State Life Insurance

State Life Insurance Corporation Of Pakistan “Nowshera”
Chapter No 1
INTRODUCTION TO THE REPORT
1.1- Background of the Report:

In today’s life Insurance has taken place as a need of human life because no part of our
life remains untouched by the Insurance. The products we buy and consume in finished
or semi finished life, realizing the of insurance in human life, Government nationalize
State Life Insurance Corporation at March 18, 1973 under the nationalization order1972.
State life insurance corporation is working for the welfare of the people by providing
them life insurance and few other categories and contributing to the overall economy as a
whole.
1.2- Purpose of the study:

Purpose of the report is to provide to the point and complete information about state life
insurance corporation in a better way, while at the same time to cover all the areas of
interest of state life insurance corporation in an interesting manner, so that readers get
maximum out of the report according to their requirement.
1.3- Scope of the study:

Scope of the study is to cover the following areas of State Life Insurance Corporation,
o Methodology of the working
o To understand the functions of different departments
o To study and understand the strategies and corporate policies implemented at all
levels.
1.4- Methodology of the study:

For the completion of this report both primary and secondary sources for data collection.
1.4.1- Primary sources
The primary sources used during the completion of this report are,
Govt. College of Management Sciences Mardan 1

• Interviews
• Observation
1.4.2- Secondary sources
The secondary sources are,
 Local magazines of “State Life Insurance Corporation”
 Newspapers
 Annual reports 2008-2008
 World wide web
Limitations of the study are:

• Lack of documented information.
• Lack of an annual report of the organization.
• Lack of proper information about different departments based upon their
functioning.
• Beside all these activities this report opens new doors for both the people
interested to get information about SLIC and for the students of Govt.
College of Management Sciences Mardan as well.
• State Life Insurance Corporation was emerged after the fall of Dhaka. In
the year 1972 it was nationalized and was placed under State Control on
March 18, 1973 under Life Insurance (Nationalization Order 1972). State
Life Insurance Corporation since its inception has almost 5 million
policyholders and life fund of Rs. 6.5 billion with total assets standing at
over Rs.100 billion.
• As a basic function State Life Insurance Corporation is working for the
well being of the people of Pakistan by giving them the life insurance
cover and by thus stressing for the betterment of the economy of Pakistan.
• State Life Insurance Corporation is divided into the, Zonal and Regional
offices, central region, northern region and group life. At the broad level
State Life Insurance Corporation Peshawar region is providing services to
its policy holders under these packages, jeevansathi, shad bad, child

education, marriage plan, child protection policies, three payment plans,

sunehri policy, shehnai policy and few other as well.
• State Life Insurance Corporation Peshawar region at the present is
operating with the following departments. Sales Promotion and Marketing,
Agency administration, New Business Department, PHS, HRM, B & A,
Internal Audit & Account, Computer Department and Personnel &
General Services.
After the thorough analysis of SLIC on different tools revealed that the organization has
shows its efficiency in all its services and areas. Than on the basis of these analyses
following recommendations have been given:
• For the development of Insurance Sense in the society a mass communication
campaign should be launched through media and documentaries.
• Special policies should be adopted for the Government servants according to their
financial position.
• Rural areas should be focused more specially in life insurance.
• Communication network should be emphasized among departments.
• Female housewives and entrepreneur should be encouraged to come forward in
the field.

CHAPTER NO 2
HISTORY AND BACKGROUND:
2.1- Insurance In Prospective:

There is an old saying “Room was not built in a day”. There is no doubt about this truth,
the saying relates to the historical development, it also relates to the development of any
institution in any country.
There is general agreement that insurance is fundamental requirement for sound

development of the economy and that insurance activities if properly supervised can play
an important part in the growth of industrial and commercial activities of any country. It
has been an accepted norm that insurance legislation in any country should provide a firm
and continuous basis for supervision and control of insurance companies enabling them
to play their traditional role before which they are established, namely the protection of
policyholders, beneficiaries and other concerned parties. State supervision, which is the
national legislature would provide the respect to financial viability of insurance concerns,
is not sufficient by itself as other objectives, such as the laying down of a rationalized
tariff structure or a fair treatment to policyholders in the formulation and general
conditions of insurance policies are also essential elements for safeguarding the interests
of the public in general. It is now felt that there is a great need to extend control to a
whole range of activities of insurance concerns, particularly into field where excessive or
unusual profits accrue or where harmful results to insurance may ensure. While proper
control of insurance activities is necessary, it should not mean interference with the day-
to-day activities. Sufficient discretionary power of intervention should be given to
controlling authorities to enable them to exercise their judgment and take effective
measures as required by any particular situation.
In order to promote the establishment and development of insurance market in

developing countries, insurable risk concern property situated with in the country and its
residents as well as the liability of such risks should only be insured with insurance
companies (national and foreign) duly established and licensed in the country. Insurance

or reinsurance abroad should be resorted to only in cases where no insurance cover can
be found in the country and permission should be granted only by the controlling
authority. On the other hand, the controlling authority should be everything in its power
to promote the national market in order that an increased number and type of domestic
risks could be covered so as to reduce the necessity of coverage abroad, in this respect
insurance can play a very useful role in appropriate cases. The controlling authorities
must ensure that the premium and conditions of a policy are fair and provide for the
expeditious settlement of claims. The cost of insurance should not be excessive and
should be regulated mainly through the control of commissions on sales of policies,
which should be the absolute minimum.
In developing countries, apart from the important task of insurance supervision,

government should provide measures to establish and strengthen the National Insurance
market. In Pakistan, a variety of legislative and other measures have been taken to
achieve this object, most of these after a certain degree of protection to the public. This
will enable the National Insurance companies to play their legitimate role in promoting
the insurance business in the domestic market through healthy commercial competitions
taking into view economic, social and other national interests. If properly done it should
help to prevent an outflow of foreign exchange that might result from excessive resources
to foreign insurance and reinsurance facilities.
The Islamic ideology committee has recommended a change in insurance concepts on the
basis of Islamic principles. It has suggested a number of measures to be adopted by
insurers and proposed that the insurance business be conducted only by purely
Government sponsored organizations instead of private insurance companies. From what
has been mentioned one fact become clear that insurance it is not un-Islamic. If the
present system is based on the principle of mutual co-operation, self-help, guarantee and
obligation, then it will not suffer from any drawback from the point of view of Shariah.
The funds collected could be invested on a profit and loss sharing basis. It has further
been suggested that a federally administered fund be established whose membership
would be voluntary with the intention of helping the needy on the basis of self-reliance. If
the state, in furtherance of it welfare functions, replace the existing commercially

