State Life Insurance Corporation of Pakistan

BRIEF HISTORY

The Life Insurance Business in Pakistan was nationalized during March 1972. Initially Life Insurance business of 32 Insurance Companies was merged and placed under three Beema Units named A , B and C Beema Units. However, later these Beema Units were merged and effective November 1, 1972 the Management of the Life Insurance Business was consolidated and entrusted to the State Life Insurance Corporation of Pakistan. The major function of the State Life Insurance Corporation of Pakistan is to carry out Life Insurance Business; however, it is also involved in the other related business activities such as investment of policyholders fund in Government securities, Stock market, Real Estate etc State Life Insurance Corporation of Pakistan is headed by a Chairman and assisted by the Executive Directors appointed by Federal Government. Up to July 2000 the Corporation was run by Board of Directors constituted under Life Insurance (Nationalization) Order 1972. In July 2000, under Insurance Ordinance 2000, the Federal Government reconstituted the Board of Directors of State Life which runs the affair of this Corporation.
ORGANIZATIONAL STRUCTURE

It is headed by chairman who is a chief executive of the corporation and appointed by the government the other administrative level and authorities is given below A. Board of directors It comprises of 5 members who are responsible for making plans and policies to achieve the set goals of the organization. Executive Directors It comprises of 4 members responsible for implementation of policies and directives of the board of directors. Regions There are 4 regions in Pakistan headed by regional chiefs responsible for looking after all the zones under his administration. Zones There are 26 zones in Pakistan headed by the zonal head responsible for procurement of business to achieve the set business target of the organization.

B.

C.

D.

The basic structure of the Corporation consists of Four Regional Offices, Twenty-Six Zonal Offices, a few Sub-Zonal Offices, 111 Sector Offices, and a network of 461 Area Offices across the country for Individual Life Insurance; Four Zonal Offices and 6 Sector Offices with 20 Sector Heads for Group & Pension are involved in the Marketing of Life Insurance Plans

policies and products offered by State Life and a Principal Office. The Zonal Offices deal exclusively with Sales and Marketing. Underwriting of Life Insurance Policies and the Policyholder s Services. Regional Offices, each headed by a Regional Chief, supervise business activities of the Zones functioning under them. The Principal Office, based at Karachi, is responsible for corporate activities such as investment, real estate, actuarial, overseas operations, etc.

MAJOR ACHIEVEMENTS

The

major

achievements

of

State

Life

are

as

under:

1. On the commencement of the operations, the Corporation took a very important step by effecting reduction up to 33% in the premiums on the past and potential Life Policies for the benefit of the Policyholders. 2. State Life is profitable organization and is paying dividend to the Government of Pakistan since its inception in 1972. State Life has played very vital role in the economy by providing employment to the people of the country as permanent employees and as part of its marketing force and by investing the huge funds in different sectors of the economy. Investment portfolio also includes investment in Real Estate.

3.

4.

5. The Paid up Capital increased from Rs.10 million in 1972 to Rs.1100million in 2008. 6. Investment income including rental income increased from Rs.0.81 billion in 1972 to 19.186 billion in 2008.

7. State Life is smoothly striving towards its objective of making life insurance available to large section of the society by extending it to common man.
OBJECTIVES

To run life insurance business on sound line.

y y y y

To provide more efficient service to the policyholders. To maximum the return to the policyholders by economizing on expenses and increasing the yield on investment. To make life insurance a more effective means of mobilizing national savings. To widen the area of operation of life insurance and making it available to as large a section of the population as possible, extending it from the

comparatively more affluent sections of society to the common man in towns and villages. To use the policyholders fund in he wider interest of the community.

As at 31-12-2008 (Rs. in millions) Portfolio 126,188 1,335 24,097 15,745 2,437 13,268 183,070

Particulars Govt. Securities TFCs/Approved Govt. Securities Equities Bank Deposits Investment properties Policy Loans

Investment Income As at 31-12-2008 (Rs. in millions) Particulars Govt. Securities TFCs/Approved Govt. Securities Equities Bank Deposits Investment properties Policy Loans Other Income Portfolio 13,084 149 2,523 694 342 1,308 1,086 19,186

Total Income (Rs. In Million) 2004 2005 2006 2007

24,624.2 26,925.6 30,915.4 36,221.9

2008

41,829.9

KEY CONTACTS

Ghulam Ali Director General Privatisation Commission 5-A Constitution Avenue EAC Building Islamabad Pakistan Telephone: (92-51) 920 5487 Facsimile : (92-51) 920 3076, (92-51) 921 1692 Email: info@privatisation.gov.pk

Mian Touqeer Aslam Consultant Privatisation Commission 5-A Constitution Avenue EAC Building Islamabad Pakistan Telephone: (92-51) 9208509 Facsimile : (92-51) 9203076 (92-51) 921 1692 Email: info@privatisation.gov.pk

followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programme regarding future courses of action. It is rightly said Well plan is half done. Therefore planning takes into consideration available & prospective human and physical resources of the organization so as to get effective co-ordination, contribution & perfect adjustment. It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources. According to Urwick, Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses. Planning is deciding best alternative among others to perform different managerial functions in order to achieve predetermined goals. According to Koontz & ODonell, Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur.

