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Business Model

Materiality and Value Creation

Stakeholders

Our stakeholders are those who may be significantly affected by the Company’s activities, products or services; and conversely, those whose actions may significantly affect the ability of the Company to create value over time.

In this context the Company’s primary stakeholders are its shareholders, customers, business partners, employees and the community and environment in which it operates. These key stakeholders will be further discussed in below

Stakeholder identification

Principal stakeholders Primary concerns and expectations
Shareholders Dividends paid
Share price movement
Customers Service standards of the organisation
Policy bonuses/Delivery of claims, maturity payments, policy payments on time.
Financial stability of the insurer
Business Partners
Independent contractual agents Commissions
Job satisfaction
Job security
Reinsurers Timely payment of reinsurer’s premium
Actuaries Data required for the actuarial valuation
Timely payment of actuarial fees
Industry associations Participation in industry-related seminars and conferences
Contributing to industry development
Employees Salary Remuneration packages
Bonus and other incentives
Promotions, career advancement
Job satisfaction, job security
Community and environment Corporate social responsibility (CSR)
Employment opportunities
Contribution to the preservation of environment
Government, regulators, professional bodies, ombudsman Financial prudence and stability of the industry
Compliance with rules and regulations
Innovation and best practices
Payment of taxes
Business ethics
Fair settlement of claims
Adherence to best practices
Banks and financial institutions Investment opportunities
Cross selling opportunities
Facilitate continuous relationships
Competitors Fair competition
Industry development and growth

Stakeholder engagement

Method of engagement Frequency of engagement Key topics and concerns raised How the Company responded to such topics and concerns.

Shareholders

Annual General Meeting (AGM) Annually Holding of AGM as per regulatory requirements The Company held its first AGM by way of a shareholder resolution in terms of Section 144 (3) of the Companies Act No. 07 of 2007.
Annual Report Annually Financial information and disclosures about the Company This Annual Report published for the year ended 31 December 2015 is the Company’s first Annual Report.

Customers

Complaints, inquiries requests received from walk-in customers across all branches Ongoing basis Queries with regard to their policies and services offered Easily accessible hotline/website to provide information and customer service points at all our branches.
Sales force feedback Ongoing Policyholder concerns regarding their policies and services offered Increase person-to-person contact between the customers and trained, professional company personnel by establishing the most extensive island-wide branch network.
Customer surveys When required Monitor service levels Conduct regular customer satisfaction surveys and take prompt corrective action where necessary.
Inquiries/complaints received through the Call Centre Ongoing Policyholder concerns regarding their policies and services offered Easily accessible hotline to provide information and monitoring of service levels.

Business partners – Actuaries

Year end actuarial valuation of the long term insurance business Annually Data required for the valuation, types of data validations done, details of new products launched during the year, assumptions used, computation of product-wise reserves and solvency margin, preparation of all information required by the regulator All data were validated and provided with details including reserve amounts and solvency margin for the Actuary to decide on the bonus amounts to participating policyholders. Prepared all relevant information required by the regulator for the review of the Actuary.
Pricing of new products As and when a new product is to be launched Details of assumptions such as mortality, interest, expenses, withdrawal rates, tax rates, profit margin and the workings on the gross premium rates Provide details of assumptions and formulae used and the drift gross premium rates for the Actuary to review, do any necessary modifications and finalise the rates.
Any other matters for which Actuary’s involvement is needed As and when required The issue in detail with necessary supporting information Provide all details and calculations as required.

Business partners – Independent sales agents

Annual Awards Ceremony and Mid-year Awards Ceremony Once a year Enhance motivation, reward outstanding performance. Recognition among peers Reward sales force with plaques, medals, certificates, cash rewards and foreign tours. Media publicity.
Sports Once a year Opportunity to showcase talents and interact with other branch staff members Reward best performers. Recognition in newsletters.
Grievance handling On going Work-related issues Meeting/discussion with immediate supervisors.
Dedicated sales support centre.
Frequent visits by Senior Management to branches and divisions.