oriented private insurance business and indemnifies the loss in case of any damage due to
an unfortunate or untoward happening or helps the insured to meet adverse financial
agencies through schemes arranged on the basis of voluntary contribution, it would be
according to the tenets of Islam. By so doing it will not only enable the government to
discharge social functions, but it also helps to reduce the cost of insurance due to mass
participation of citizens. The argument in favor of nationalization are that Government
controlled formations make it possible to introduce uniformity in contracts relating to
insurance policies, data can be easily pooled, unnecessary statutory reports eliminated,
and the premium rate reduce in absence of the profit motive, costly exercises for self
promotion through advertisement would be eliminated. The arguments against it are that
insurance has remained in private hand for many years and based on the experience
gained there seems no reason to believe that any better service will result through state
ownership. It is essential to point out that in a number of countries insurance markets
have only been partly nationalized. Nationalization in some cases involved only those
sectors of the insurance market, which were considered important.
The question where domestic insurance institutions should be public, private or semi-
public should be left to the economic and social philosophy of each country. The
essential thing is to have an insurance market where fair premia should be matched by
efficient service to the common man.
2.2- Pakistan Insurance Corporation

The Pakistan insurance corporation, which was established under Pakistan Insurance
Corporation Act of 1952, seems to have been conceived in certain respects in a different
light. The main object of this Act (apart from conserving currency) was to provide
internal reinsurance facilities and at the same time promote and assist new domestic
insurance companies. The corporation also has the responsibility of managing the Export
Credit Guarantee and War Risk Insurance Schemes. It has taken an interest in the work of
R.C.D. in part, which provide a reinsurance pool for insurance bodies in Pakistan, Iran
and Turkey.

Iran and Pakistan have also enacted legislation to make reinsurance cessions to national
institutions compulsory. The proportion to be coded ranged from 25% to 30%. The
reinsurance performs both state insurance as well as business of semi-public insurance
concerns and has undoubtedly played a vital role in developing the insurance market.
In Pakistan the Ministry of Commerce controls the insurance market. This Ministry
directly supervises National Insurance Corporation, Pakistan Insurance Corporation and
the State life Insurance Corporation. The private sector is controlled and regulated by the
controller of insurance in regard to business undertaken by it.
A part from the broad classification of insurance as Marine, Fire, Accident and
Miscellaneous, there is yet another type to classify it according to the business in the
following categories.
(a) Insurance of persons with the category of life and personal accident insurance.
(b) Insurance of property dealing with burglary or material loss or damage by fire.
(c) Insurance of liability, including public, employers and marine collision
liability, etc.
(d) Credit insurance, which is a comparatively later development and undertakes
financial insurance such as guarantees.
If we look around we will find that various kinds of insurance companies are now
functioning. These companies are catering individual and industrial needs of all the
countries, which include the highly developed and industrialized countries as well as less
developed countries. When we talk of the great scientific development and invention
insurance as it stand to day is also a wonder of the world. The insurance industry as it
exists today is the product of a number of centuries as is not development of any
particular period; its history is very old.
The word “insurance” can be defined in many ways:

2.3- Definitions of Insurance
Insurance is a system under which the insurer, for a consideration usually agreed upon in
advance, promises to reimburse the insured or to render services to the insured in the
event that certain accidental occurrences result in losses during a given period. It thus is a
method of coping with risk. Its primary function is to substitute certainty for uncertainty
as regards the economic cost of loss-producing events. Insurance relies heavily on the
"law of large numbers" In large homogeneous populations it is possible to estimate the
normal frequency of common events such as deaths and accidents. Losses can be
predicted with reasonable accuracy, and this accuracy increases as the size of the group
expands. From a theoretical standpoint, it is possible to eliminate all pure risk if an
infinitely large group is selected. From the standpoint of the insurer, an insurable risk
must meet the following requirements:
1. The objects to be insured must be numerous enough and homogeneous enough
to allow a reasonably close calculation of the probable frequency and severity of
losses.
2. The insured objects must not be subject to simultaneous destruction. For
example, if all the buildings insured by one insurer are in an area subject to flood,
and a flood occurs, the loss to the insurance underwriter may be catastrophic.
3. The possible loss must be accidental in nature, and beyond the control of the
insured. If the insured could cause the loss, the element of randomness and
predictability would be destroyed.
4. There must be some way to determine whether a loss has occurred and how great
that loss is. This is why insurance contracts specify very definitely what events
must take place, what constitutes loss, and how it is to be measured.
From the viewpoint of the insured person, an insurable risk is one for which the
probability of loss is not so high as to require excessive premiums. What is "excessive"?
It depends on individual circumstances, including the insurer’s attitude toward risk. At
the same time, the potential loss must be severe enough to cause financial hardship if it is
not insured against. Insurable risks include losses to property resulting from fire,
explosion, windstorm etc; losses of life or health and the legal liability arising out of use

of automobiles, occupancy of buildings, employment, or manufacture. Uninsurable risks

include losses resulting from price changes and competitive conditions in the market.
Political risks such as war or currency debasement are usually not insurable by private
parties but may be insurable by governmental institutions. Very often contracts can be
drawn in such a way that an "uninsurable risk" can be turned into an "insurable" one
through restrictions on losses, redefinition of perils, or other methods.
In simple words it means, “ pooling of resources in a jointly owned funds with the
purpose of reducing individual burden”.
According to others it is a “collective pooling of money to be paid out to any of

contributor in case the event of loss cementing from a defined disaster or calamity”.
2.4- Categories of Insurance
Insurance is broadly divided into two categories:

a) General Insurance
b) Life Insurance
General insurance and life insurance
Marine, fire, motors, cash in safe are the examples of general insurance, which covers
material posses and used by a person for his comforts and well-being. While group and
individual insurance are the examples of life insurance. While the invention of
automobiles early this century a new clause motor was developed by the insurance
industry to provide insurance coverage for automobiles, which includes such clauses as
accidental insurance.
From the early days of civilization man have formed societies as whose members
promised to help each other in the event of misfortune. As early as 900 B.C. the
merchants of the Rhodes islands in the miditarian agree to share certain risks among
themselves.

