Rules governing the services of Development Officers in LIC of India

1. Hearty Welcome !
This presentation is on
SPECIAL RULES
Governing the Development Officers
Best Wishes!

2. Special Rules – Genesis
An Overview in Brief
With Heartfelt Tributes to Shri.S.W.Kalwit

3. You are Appointed…
Appointment Letter
Dear Sir/Madam,
With reference to your application in terms of LIC of India (Recruitment Of
Apprentice Development Officers) Regulations, 1999 and the subsequent
training you had with us as an Apprentice Development Officer, we hereby offer
you appointment as a Probationary Development Officer with effect from …..
On the following Terms & Conditions.
“Your Confirmation will depend ,inter alia upon, fulfillment of the minimum
business requirements set out in Para …. above.
The grant of increments to you shall be governed by the targets assigned to
you as per this appointment letter read with Regulation 56 of LIC of India
(Staff) regulations, 1960….”

4. You are Confirmed…
Confirmation Letter
Dear Sir/Madam,
Further to our letter dated….issued to you giving
terms & conditions of your appointment as a
Probationary Development Officer, we have pleasure
to inform you that you are confirmed in the services as
a Development Officer with effect from…..
All other Terms & Conditions of your Appointment set
out in the letter remain unchanged.

5. (1) The Central Government may, by notification in
the Official Gazette, make rules to carry out the
purposes of this Act.
(2B) The power to make rules
(i) the power to give retrospective effect to such
rules; and
(ii) the power to amend by way of addition,
variation or repeal….with retrospective effect
Section 48 in The Life Insurance
Corporation Act, 1956

6. Section 48 in The Life Insurance
Corporation Act, 1956
(2C) The provisions of clause (cc) of sub-section
(2) and sub-section (2B) and any rules made
under the said clause (cc) shall have effect,
and any such rule made with retrospective
effect from any date shall also be deemed to
have had effect from that date, notwithstanding
any judgment, decree or order of any court,
tribunal or other authority and notwithstanding
anything contained in the Industrial Disputes
Act, 1947 (14 of 1947), or any other law or any
agreement, settlement, award or other
instrument for the time being in force.

7. 2015 MODIFICATION? !
2009 SPECIAL RULES
1989 SPECIAL RULES ON MOU
1976 BLUE ORDER BACK
1971 NEW SERVICE RULES ( T A PAI )
1964 MEMORANDUM OF SETTLEMENT
1957 BLUE ORDER (CLASSIFICATION FORMULAE)
1956 LIC OF INDIA FORMED
1969 NEW SERVICE RULES

8. Their major function is to procure new business through
their agency organization and to render prompt after-sales-
service. The nature of their work mainly involves field
duties.
Employees of other classes work for specified time in the
office where their output is directly supervised.
On the other hand, the Development Officers have no
fixed hours of work.
Their performance has necessarily to be judged with
reference to the results of their efforts in the forms of new
business secured through their agents and the cost
incurred in relation thereto.
Why Special Rules for Development Officers….
(Management’s Reason)

9. Why they changed 1989 Special Rules in 2009
Management’s Reason…
 “We have modified the Incentive
Scheme/s of Development Officers in the
year 1997, 2000 and 2004. Growth
oriented Incentive Bonus Scheme (GOIB)
was introduced with effect from 1st
September 2004. However, there has been
no change in the Special Rules for
Development Officers since 1989”

10. Why they changed 1989 in 2009
Management’s Reason…
 “Out of 18933 Development Officers
whose appraisals were settled in the year
2006-07, 836 Development Officers are
working above 17% cost ratio, which
works out to 4.42%.
 Out of 18933 Development Officers whose
appraisals were settled in the year 2006-
07, 83 Development Officers are working
above 35% cost ratio, which works out to
0.44%”

11. Life Insurance Corporation of India
Development Officers (Revision of Certain
Terms and Conditions of Service) Rules, 2009
------------------------------------------------------------------
Special Rules 2009……..
In exercise of the powers conferred by sub-
section (1), read with clause (cc) of sub-section
(2), of section 48 of the Life Insurance
Corporation Act, 1956 (31 of 1956), the Central
Government hereby makes the following rules
regulating certain terms and conditions of service
relating to business performance of Development
Officer of the Life Insurance Corporation of India
-------------------------------------------------------------