Business partners – Reinsurers

Long term treaty On going Continue a long term and mutually beneficial partnership with Sri Lanka’s leading life insurer Actively maintaining the business relationships.
Timely payment of reinsurance premium.

Business partners – Industry associations

Insurance Association of Sri Lanka Monthly committee meetings Formulate joint industry initiatives, technical updates, regulatory matters, grievance handling and co-ordination of correspondence with Insurance Board of Sri Lanka Life insurance awareness month which is a joint industry effort aimed at highlighting the importance of life insurance among the general public.

Employees

Succession planning Annual and when required Increase internal competition Introduce career lattice and develop on special projects.
Share information and Company performance New year message, year- end reviews, mid-year conferences, monthly message Create high expectations on rewards and recognition Systemised performance based reward system.
Provide own branches When the given targets are achieved Moral hazard of rented-out branches Different branch level rewards for milestone achievements.
Respect voices from all levels through departmental forums with the CEO Quarterly Deviating from main objectives Conduct pocket meeting with the HOD prior to main meeting.
Celebrate both financial and non-financial achievements When required
Encourage volunteering Company events and other official activities Lack of opportunities to cater to all volunteers Proper allocation of opportunities according to the competencies and creation of new opportunities.
Encourage innovation with due appreciations When special projects and new business activities are introduced
Give and receive feedback This is inculcated in the culture, specially at biannual appraisals and at different stages of projects Develop all the levels to provide constructive feedbacks when required Provide regular training sessions on counselling and coaching.
Show respect Inbuilt in the culture as a core value Generational differences Encourage everyone to live the Company values.
Encourage learning Learning culture, qualification and performance-based promotions Motivate continuous learning, whatever the age group Encourage team performances.
Align employees, Company goals and strategies Annual objective formulation and biannual appraisals Changes in objectives due to changes in the operating environment Set new KPIs and rewards through regular review.
Work-life fit programmes Daily basis

Regulator – Insurance Board of Sri Lanka

Submission of statutory returns Quarterly and annually as stipulated Clarifications about the information furnished in the returns Timely submission of all IBSL statutory returns. Prompt responses to all queries raised by the IBSL.
Submission of other documents Ongoing As and when required Submission of other documentation as stipulated by the IBSL (e.g. new product details, new advertisements, Annual Report etc.)
Forums, meetings and discussions As and when required New developments and concerns in the industry Participation in industrial forums and in discussions organised by the IBSL.

Regulator - Central Bank of Sri Lanka

Submission of Central Bank reports Monthly and quarterly as required
Contribution to the indices and surveys of the Central Bank Monthly and quarterly Clarifications on information furnished by the Company Relevant information for aspects such as Purchasing Managers’ Index, Business Outlook Survey, National Accounts Estimates etc. Prompt responses to all queries raised by the Central Bank.

Regulator – Department of Inland Revenue

Submission of tax returns and payment of taxes Quarterly and annually Timely payment of all applicable taxes and timely submission of tax returns.
Meetings and discussions with the Department of Inland Revenue As and when required Clarifications about information furnished in the tax returns Participation at discussions and providing explanations on queries.

Community

CSR Projects Ongoing basis Groups which need sustainable assistance in areas of healthcare and education are identified Deserving beneficiaries are identified and assisted through school development projects and ‘Waidya Hamuwa’ medical camps.
Sustainability Initiatives Ongoing Minimising the adverse impact on the environment Optimal usage of non-renewable natural sources Construction of Green Buildings. Installation of solar PV models, sensor taps, rain water harvesting, introduction of centralised automatic temperature control.

Memberships of Associations

Ceylinco Life participates in the following key associations:

Insurance Association of Sri Lanka

Our nominees are represented in the following committees and forums of IASL:

  • Executive Committee
  • Legal Advisory Forum
  • Life Insurance Forum
  • Finance and Technical Sub-committees
  • Marketing and Sales Forum
  • HR Forum
  • IT Forum

Sri Lanka Insurance Institute (SLII)

Ceylinco Life is a member of SLII, with our Deputy General Manager – Technical serving as the Secretary of the Institute.