The history of life insurance dates back too as early as 1500’s. Fire insurance as early as
2nd half of 16th century while the concept of Accident insurance was developed in
England in the 1800’s when in 1840 the guarantee society was formed to insure
employers against embezzlement by their employees. The British become principal
marine insurers when Sir royal exchanges in England in 1570 to transit the marine
insurance.
2.5- Modern Insurance
With the passage of time and scope of insurance expanded. In order to survive in the
competitive environment insurance companies offering many services that were not even
perceived by its pioneers Insurance in its modern structure stated in England when
Lloyds stated insurance business.
Insurance in the modern sense --- where insurers collect small premiums from their
policyholders, pay claims them who had incurred losses and made a profit for taking the
risk after deducting business expenses.
Life insurance however gradually commenced differing altogether from other classes of
insurance the history of life insurance dates back to as early as 1500’s when the brilliant
idea was conceived by an individual by the name called LLOYDS in a coffee shop on the
bank of river Thames.
Over the year various sophisticated forms of insurance contract have been evolved. But
the basic concept is the same i.e. collective pooling of resources in jointly owned fund
with the purpose of rendering individual burden from its modest beginning in a 17th
century coffee-house in London today.
It is one of the worlds leading insurance market in which over 130 businesses compete
and cooperate. In Pakistan insurance is the second largest service industry.
2.6- Importance of Insurance:

Now a days no part of our life’s remain untouched to day by insurance though many of us
not realize it .The imported finish goods that we buy from the market, the raw materials

and semi finished goods use in our local industry are all insured in every stage of its
shipment. This also trues for all exports as one export some one else import.
Insurance today permits all economic activities, the Trans global movement of all marine
and air cargo require mandatory marine and flight insurance, fire coverage of properties
and the content with in health and life insurance, insurance of all types of vehicles and
also such insurance as against unemployment or that of certain body parts just proves the
importance of it in all human activities. Life insurance provides protection to the
dependent of breadwinner while non life insurance cover material possessed and used by
a person for his personal comfort and well-being.
2.7- National Insurance Corporation

The National Insurance Corporation was established under the N.I.C Act of 1976. Its
activities covered the direct insurance requirement of the public sector, the federal
government, all provincial governments and autonomous/Semi autonomous corporations
owned, managed or otherwise controlled by them including taken over units. The
functions of the corporation as described in the Act are to undertaken general insurance
business under its charter. It is required to insure public property in respect of general
insurance business relating to any risk or legal liability pertaining to any public property
and to advise them to adopt measures to minimize wastage arising from causes which are
usually insured against and to reduce the cost of insurance, preserving domestic resources
from losses and prevent the flow of foreign exchange by saving reinsurance premia based
on the principle of self help.
2.8- History of Insurance in Pakistan

At the time of independence Pakistan inherit a total of 5 indigenous insurance companies
and 77 foreign companies. Realizing the importance of promoting Pakistani companies,
Pakistan Insurance Corporation was established in 1952. In 1955 national co insurance
scheme (NCS) was introduced with the help of Pakistani insurer and small companies, to
retain profit with in the country and to present effective and powerful competition to the
foreign companies, this help local companies to grow both in terms of number as well as

financial and business progress. The total number of foreign companies declined to 25 in
1971 from 1957, while the premia under NCS increased from Rs. 600000 to Rs. 29
million during the same period. Consequently up on the government policy of
nationalization, NCS was converted into National Insurance Fund (NIF) in July 1973 and
later to Pakistan Insurance Corporation (PIC) in 1976 to under write the property and
interest of the public sector only. As a result of nationalization of life insurance and
creation of State Life Insurance Corporation (SLIC), the private sector was confined to
non-life insurance business only.
2.9- State Life Insurance Corporation
State Life Insurance Corporation was emerged after the fall of Dhaka. In 1972 it was
nationalized under nationalization order, which was placed under state control on March
18, 1973 under life insurance (Nationalization order 1972).
All those companies which were operating insurance business were merged and life
insurance business was separated from general insurance, Eastern Federal Union,
Commercial Union, Adamjee, American Life Insurance and some other companies which
were operating also in East Pakistan were given the licensed for general insurance, while
State Life Insurance Corporation was granted the license for life insurance. State life
insurance since its inception up till now has almost 5 million policyholders and has
almost a life fund of Rs 6.5 billions with assets of Rs 100 billions.
State Life Insurance Corporation is working for the well being of the people of Pakistan
by giving them the life insurance cover, and by thus stressing for the betterment of the
economy of the country. In Pakistan, life insurance remained under private sector till
nationalization in 1972, when state life was established by merging 32 private companies.
Since then it has gone through various phases of development.
Initially management Board of trustees appointed by government of Pakistan looked after

the affairs of nationalized life insurance companies. The Board was assigned the task of
integration and consolidation of 41 roosts while insurers. The basic structure of the

corporation which originally comprised three Beema Units dealing mainly with sales,
underwriting and servicing of life policies and activities, such as investment real estate,
Actuarial work and overseas operations was organized w.e.f 15th October, 1975 as three
Beema Units:
1. 16 companies = A Beema unit
2. 15 companies = B Beema unit
3. Eastern Federal Union insurance company = C Beema Unit
But due to unhealthy competition the three Beema units were abolished and under the re-
organization scheme five zonal offices, which concentrated mainly on sales promotion
and development of field force, replaced these Beema units. The corporation completed
25 eventful years of service in 1997.
The principal office has been divided into five functional areas called as Division each
headed by one Executive Director, Each Executive Director is functional head of his
department and all Instructions flow from their respective office to the zones. Each
Executive Director assigns Deputy General Manager to look after the day-to-day business
of the Division and issue necessary instructions to functional areas (Zonal Heads) at the
Zonal level. The functional areas at zones are known as sectors.
The zones are the functional areas that are headed by a person called "Zonal Head" whose
main responsibility is the development of business, smooth and efficient services to the
policyholders and local administration. Department sectional heads that is the incharge of
the respective functional areas assists the Zonal Head.
2.9.1- Basic Facts
Chronology Of Events
• Taking of management of Life Insurance Complains and
Appointment of Trustees 19thMarch, 1972
• Establishment of Stale Life Insurance Corporation and
Formation of 'A' 'B' and 'C' Beema Units 1st November 1972