Steps in Planning Function

Planning function of management involves following steps:-

1. Establishment of objectives
a. b. c. d. e. f. g. h. a. b. c. d. e. f. g. a. b. c. d. e. Planning requires a systematic approach. Planning starts with the setting of goals and objectives to be achieved. Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts. Moreover objectives focus the attention of managers on the end results to be achieved. As a matter of fact, objectives provide nucleus to the planning process. Therefore, objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities undertaken are bound to be ineffective. As far as possible, objectives should be stated in quantitative terms. For example, Number of men working, wages given, units produced, etc. But such an objective cannot be stated in quantitative terms like performance of quality control manager, effectiveness of personnel manager. Such goals should be specified in qualitative terms. Hence objectives should be practical, acceptable, workable and achievable. Planning premises are the assumptions about the lively shape of events in future. They serve as a basis of planning. Establishment of planning premises is concerned with determining where one tends to deviate from the actual plans and causes of such deviations. It is to find out what obstacles are there in the way of business during the course of operations. Establishment of planning premises is concerned to take such steps that avoids these obstacles to a great extent. Planning premises may be internal or external. Internal includes capital investment policy, management labour relations, philosophy of management, etc. Whereas external includes socioeconomic, political and economical changes. Internal premises are controllable whereas external are non- controllable. When forecast are available and premises are established, a number of alternative course of actions have to be considered. For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organization. The merits, demerits as well as the consequences of each alternative must be examined before the choice is being made. After objective and scientific evaluation, the best alternative is chosen. The planners should take help of various quantitative techniques to judge the stability of an alternative. Derivative plans are the sub plans or secondary plans which help in the achievement of main plan. Secondary plans will flow from the basic plan. These are meant to support and expediate the achievement of basic plans.

2. Establishment of Planning Premises

3. Choice of alternative course of action

4. Formulation of derivative plans

a. b.

c. d. a. b.

These detail plans include policies, procedures, rules, programmes, budgets, schedules, etc. For example, if profit maximization is the main aim of the enterprise, derivative plans will include sales maximization, production maximization, and cost minimization. Derivative plans indicate time schedule and sequence of accomplishing various tasks. After the plans have been determined, it is necessary rather advisable to take subordinates or those who have to implement these plans into confidence. The purposes behind taking them into confidence are :a. Subordinates may feel motivated since they are involved in decision making process. b. The organization may be able to get valuable suggestions and improvement in formulation as well as implementation of plans. c. Also the employees will be more interested in the execution of these plans. After choosing a particular course of action, it is put into action. After the selected plan is implemented, it is important to appraise its effectiveness. This is done on the basis of feedback or information received from departments or persons concerned. This enables the management to correct deviations or modify the plan. This step establishes a link between planning and controlling function. The follow up must go side by side the implementation of plans so that in the light of observations made, future plans can be made more realistic.

5. Securing Co-operation

6. Follow up/Appraisal of plans

a. b. c. d. e. f.

Organizing is the function of management which follows planning. It is a function in which the synchronization and combination of human, physical and financial resources takes place. All the three resources are important to get results. Therefore, organizational function helps in achievement of results which in fact is important for the functioning of a concern. According to Chester Barnard, Organizing is a function by which the concern is able to define the role positions, the jobs related and the co- ordination between authority and responsibility. Hence, a manager always has to organize in order to get results. A manager performs organizing function with the help of following steps:1. 2. 3. Identification of activities - All the activities which have to be performed in a concern have to be identified first. For example, preparation of accounts, making sales, record keeping, quality control, inventory control, etc. All these activities have to be grouped and classified into units. Departmentally organizing the activities - In this step, the manager tries to combine and group similar and related activities into units or departments. This organization of dividing the whole concern into independent units and departments is called departmentation. Classifying the authority - Once the departments are made, the manager likes to classify the powers and its extent to the managers. This activity of giving a rank in order to the managerial positions is called hierarchy. The top management is into formulation of policies, the middle level management into departmental supervision and lower level management into supervision of foremen. The clarification of authority help in bringing efficiency in the running of a concern. This helps in achieving efficiency in the running of a concern. This helps in avoiding wastage of time, money, effort, in avoidance of duplication or overlapping of efforts and this helps in bringing smoothness in a concerns working. Co-ordination between authority and responsibility - Relationships are established among various groups to enable smooth interaction toward the achievment of the organizational goal. Each individual is made aware of his authority and he/she knows whom they have to take orders from and to whom they are accountable and to whom they have to report. A clear organizational structure is drawn and all the employees are made aware of it.

4.