Materiality

Our business model focuses on aspects that are important, from the perspective of the Company as well as that of the stakeholder. What is ‘important’ is a judgment based on relevance and significance, the latter being determined by the probability of occurrence and the magnitude of the impact.

The aspects we consider to be important are thus rated as moderate, high and very high and are tabulated below with a cross reference to the GRI Content Index that appears on this section.

Rating of material aspects

Importance
No. Aspect GRI Indicators To Company To Stakeholder

Economic

1 Economic performance G4-EC1
G4-EC3
Very high Very high
2 Indirect economic impacts G4-EC7
G4-EC8
High High

Environmental

3 Energy G4-EN6 High High
4 GHG emissions G4-EN15
G4-EN16
G4-EN17
High High
5 Effluents and waste G4-EN23 High High
6 Overall G4-EN31 Moderate Moderate

Social

Labour practices and decent work
7 Employment G4-LA1
G4-LA2
G4-LA3
Very high Very high
8 Training and education G4-LA10
G4-LA11
Very high Very high
9 Diversity and equal opportunity G4-LA12 High High
10 Labour practices grievance mechanisms G4-LA16 High High
Human rights
11 Non-discrimination G4-HR3 High High
12 Human rights grievance mechanisms G4-HR12 High High
Society
13 Local communities G4-SO1 High Very high
14 Compliance G4-SO8 High Moderate
Product responsibility
15 Product and service labelling G4-PR3
G4-PR4
G4-PR5
Very high High
16 Marketing communications G4-PR7 Very high High
17 Customer privacy G4-PR8 Very high Very high
18 Compliance G4-PR9 Very high Very high

Materiality matrix

The materiality matrix shown above is a visual summary of the ratings, with the numbers depicting the different aspects listed previously.

Value Creation and Capital Formation

We take a broad view of value creation. It is a two-way process, as the ability of the Company to create sustainable value for itself is also related to the value it creates for its stakeholders. Thus we distinguish between the Company and its stakeholders, identify which ones are important to the Company, and understand why the Company is important to them. The materiality matrix discussed previously underscores this process.

Value creation leads to capital formation. As a store of value, capital takes on a broader meaning in integrated reporting and constitutes the resources and relationships used and affected by the Company.

We classify capital that is owned by the Company as being ‘internal’ capital, while capital that is not owned as ‘external’ capital. Ownership is irrelevant here, as the Company has access to and uses all forms of its capital to create sustainable value for itself and its stakeholders.

Our internal capital comprises financial capital and institutional capital. The former is what gets reported in the Financial Statements, while the latter are intangibles such as integrity, trust, specialised knowledge and brand image.

Our external forms of capital thus centre on key stakeholders and comprise investor capital, customer capital, business partner capital, employee capital and social and environmental capital.

A schematic view


The diagram shown above summarises the interrelationships of the key elements of our business model.

Our corporate vision, purpose and values lie at the core of all what we do. They explain ‘why’ we exist. These are brought into focus through corporate objectives which explain ‘what’ we want to achieve in the short, medium and long term. Translating our objectives into action plans are strategies, which explain ‘how’ we will do it. Our strategies are implemented through business operations, with results measured through key performance indicators (KPI).

While KPIs focus on time-bound specifics, a more holistic view of our business takes us to value creation and capital formation – which are outcomes. Both performance and outcomes are reviewed in the section on Management Discussion and Analysis that follows.

It does not end there. Value creation is a dynamic processes with flows taking place between the various forms of capital all the time. This is managed through monitoring and evaluation which include oversight mechanisms such as corporate governance, risk management and environmental scanning (operating environment), which lead to a re-evaluation and fine tuning of corporate objectives. The process goes on.

Management Approach

The Management Discussion and Analysis that follows explains why we consider an aspect to be material, what we do to manage them and how we evaluate our performance and outcomes. The discussion is thus structured along value creation and capital formation, duly supported by indicators and measures.