• Introduction of Lower Premium Rates on

New policies 1st November 1972
• Reduction in Premium rate of Policies issued by
Defunct Insurance Companies 1st January 1973
• Merger of Units and formation of Zones 1st October 1975
• Establishment Branch Office in Dubai July 1978
• Establishment of an Agency Office in Kuwait May 1983
• Establishment of Multan Zone 1st October 1985
• Establishment of Faisalabad Zone 1st March 1986
• Establishment of Quetta Zone 1st May 1986
• Establishment of Gujranwala Zone 1st July 1986
• Establishment of Sukkar Zone 1st April 1990

Chapter No 3
Structure of State Life Insurance Corporation of Pakistan
"Nowshera"
3.1- Basic structure of State Life Insurance Corporation

The basic structure of the Corporation consists of Zonal Offices in all-important towns,
Regional Offices and a Principal Office. The Zonal Offices deal exclusively with the
sales and marketing of policies underwriting of Life Insurance Policies and the
policyholder services. Regional Offices (South, North, Central and Multan) each headed
by Regional Chief who supervises business activities of the zones in their Region
effectively and the Principal Office, based at Karachi, is responsible for activities such as
Investment, Advertising, Sales Promotion, Real Estate, Actuarial and International
Operations etc.
The Chief Executive of the Corporation is Chairman, who is presently assisted by three
Executive Directors. State life is effectively providing life insurance cover to cater to
individual needs of the country’s populace through an organized and professionally
trained field force comprising several thousand field workers and field supervisors. The
policies issued by the state life are backed by the life fund exceeding Rs 64 billion at the
end of April 2000. At the end of year 2005 the figure reached 80 billions. In addition, the
government of Pakistan guarantees all individual life insurance policies. State life’s
performance both in individual and group and pension, has been characterized by
exemplary growth, brought about by the concerned efforts of its dedicated employees and
members for its dynamic field force, under the guidance of a top management comprising
men with a vision and wisdom. State life offers a large number of plans for the benefits of
Pakistani families.
3.1.1- Organizational Structure

State life insurance Corporation of Pakistan is a federally administered corporate body in
the public sector directly under the ministry of Commerce, Government of Pakistan. All

the activities of the corporation are supervised and managed by the Board of Directors,
which consists of a Chairman, and seven Directors. The Principal Office has been
divided into four major functional areas each headed by an Executive Director, from
which there is a flow of instructions to the zones. A zonal heads whose main
responsibility is the development of business, smooth and efficient service to the
policyholders and local administration.
Graphs
D i a g r a m N o . O1 R A G A N I Z A T I O N A L S T R U C T U R E
Z O N A L H E A D
M a n a g M e ra n P a o g l ei c r y P o l iM c y a n a M g e a r n a g e r I n c M h a a r ng ae g e M r a n a g e r
M a n a g e r F M D
B u s i n eH s o s l dd ee pr t S t : e r v i c e B s & I n A t e r n C a l o Am u p d u i t tP e r& D G A e S p g t e t n: c y D e p t t :
D e p u t Dy e p A u s t s y Ai s st a s ni s t tD a ne pt A u s t s y A i s st as A in s t s t as A in s t s t as in s t t a n t
M a n a g M e ra n a g e r M a n a g e r
A s s Ai s ts a s n i s t t a n t
A s s A i s s t as Ain s t st a s A ni s t s t as Ain s t ts a s Ani s t st as ni As t t sa s n Ai t s st a s ni s t t a n t
A s s Ai s t s a s nAi s t st a s Ani s t ts a s ni s t t a n t
A s s t At : s s t A t : s s t At : s s t A t : s s tA t : s s t t :
P a y mC eo n m t P m a y - r C o la s h B a n J k o i nu gr n a l
S e c t i so s n i oS n e c t Ci o o n u S n et e c r t M i o an n a g e r
M a n a g e r
C l a i m
C l e C r k l e Cr k l e C r k l e C r k l e Cr k l e C r k l e C r k l e r k
D e p u t y
M a n a g e r
A s s Ai s st a s nAi s t ts a s ni s t t a n t
S o u r D c e i s: c u s s i o n w i t h D r . M u j a h i d A f r i d i , M a n a

O R G A N I Z A T I O N A L C H A R T
D i a g r a m N o . 2
Z O N A L H E A D
N e w b u s i n e s sH u m a n r e s o I nu tr e c r e n a l a u d P i t e &r s o n n e l & A g e n c y
d p a r t m e nd te v e l o p m e n t d e p e av r a t l m u ae tn i to g n e n e r a l s e r v i dc e p a r t m e n t
P o l i c y h o l d e r s B e ur v d i g c ee t & a c c C o o u mn t p u t e r
C l a i m d e p a r t m e n t
d e p a r t m e n t d e p a r t m e nd t e p a r t m e n t
U n d e r
D i s p a t c h P e r s o n n e l G e n e r a l
w r i t i n g
P a y m e n t C o m m i s s i o n J o u r n a l l e d g e r
P a y r o l l s e Cc t a i os hn C o uP n a t y e rr o l l s e c t i o n
s e c t i o n s e c t i o n s e c t i o n
B u d g e t J o u r n a l l e d g e r
S u s p e n c e S u r r e n d e r L a p s a Sn dp e c i a l R e A v li tv e a r l a t i o n
L o a n S e c t i o n
s e c t i o n s e c t i o n r e v i v a l s e c t i o s ne c t i o n s e c t i o n
S o u r c De : i s c u s s i o n w i t h D r . M u j a h i d A f r i d i , M a n a g e r , P
3.1.2- Mission
In order to develop or restrict a company strategic decision makers must determines its
basic goal, philosophies that shape the strategic posture of the firm. The out comes of this
task known as companies mission provided true basis for a culture that will guide the
future action. It is the purpose for which the organization exists, it reveals the image that
company seeks to project, reflect the companies’ self-concept. When systematically and
comprehensively develop a firms mission statement can serve invaluable tools in
directing the formulation and implementation of strategy.

