Functioning of SLIC
The Pakistan Credit Rat ing Agency (Pacra) has assigned the Insurer Financial Strength (IFS) rating of ³AAA´ (Triple A) to State Life Insurance Corporation of Pakistan (SLIC). The rat ing denotes SLIC¶s except ionally strong capacit y to policyho lder and contract obligat ions. At the same t ime, risk factors are considered minimal, and the impact of the adverse business and economic factors is expected to be extremely small. The rat ing reflects state-owned SLIC¶s leading posit ion in life insurance business in Pakistan. This is supplemented by the corporation¶s extensive distribut ion network, good meet
management qualit y, comprehensive informat ion system, and growing business vo lumes. In return, the client agrees to pay recurring premiums--a fancy word for payments--to the insurance company on a regular basis, often monthly or yearly. The insurance company collects its premiums from all clients, invests that money in extremely safe investments, such as government bonds, securities etc«and keeps capital on hand to pay claims made by its clients.
SLIC Insurance business model
Underwriting Department
The business model is to collect more in premium and investment income than is paid out in losses, and to also offer a competitive price which consumers will accept. Profit can be reduced to a simple equation: Profit = earned premium + investment income - incurred loss underwriting expenses. Insurers make money in two ways: 1. Through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks. 2. By investing the premiums they collect from insured parties.
Underwriting is done on the basis of two grounds: Financial Grounds Medical Grounds
Policy holder services (New business department)
Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for Claims may be filed by insured directly with the insurer or through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form. CLAIMS Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. Every claim is covered by filling a claim paper before 90 days of receiving money. Early Claims covered by 1. Nominee¶s statement 2. Doctor statement 3. Employer statement
Marketing Department
Insurers will often use insurance agents to initially market or underwrite their customers. Agents can be captive, meaning they write only for one company, or independent, meaning that they can issue policies from several companies. Win back strategy is used by Slic by giving prizes to its old customers. Target market is every person sweeper to president of Pakistan how have savings. Agency Department Commissions to agents represent a significant portion of an insurance cost and insurers such as State life that sell policies directly via mass marketing campaigns can offer lower prices pay 35% initial commission to its SO¶s. The existence and success of companies using insurance agents (with higher prices) is likely due to improved and personalized customers.
FINANCE DEPARTMENT AT SLIC
Finance Department
The finance department of SLIC is headed by the General Manager (Finance), who reports to the MD and CEO. There are four other departments under the Finance Departments. These are: 1. Accounts Department 2. Actuary Department 3. Investment Department 4. Audit Department The Accounts Department The Accounts Department functions like any other Accounts department. It is concerned with the disbursement of salaries, reimbursements, incentives, commissions to agents. It also handles the payments due to other agencies with which the Company interacts, viz. event management companies etc. The work of an Accounts department assumes much importance in an insurance company because it has to be able to pay the claims arising time to time. The Actuary Department The Actuary Department is the ³Pricing Department´ of an insurance company. It must be understood that the basic premise on which the insurance companies work is ³use the corpus of policy holders for disbursement for any claim´. Mortality table is used for policy prices. Based on this principle, this department decides the amount of premium to be charged from a client for a particular policy. This is normally done with the help of Mortality Tables, which can either be prepared by the company itself, or the company can use the existing tables available for its use. The Actuary Department is also responsible for Asset-Liability Management of the insurance company. The Investment Department SLIC invest most of its funds in real state business. The Investment Department is responsible for the investment of the money of the investors. These guidelines are: 1. Not less than 50% of the funds will be invested in Government Securities (G-Sec). 2. Up to15% of the corpus will be invested in infrastructure, social and rural sectors. 3. Not less than 20% can be invested in government and other equities. 4. Remaining 15% can be invested in ³unapproved´ equities. Less than 5 year loss
Within 5 year break even More than 5 year profit
Audit Department The audit department is usually charged with creating and implementing procedures, controls and oversight for all business areas that have input into the financial books and records of a company. It also usually has responsibility for correcting any deficiencies noted by the independent accountants.
HR & human resource development
Departments are the entities organizations form to organize people, reporting relationships, and work in a way that best supports the accomplishment of the organization's goals. Departments are usually organized by functions such as human resources, marketing, administration, and sales.
State Life basically deals in following line of Business
y y y y y Conventional Life insurance (Home Business) Annuities Universal Life Business (Gulf Business) Pension Services Group Life Insurance
Services in SLIC
Supplementary contract Nominees
Automatic investment plan of SLIC
Key Features SLIC Investment Plan · Two plan options to choose from Ready-made and Tailor-made · Regular, limited, single premium paying options · Unmatched flexibility through our µExchange Option¶ · Liquidity in the form of partial withdrawal · Option to avail of Accidental Death Benefit, Accidental Total, Premium Disability and
How does this Plan work?
As a customer you will have the liberty to choose between the Ready-made and Tailor-made Plan options. The premium contributions made by you, net of Premium Allocation Charges and Sum Assured Related Charges are invested in fund/funds of your choice and units are allocated Depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/ funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units, whereas the Fund Management Charge is priced in the Unit Value.
State life Automatic Investment Plan
Basic Plan Minimum Maximum
Age at Entry
6 month
60 years last birthday
Premium pay term Min Sum Assured
5 years
30 years
Regular / Limited Premium: Annualized Premium for 5 years or Annualized Premium for half of the policy term, whichever higher. Single Premium 125% of the single premium amount No Limit Minimum premium
Max Sum Assured
Single Premium ------Rs 20,000 Min Top Up amount------Rs 2,000
Premium option
Rs 10,000
Limited Premium
Rs 20,000
Rs5,000
Rs10,000
Rs 2,500
Rs 5,000
Rs 1,000
Rs 2,000
Children's Plan
Children¶s Plan is designed to provide a lump sum to the child at maturity. It also provides financial security to the child in the future, even in case of the insured parent¶s unfortunate death during the policy term. Children¶s Plan receives simple reversionary bonuses, which are usually added annually. This is a flexible plan with three options for you to choose from, depending on your requirements. The details of these options are explained in the next section. You will have the choice of 3 options at the start of the policy.
Tax Benefits The premiums you pay will be eligible for tax relief under Section 88 of the Income Tax Act, 1961. The benefits received under the policy are eligible for tax relief under Section 100 (10D) of the income tax act, 1961.
Eligibility
Eligibility Minimum Age of Entry Maximum Age of Entry Age 18 years 60 years
Maximum Age of Maturity Min. Term: 10 years Max. Term: 25 years Payment options Yearly half-yearly quarterly modes depending on your convenience
75 years
Investment Portfolio and Investment Income Of SLIC
The major portion of SLIC¶s investment comprise of government securities (69%), corporate debts (2%), Equities (11%), Investment property (1%), Bank deposits (9%) and Loans against policies (8%) as at 31.12.2010. The balanced composition of the investment portfolio helps SLIC to earn a good rate of return, the benefit of which is ultimately passed on to the policyholders. In 2010, State Life was able to earn an investment income of Rs. 27.6 billion as compared to Rs. 21 billion in 2009. This growth in investment income reflects an increase of 32% during this duration.
Loans against policies (8%)
governmen t securities (69%),
Investment Portfolio and Investment Income
Bank deposits (9%)
Equities (11%
corporate debts (2%),
The sales process
Prospecting
After sale services
Approach
Information
Presenting & closing Gathering information