office-
4Sector Office-5
Sector Office-6
Sector Office-7
Sector Office-8
Sector Office-9 Sector Office-
10
SECTOR OFFICES
A.M-1 A.M-2 A.M-3 A.M-4 A.M-5
AREA OFFICES
S.M. Office-1
S.M. Office-2 S.M.
Office-3
s.M.Office-4 S.M.
Office-5
S.M.Office-6 S.M.
Office-7
S.M. OFFICES
S.O-1S.O-2 S.O-3 S.O-4
S.O-5
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 Insurance’s 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 is
collected here”.
The message should be ligible and should be at some prominent place.
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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.
Page 50 of 73
Zonal Head / Main Office
Sector HeadArea
ManagerSales
ManagerSales 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.
The pattern clearly depicting that product is being sold haphazardly without
considering the “Right” product option
RIGHT TIME
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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.
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
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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 “R”s.
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.
Page 55 of 73
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.
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 Insurance’s,
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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Economical Influence
Product
Price
Promotion
Placement
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.
Page 57 of 73
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
Page 58 of 73
SLIC80%
20 % by all other
Insurance Companie
s
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 policyholder’s 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.
Involvement of Officers’ Association
Involvement of Area Managers Association
Page 59 of 73
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.
Making reconciliation
Avoiding accumulation of suspense.
De-centralization.
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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.
Page 61 of 73
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 competitor’s 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. Eastern Federal Union
2. Metropolitan Insurance Company
3. American Life Insurance Company
4. Commercial Union
Page 62 of 73
COMPANY YEAR OF ESTABLISHMENT
Eastern Federal Union 1992
Metropolitan Insurance Company February 1993
American Life Insurance
Company
May 1995
Commercial Union 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 life’s 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
Page 63 of 73
Rs.159 million. It wrote 57% of the total new individual life and 63% of
group life premium.
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, CU’s 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.
Page 64 of 73
A COMPARISON WITH COMPETITORS
STATE LIFE OTHER COMPANIES
Govt. Organization. Private Organization.
Provide State / Constitutional
Guarantee.
No guarantee
Corporation having 30 years
experience of Life Insurance.
New companies having 08 years old.
Declared & Guaranteed Bonuses. Assumed Bonuses.
Offers a wide range of plans fulfilling
requirements of every individual.
Having limited plans.
Accept proposals without medical
requirement upto 3 lacks. It shows the
financial strength of Corporation.
Accept each proposal on medical
grounds and can not afford risks
even of Rs.50,000/-.
Minimum premium 2500 per annum. Minimum premium Rs.6000 per
annum.
Life fund Rs.6000 Crore through which
annual profit is Rs.900 Crore per
annum @ 15% as an average.
No life fund unit value fluctuates by
changing situation of country.
Capital Rs.3000 Crore. Capital Rs.600 Crore.
About market share 85% Market share about 5% to 7%
We discuss sum assured plus bonuses They highlight presumed and
assumed figures.
Policyholder service available
throughout Pakistan in each zone i.e
26 Zonal Offices.
Policyholder service available from
Karachi only.
No individual owner and all the profit
divided to the policyholders.
Individually owned companies thus
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
SUGGESTION FOR ZONAL OFFICES
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Selection of Zonal Head should not merely be on his marketing skill. His
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
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.
More than 5 types of Centre Table set.
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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.
Area Offices be equipping with cash counter and other services
necessary for policyholders.
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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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