SLIC Mission Statement:

“To remain the leading insurer in the country by meeting their commitments to their
valued policyholders and the nation.”
3.1.3- Objectives
It is apparent that an organization came into being to serve some purpose it is the function
of management to clarify architect, implement in and in large measure to define the
purpose for an organization’s existence. This is done with establishments of the
objectives.
The main objectives of SLIC are as follows:

• To run life insurance business on sound lines.
• To provide more efficient services to the policyholders.
• To maximize the return of 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 use the policyholders fund in the wider interest of the community
• 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 effluent sections of society to the common man in towns
and villages.
3.2- Regional and Zonal Distribution of SLIC

In State Life Insurance Corporation of Pakistan, life insurance is divided in to two
categories, individual and group insurance the corporation comprises a principal office,
four regional offices and twenty-six zonal offices. These zonal offices are entrusted with
the most important function, i.e. marketing of life insurance policies and the
policyholder’s services. On the group and pension side there are five zones operating
throughout Pakistan; including newly created health zone. Regional Offices are headed
by regional chiefs who lead and guide marketing teams in their respective group of zones

in the regions. The principal office based at Karachi, is responsible for key functions,
such as marketing, investment, real estate, actuarial, international division, advertising
and sales promotion, besides overall strategic control and direction to the regions and
zones.
Regional and Zonal Distribution

 Southern Region
• Karachi zone (south)
• Karachi zone (eastern)
• Karachi zone (central)
• Hyderabad zone
• Quetta zone
• Sukkar zone
• Mirpur khas zone
• Larkana zone
 Multan Region
• Multan zone
• Sahiwal zone
• Rahim Yar khan zone
• Bahawalpur zone
• Dera ghazi khan zone
 Central Region
• Lahore zone (central)
• Lahore zone (western)
• Faisalabad zone
• Sargodha zone
• Sialkot zone
• Gujranwala zone

 Northern Region
• Rawalpindi zone
• Peshawar zone
• Mir purr (AJK) zone
• Abbot bad zone
• Swat zone
• Gujarat zone
• Islamabad zone
 Group Life
• Karachi zone
• Lahore zone
• Rawalpindi zone
• Peshawar zone
3.3- The Future
The insurance ordinance 2000 was promulgated on 19th august, 2000. Its objective is “to
regulate the business of the insurance industry, to ensure the protection of the interests of
insurance policyholders and to promote sound development of the insurance industry”.
The ordinance will radically change the way in which the entire insurance industry,
including State Life, will operate. The corporation intends to comply with the ordinance
in letter and spirit.
Insha Allah the corporation intends to:

i) Review and streamline its product line, to provide the best life insurance
plans for the public.
ii) Improve its underwriting, policyholders service and computer system, to
provide good quality service to policyholders

iii) Restructure its office and field operations to improve efficiency and
control costs.
iv) Adapt its investment policy to the changing economic scenario.
3.4- Product of SLIC
Some of the popular plans are jeevansathi, shad bad, child education and marriage plan,
child protection policy, three-payment plan, endowment plan, sunehri policy, and shehnai
policy. The valiant field force makes such plans, which meets their needs most favorably.
3.4.1- Jeevan Sathi Plan (with profits)
Under this plan policies are issued on the lives of two persons and simultaneously
cover the risk on the lives of both for the sum assured. Premiums are payable till the end
of the specified term or till death of either of the insured persons if earlier.
Benefits:
Following are the benefits of Jeevan Sathi Plan (with profit)
a). On the death of the first life, the sum assured will be paid to the survivor.
b). On the death of the second life, again the sum assured will be paid (to the
nominee) together with the attaching bonuses. In this event the policy will
terminated.
c). If the second life survives the term of the policy he/she will be paid the
sum assured together with the attaching bonuses, even though the assured
has been paid once, or the death of the first life.
d). If both the lives survive the term of the policy the sum assured will be paid
to them jointly only once together with the attaching bonuses.
3.4.2- Mortgage Protection Policy

Mortgage protection policy is a specialized form of Group Term Assurance. The policy
provides for sum assured reducing by equal amounts over the term of the policy.

Loans and mortgages have become essential parts of the life of modern man. The
mortgage protection policy essentially provides coverage approximately equal to the
outstanding loan at any time, which is being repaid by regular installments. It provides
the debtor with the satisfying knowledge that in case of his premature death, his creditor
will not be pounding on the doors of his heirs but will simply turn to state life insurance
Corporation for collection of outstanding debts.
Features:
1. One single premium may be paid at the inception of the policy or annual
premiums may be paid for approximately 2/3rd of the term of the loan.
2. Premiums are payable annually in advance but may also be paid in half
yearly, quarterly or monthly installments provided the installment is not
less than Rs. 150/-.
Death Benefits
In case the policyholder dies in the first policy year the sum assured of Rs. 50,000/-
would be payable. The death risk covered under the policy reduces by Rs. 4,000/- per
annum as shown in the schedule of sum assured.
3.4.3-Various Terms Available

Premium rates are available for terms of 5,8,10,15 and 20 years. In case of 5 years term
policy, premiums can be paid only by a simple premium at the inception of the policy. In
case of other terms the policyholder has a choice.
3.4.3.1-Neghban Plans
This plan provides term insurance cover for period of 5 to 10 years. The plan will be
available to all insurable lives Upto age of 60 years who qualify for term insurance rider.
As the name suggests this plan is meant to provide protection during the term of the
policy only i.e. sum assured is payable on death if it occurs during the term of insurance
while the policy is enforce. The plan does not carry any survival benefits, maturity
benefits, surrender values, loan values etc. The policies will be without profits.

