The Hindu Business Line : LIC to offer `conversion' option to staff

A MASSIVE staff reorganisation exercise awaits the Life Insurance Corporation under the financial advisers scheme, whereby an overwhelming majority of employees would be offered a three-year lien to assume the role of financial advisers, a nomenclature commonly used now-a-days for insurance agents.

Besides marketing core life insurance products of LIC, the new team of financial advisors would also be allowed to sell products of LIC Mutual Fund and LIC Housing Finance. The advisors would, however, be required to fulfil the Insurance Regulatory and Development Authority (IRDA) norms for agents.

The scheme, that has to be ratified by the Ministry of Finance, would require amendments to LIC Staff Rules, 1960, and Pension Rules, 1995, to make it operational.

The conversion offer would be limited to Class-III and Class-IV employees with minimum three years completed service who hold a graduate degree and are between 30 and 50 years of age. At the end of March 31, 2003, total employees in Class-III and IV were around 81,000, out of 1.17 lakh LIC staff.

Employees who take up the offer would have the option to resume regular employment with LIC if they prefer to or in the event they prove to be unsuccessful in meeting the annual business targets set by the Corporation under the performance norms.

While underperformers would have to revert back at the same post and get pay from which they took the offer, those successful in exceeding the targets would be offered a promotion to Class-II Development Officers (DO) or as Branch Managers (Sales). The performance bar for such promotion would, however, be substantially higher than the yearly targets.

The performance norms stipulate minimum 50 lives covered and a minimum first premium of Rs 37,000 in the first year. This goes up to 85 lives and Rs 80,000 in the second year and 105 lives and Rs 1,20,000 in the third year.

Besides earning the applicable commission on the business generated, the financial advisors would be paid their full last salary drawn during the first six-months of the lien which reduces to 75 per cent of the last drawn salary during the next six months, 50 per cent in the second year and 25 per cent in the third year.

Top LIC officials said that the scheme was aimed at rationalisation of the workforce.

"It is not a voluntary retirement scheme (VRS). This will only allow our staff to work in the field. Our experience shows that agents who are former employees do better," they said.

He said that the scheme had gone down well with the staff unions with whom discussions have already been held.

LIC hopes that the scheme might ultimately lead to a reduction of staff number.

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