12. DEFINITIONS
Includes:
Basic,FPA,HRA,CCA,HA,FCA
And Other Reimbursement of
TE,Telephone, Mobile Bills,
Vehicle Insurance Premium
Does Not Include:
PLLI, IB,PL Encashment, Cash
Medical Benefit
Remuneration
For COST
purpose

13. DEFINITIONS Includes:
Schedule First & FirstYear
Premium brought in by the
agency organization.
Does Not Include:
Second & Subsequent years
Premium.
Premium
Income
For COST
purpose
Schedule Premium means the actual credit of the
premium as per a plan & term

15. Expense Ratio & Population of the Area of Operation

16. Prescribed Expense Ratio =
Expense Ratio + Relaxations

17. 19%
Occasions 21% >21 TO 23 > 23<=32 >32 <=35 >35
Fisrt Time NIL
No
Increment
No
Increment
No
Increment
ONE
Decrement
Second
Time
NIL
No
Increment
No
Increment
ONE
Decrement
TWO
Decrement
Third
Time
NIL
No
Increment
ONE
Decrement
TWO
Decrement
TWO
Decrement
EXPENSE RATIO As per Existing Special Rules 2009
DISINCENTIVE TABLE – SELECT FROM DROP
DOWN FROM THE YELLOW BOX

18. Table of Disincentives
Special
Rules 2009
Where the Cost Ratio Exceeds the Prescribed
Limit
Continuous
Occasions
Up to 2% >2% but
<4%
>4% but
CR<=32%
>32% but
<=35%
>35%
First
Time
NIL No
Increment
No
Increment
No
Increment
One
Decrement
Second
Time
NIL No
Increment
No
Increment
One
Decrement
Two
Decrement
Third
Time
NIL No
Increment
One
Decrement
Two
Decrement
Two
Decrement

19. TERMINATION CLAUSE ….
TWO SCENAREOS

20. Deferment of Disincentive…
“If a Development Officer has
completed 10 years of service or more as
a Development Officer, and has not
exceeded the prescribed expense limit
for a continuous period of not less than
10 years immediately preceding the
relevant appraisal year”

21. Subject to the provisions of Rule 9,
1.the current decrements may be reinstated subject to the
future cost being within ceiling.
2.The reinstatement provided under Rule 9 or Rule 10 together
shall be limited to three occasions for which decrement were
suffered during the entire service as a Development Officer.
3.The decrement suffered during an appraisal year may be
reinstated during the period of next five appraisal years, and not
thereafter.
Reinstatement of Current Decrements Suffered
…….Under Rule 9 & Rule 10

22. Reinstatement of Current Decrements Suffered
…….Under Rule 9 & Rule 10
Subject to the provisions of Rule 10, if a Development Officer
does not exceed the basic expense limit in three successive
appraisal years, the current decrement for one year may be
reinstated from the relevant appraisal date.
If a Development Officer is eligible for reinstatement
both as per Rule 9 and Rule 10, he may choose the
same either under Rule 9 or under Rule 10; and not
under both. The choice so exercised shall be final.

23. (5) Where the representation received under proviso to
sub-rule (4) discloses,
(a) any factual inaccuracies in the computation of eligible
premium or other figures
(b) any cause beyond the control of the Development
Officer, such as accident or sickness
 The competent authority shall forward the
representation to the Zonal Manager, for decision.
If the Zonal Manager is satisfied, he may consider and
pass such orders as he may deem fit.
If the Zonal Manager rejects, the DO may submit a
Memorial to the Chairman in respect of that matter.
Grounds for Representation for Not to Effect the Disincentive
Explanation

24. Re-appointment of terminated Development Officer:
If a Development Officer, whose services are
terminated in pursuance of rule 7 has completed at
least seven years of service in Class II on the date of
such termination and has not completed 55 years of
age, he shall be eligible for reappointment in the service
of the Corporation to do administrative work in Class
III either as Assistant or Record Clerk

25. Special Cases- Review by MD:
There is a provision for review by the Managing
Director in deserving cases subject to the
provisions of Rule 12.
A deserving case where the performance of a
Development Officer may be regarded as good
would be one if his cost ratio does not exceed
15% on the basis of his annual remuneration in
each of the two consecutive preceding appraisal
years and he has otherwise carried out his official
duties in a satisfactory manner.