Normal non-medical scheme and underwriting requirements will apply.

Only yearly mode of payment of premium will be permissible subject to normal rules
ADB or AIB may be attached if the life otherwise qualifies for the supplementary
benefits.
3.4.3.2- Shad bad Plan (with profits)
This plan will meet the requirements of those who appreciate the basic savings purchase
of endowment insurance and the bonuses and terminal bonuses payable. But they would
like some additional cover to protect their loved ones in case they should die, Allah
forbid before maturity.
Benefits
6000 basic endowment with profit sum assured. This will be entitled to all the usual
bonuses and terminal bonuses declared from time to time on endowment with profits of
the same term.
PLUS
On death during the policy term from any cause an additional Rs. 1000/- will be payable
in a lump sum. Adding this to the endowment amount of Rs. 1000/- payable on death, the
total death benefit will be Rs. 2000/-.
PLUS
On death by accident an additional Rs. 2000/- will be payable. Adding this to the amount
of Rs. 2000/- mentioned above, the total payable on death by accident would be Rs.
4000/-.
3.4.3.3- Sunehri Policy

Sunehri policy is an innovative life insurance product. It is flexible, secure and meets the
challenges of inflation quite economically. This plan has a special feature from the 3rd
policy year onwards the sum assured under the policy and the premium will increase by
6% p.a. However the policyholder has a right not to increase and pay the same amount as
last year. In such an event the sum assured under the policy will remain same as last year.
If the policyholder has refused the increase 3 times during the term of the policy then he
will be required to provide the evidence of insurability for further increase. From the 3rd

policy year onward the policyholder is provided with a statement every year showing the
build up of the cash value of the policy and sum assured for the policy.
Death Benefits:
If the insured dies during the first 2 years of the policy, then the initial basic sum
assured will be payable. If the insured dies in the 3rd or later policy years then the death
benefit payable will equal the sum assured applicable to the policy year of death plus the
adjusted opening cash value. This policy matures at age of 70 years.
3.4.3.4- Child Education And Marriage Plan (without benefits)

Child education and marriage plan is a plan for the protection of child’s future.
This plan provides coverage for a specified term. It provides a lump sum benefit for the
child at the completion of the policy term. The term of the plan is such that the lump sum
benefit becomes payable when the child attains a pre determined age of 18, 21 and 25
years. These ages may be selected considering the occasions at which children generally
need financial assistance for higher education, marriage or setting up business.
Benefits:
1. If the policyholder dies before the expiry of the term a regular income benefit of
Rs. 240/- per thousand sum insured p.a. is paid to the child until the completion of
the policy term.
2. Upon the completion of policy term, the child receives the full sum assured plus
bonuses accrued over the entire term.
3.4.3.5- Premiums
Under this plan a level premium is payable till the maturity date or earlier death of the
policyholder.

CHAPTER No 4
DEPARTMENTS OF STATE LIFE INSURANCE CORPORATION
OF PAKISTAN “NOWSHERA”.
The major departments of State Life Insurance Corporation of Pakistan are given below:
• Zonal Secretariat
• New Business Department
• Policyholders service Deptt. (PHS)
• Personnel and General Service Deptt.(P & G.S)
• Sales and Development Deptt. (S & D)
• Internal Audit and Evaluation Deptt.
• Human resource Development Deptt.
• Budget and Accounts Deptt.
• Agency Administration Deptt.
• Computer Deptt.
4.1- Zonal Head Secretariat
The major function of the Zonal Head Secretariat is to assist the Zonal Head in
the discharging of his responsibility as Head of the Zones.
Functions.
The zonal Head secretariat performs the following functions.
i. To co ordinate the setting up of target for field executive.

ii. To evaluate and avail the field executives at regular interval.

iii. To prepare and conduct sales promotion activities to assist the field executives.
In this respect competition is launched by zonal head secretariat.
iv. To maintain statistics for sales and manpower in order to review the
performance.
v. To revise and launch campaign for manpower sales development in the
marketing department.
vi. To prepare and issue instructions to the Field and Staff.
vii. Handling of complaints of policyholders against field force.
4.2- New Business Department
The main function of New Business Department is the underwriting of the

documents of the interested person who is going to purchase a policy. This is responsible
for maintaining the record of all the policies, allotment of policy number and collecting
the premium from policyholders. The main functions performed by New Business
Department are given below as:
Functions
• To underwrite the documents, which do the persons who are interested to be

insured, fill.
• To calculate the premium amount policy is accepted by Nation Building
Department.
• To collect the premium from policyholders.
• To prepare the acceptance letter.
• To allot the policy number.
• To maintain the record of all the policies.
• To issue the first premium receipt.
• To develop and promote the life insurance Business through Field Force.

Procedure for a person to get a policy

New Business Department is the policy-issuing department. A person who is interested to
get a policy must have to fulfill the following conditions:
i. He must fill up a proposal form, which is in printed form.

ii. Proposal form must be recommended by the sales Officer.
iii. He must submit this form at Nation Building Department.
iv. He should receive the acceptance letter.
v. He must deposit a specific amount of premium.
vi. He must submit a medical fitness report.
vii. He should receive first premium receipt from office after depositing the premium.
viii. He must deposit the installment of premium regularly.
ix. He must submit medical proposal and non-medical proposal form.
x. Premium will be according to age limit, i.e. High age, higher premium and low
age lower premium.
Proposal Form
The Corporation free of cost to enable a proposee to apply for a policy of life insurance
supplies a proposal form. However, the main questions which normally the propose is
required to answer truthfully accurately and correctly are:
* The name of proposee in full.

* His present residence.
* Exact nature of his occupation.
* Nationality
* Date and place of birth
* Plan of insurance proposed.

* Sum assured
* Term of insurance
* Mode of premium payment and
* History of previous proposals for life insurance.
Whether any such proposal has ever been declined delayed, withdrawn or accepted at an
extra premium after having completed the answers to the questions, the proposee has to
sign a Declaration whereby he declares that he is at present in good health and that the
answers to the questions given are true. He is further agreeable to answer any question,
which may be put to him by the corporation. Medical Examiner, regarding his health of
family history affecting the proposed insurance.
Medical Report Form
The Medical Report Form has to be combined with the proposal form. Medical report
form consists of two distinct parts. The 1st part consists of questions put to the proposee
by the Director. This is known as the Personal Statement of Health. The 2nd part consists
of the Directors own observations from physical examination of the proposee and forms
the medical report. The personal statement of health and the Medical Report contain
information regarding the habits personal history and ;the medical history of the life
assured and of members of his family so as to find out whether or not be proposee or any
member of his family has suffered from any serious sickness and disease hereditary
disease and whether or not has met with ;any accident.
Non-Medical Business
Under non-medical scheme selection is made without the help of a medical

examiners report. Doing away with Medical Examination need not necessarily mean a
lowering of the standard of selection. On addition to the proposal form a personal
statement of health also required to be completed by the life proposed when the proposal
is secured under non-medical scheme. Particulars regarding height, weight, abdomen and

chest measurements are also to be recorded in the personal statement form attached with
the proposal form.
Procedure Adopted By New Business Department To Issue A Policy

Following procedure is adopted by the New Business Department to issue a policy:
1. Under writing
2. Issuing Policy.
1. Underwriting
Underwriting is the term used to describe the consideration given to a proposal for
insurance to determine whether or not the policy applied for should be issued or not and
if it could be issued what should be the rates and terms. Broadly speaking underwriting is
the process of selection and classification of risks.
After receiving the proposal Performa it is registered and serial number is allotted to it. In
the third stage entire proposal form is minutely scrutinized from the beginning to the end.
Age is worked out again, the occupational hazard if any are recorded on the underwriting
sheet and any thing adverse in the statement of health, family history and medical report
is pointed on. In the fourth stage proposal is based on entry in the written business
register. The proposal number and other particulars of the proposee his occupation, sum
assured, table and term, detail of medical examination are recorded. After underwriting
first premium receipt is issued.
2. Issuing Policy
The New Business Department issue policy to the policyholder. The documents of
policy are immediately sent to the policyholder after underwriting.
Contents Of Policy Document

Contents of policy document are as follows:

1/ Title if any
2/ Details of contract and attestation
3/ Privileges and conditions
4/ Two pages for endorsement
Non-Medical Proposal Form Requirements
Sum at risk Age 17 to 40 years 41 to 45 years 45 to 50 years
Upto Rs.25000 Non Medical Non Medical Non Medical

25001-30000 -do- do do
30001-60000 -do- do do
60001-100000 -do- do do
Medical Proposal Form Requirements
Chest X-Ray Amount insured

Age limit exceeds
17 to 40 years Rs. 90,000/-
41 and above Rs. 60,000/-
Microscope Test:
Analysis when the sum assured exceeds Rs. 60,000/-or when age exceeds 50 years.
Electro Cardiogram
Age limit Sum assured exceeds
17 to 40 years Rs. 1,50,000/-
41 and above Rs. 60,000/-
Blood Study

Whenever the sum assured exceeds from Rs. 30,000/- blood study becomes necessary
when the age is 41 years or more. And for lower ages when the sum assured exceeds to
Rs. 50,000/-
4.3- Policy Holder Service Department (PHS)

The main purpose of establishing the policyholder service department is to provide more
and more services to all the persons who have to purchase the policy of the corporation.
This department gives the services to the policyholders for getting the loans from
corporation revival of policies, Alteration and the claims on Maturity or on death.
Functions Of P.H.S Department

Policy holders services Department performs the following functions:
• To keep and maintain all the records of premium.
• To provide services for claims on maturity or on death to the policyholders.
• To issue the premium receipt to the policyholders.
• To issue the notices to policyholders, if premium is not paid.
• To help the policyholders to get loan against his policy.
• To issue the premium payment certificate for income tax purposes.
• To provide the services for alteration of policy.
• To pay the amount of accident claims.
• To calculate the surrender value of the policy when it is desired.
• To provide the services of supplementary contacts.
Sections of policy holder Service Department

The Policyholder Services Department has the following sections:
1. Loans, Surrenders and survival benefit section.
2. Revival and alteration of the policy section.
3. Claim Section.

A brief explanation of the above sections are given as below:
4.3.1- Loans Surrender And Survival Benefit Section
This section is comprised of three words. i.e. Loans, Surrenders and Survival. The
detail of each is given below:
Loans
The state life insurance corporation provides the facility for getting loans to the
policyholders against their policies. In this respect the policyholder must fulfill the
following conditions:
a) He should fill up the loan form for getting loan.

b) He must pay at least two years premium.
c) He should sign the policy documents by the name of the corporation.
d) He is entitled to apply for loan from corporation after two years regular
payment of premium.
After fulfilling the above conditions, the policyholder is entitled to receive loan from the
corporation at low interest rate.
Surrender
Surrender means the net present value of the policy. If the policy holder fails to continue
the payment of premium of the policy, he surrenders it to the corporation and receive
some amount of money in the shape of cash after facing some loss because state life
conduct some amount as it provides services to the policy holder for some period. The
surrender value is paid to the policyholder on his request. In this connection a debit
voucher is prepared and it is sent to the Accounts Department, which after auditing from
the internal audit department prepare a cheque and send it to the policyholder.
Survival Benefits

The policyholder can get the survival benefit if he remains alive. Following three stages
are fixed for survival benefit:
1. 25% of the sum assured shall be paid at the end of 4,5,6,7,8,9 and 10 years from
the date of commencement for policies of 12,15,18,21,24.27 and 30 years term
respectively.
2. 25% of the sum assured shall be paid at the end of 8,10,12,14,16,18 and 20 years
from the date of commencement of the policies of 12,15,18,21,24,27 and 30 years terms
respectively.
3. The remaining 50% of the sum assured shall be paid at the end of the terms of the
policy of the policyholders.
4.3.2- Survivals And Alteration Of The Policy Section:
A) Revival of Policy:
Revival of policy means if any policy lapse due to some reasons, often policy holder
wants to receive his policy so on the request of the policy holder the policy can be
revived in two types:
a) Ordinary Revival”
From the date of lapse policy when any policy holder revive the policy with in three
months is known as Ordinary Revival.
b) Alteration of Policy:
If the policyholder wants to bring some change in his policy it is called Alteration of
Policy. The following changes can be made on the request of the policyholder:
1. Change in name.
2. Change in Address.
3. Change of Nominee.