26. Special Rules Impacts…..

27. The Reality as at 2013-14…
Development Officers are largely
impacted… WHY?
1. De-growth observed ranging from 4.52% to 41.22% in
the last 5 years
2. 7,53,888 agents recruited BUT 18,56,689 agents
Terminated
3. De-growth in agency net addition 17.05% (minus)
4. Closure of All Plans on 31.12.2013
5. 49 out of 52 plans withdrawn

28. The Reality as at 2013-14
Development Officers are largely
impacted… WHY?
1. By the end of 2013-14, only 12 plans
2. 2014-15 Just 7 more plans
3. Service Tax@12.36% imposed from 01.01.2014
4. Sec 194DA imposed in Income Tax amendment
5. Changes resulted in Sec 10(10)D impacted SB &
Maturity proceeds
6. Environment has affected Conventional Insurance Plans

29. The Reality as at 2013-14…
Development Officers are largely
impacted HOW?
After the Implementation of Special Rules 2009,
Total of 11,729 Development Officers have faced Disincentives on
different counts. This is 47% of the Cadre Strength.
Recruited around 8700 new Development Officers incurring 20 Cr
expenses.
Even 50% of them could not gain confirmation
Out of 22,975 Development Officers as at 2014, 601 were working at
cost ratio exceeding 38%
472 have been terminated already as on Mar 2014

30. 2006-07 2013-14
Above 17% only 836 11279 in Disincentive
Above 35% only 83 601 above 38%
472 Terminated
4500 PDOs not
confirmed
Alarming Impact of Special Rules 2009
Job Lost! Wages Lost ! Increment Lost!
Pension Lost! More VRS sought!

31. Occasions Up to 2% >2%<=4% > 4%<=32% >32% <=35 >35%
Fisrt Time NIL
30% cut in
FCA
50% cut in FCA
60% cut in
FCA
60% cut in FCA
& No
Increment
Second Time NIL
50% cut in
FCA
60% cut in FCA
60% cut in
FCA & No
Increment
80% cut in FCA
& No
Increment
Third Time NIL
60% cut in
FCA
60% cut in FCA
& No
Increment
80% cut in
FCA & No
Increment
80% cut in FCA
& One
Decrement
Fourth Time NIL
60% cut in
FCA & No
Increment
80% cut in FCA
& No
Increment
80% cut in
FCA & One
Decrement
No FCA & One
Decrement
Fifth Time NIL
80% cut in
FCA & No
Increment
80% cut in FCA
& One
Decrement
No FCA &
One
Decrement
No FCA & Two
Decrements
Modifications Expected
(as is being circulated by NF)

32. Relaxations for Higher Age
(in Expected Modifications)

33. Termination Rules
As per Modifications Expected
Scenario 1
When Cost Ratio in the relevant year
exceeds 50% AND the aggregate Cost
Ratio of the Relevant Year and the TWO
Appraisals preceding the Relevant Year
Exceed 50%
Scenario 2
When the basic pay after applying
disincentive table repeatedly, falls
below the 'Minimum Scale of Pay' for
the SECOND TIME in the entire career

34. Wage Revision expected to fetch 20% gross
increase

35. Even in the Modification (proposed)
The Expense table is unaltered for
increment purpose. If one exceeds the
Prescribed Cost even by a fraction, he
will not be eligible for increment
(excluding 2% buffer in the
disincentive table)
OBSERVATIONS

36. Post Wage Revision, there is going to be an
automatic escalation of minimum of 4% to
maximum of 9% approximately.
Present 19% will become 23%
Present 38% will become 46%
For recently confirmed 35% will become 42%
For seniors on stagnation 21% will become
25.3%
Thus, the Modifications considered prior to Wage
Revision, would get nullified with all the said
relaxations not matching the wage increase.
This would lead to Decrement again.

37. Friends,
This is just an attempt to improve
our awareness & understanding of
what is in store.
This is not an exhaustive
presentation.
We may have missed out on some.
Hope this presentation has kindled
your thoughts in that direction.
Best Wishes & Regards,

38. Thanks for Watching
Long Live National Federation!
Long Live Our Unity!