4. Change in mode of payment.

5. Terms increased or decreased.
6. Decrease in sum assured.
However for alteration of Name, the policyholder should provide

satisfactory evidence declaration or affidavit including advertisement in the newspaper.
4.3.3-Claim Section
As it is clear by its name that this section prepares and maintains the records of claim
cases of different policies:
The claim section deals with the following types of claims.
a) Death claims.
b) Maturity claims.
c) Accidental injuries benefit claims.
a) Death Claims
Generally these are paid before the maturity date of the policy because these are payable
to the nominee on the death of the policy holder when a policy holder dies, the nominee
should inform the state life corporation about the death of the policy holder and also the
cause of death. The following documents are required to the claim section before the
payment of death claims:
1. Death Certificate.
2. Employment certificate.
3. Physical statement.
4. Certificate of Indemnity.
After the satisfactory verification of the above documents the case is transferred
to claim committee for recommendation, which prepares journal vouchers, and send it to
Account Department. Account Department making some black and white requirements

returns it again to claim section, which make cheque and hand over to the nominee to
receive the amount.
b) Maturity Claim
Maturity claims are those which are payable when the policies become mature e.g. if a
person purchase a policy for 30 years then this policy will be consider as mature after 30
years. At maturity the full sum the corporation will pay assured plus bonuses for that
period to that person.
c) Accidental Injuries Benefits Claims

The injuries claims can be admitted under such policies where accident indemnity
benefits supplementary contract is attached in case of loss of two or more limbs loss of
sight in both eyes, 1/2 of the sum assured will be paid for loss of one limb, 1/3 of sum
assured in the event of loss of one eye, but in case of death by means of accident then
additional amount equal to sum assured will be payable.
4.3-Personnel And General Services Department (P&G.S)

The personnel and general services department plays a vital role in the affairs of state life
insurance corporation. The main function of this department is to control and manage the
employees of the zone and their duties i.e. personnel and general services. The
department of P & G.S also provides the services of administrative nature along with
overall matters of every department of the zone. It is the duty of this department to
remove all the hurdles, which exists between the employees. Appointment of new
employees, transfer, promotions, disciplinary action supply of stationary and furniture etc
are the jobs which are performed by; this department. This department makes co-
ordination of state life insurance corporation with the Govt..
Functions
This department is divided into many cells for different functions to be performed.
Different cells perform different functions discussed below as under:

1. Confidential cell
2. General Service Cell
3. Receipt and Dispatch cell
4. Settlement of services dues and staff training cell.
1) Confidential Cell
The confidential cell performs the following functions:
a) Appointment and recruitment of new employees for the corporation the zone.
b) Advertisement in the newspaper for jobs, which are vacant.
c) Posting and transfers of employees with in the Department zones and cities.
d) The approval of traveling expenses bills of the employees of the corporation.
e) The granting of annual increment to the employees of the corporation.
f) Maintaining the discipline in offices and taking disciplinary action.
2) General Services Cell:

The functions of this cell are as under:
a) It provides the allied facilities to the field officers of the corporation.
b) Printing, purchasing and supplying of stationary.
c) Disposal of absolute items i.e. furniture, office equipment’s etc.
d) Payment of rent expenses, electricity, telephone, telex, gas and water bills.
3) Receipt And Dispatch Cell:

The main function of this cell is to receive the mail of out station and distribute it
to various departments concerned. This cell under P & GS Department also dispatches
the mail.
4) Settlement Have Services Dues And Staff Training Cell

Following are the main functions performed by this cell:
a) To maintain the attendance and punctuality record of the employees.

b) The matters relating to leave, payment of rent and recreation allowances

and encashment of leave.
c) To provide the facility of House Building Advance/loans to staff is also its
function.
d) Settlement of services dues or resignation retirement or death of
employees.
4.4- Sales And Development Department (S & D)
The main function of sales and development department is to appoint efficient and
talented sales representatives who help in the promotion of the business of corporation
and preparation of the; business statement for individual business achievements. The
department allots code number to the field force and forwards the case regarding field
administration.
Functions
Sales and development department performs the following functions:
a) To determine in co-ordination with the zones corporate goals of sales and
development in different field i.e.
1) Business Development
2) Market development
3) Manpower development
4) Production cost control
5) Product development.
b) To put the chalked out plans to action effectively.

c) To provide motivation and tools to achieve the set plans.
d) To keep the field force satisfied and alert.
e) To maintain close co-ordination with zones and other divisions of principal
office with a view to attend to the matters concerning development effectively.
f) Research in fields of:

1) Market
2) Product
3) Manpower
4) Any other allied field connected with sales development and
conservation of business.
 Organizational Structure Of Sales & Development Department

The activities of the sales and development department are performed under the
supervision of Assistant General Manager of the Corporation, which have delegated
powers to the Managers and Assistant Managers. The following chart will show the flow
of authorities:
Graph
A S S I S T A N T G E N E R A L
M A N A G E R
M A N A G E R M- I A N A G E R M- I I A N A G M E A R N - 1A G E R - I I
T y p e t i t l e h e r e
A S S I S T A N T D E P U T Y P R I V A TA E S S I S T A N T
M A N A G E R M A N A G E R S E C R E TM A A R N Y A G E R
A S S I S T A NS ST I S T A N T
S E N I O MR EN RA I B A S S I S T A N T
A N A G M E RA N A G
C L E R K Q A S I D M A N A G E R
S O N I O R
C L E R K T Y P I S T
( R E C E I P T )
J U N I O R C L E R K
( D E S P A T C H E R )
T Y P I S T
N A I B Q A S I D

4.6- Internal Audit And Evaluation Department
The main purpose of internal audit and evaluation department is to check and to
verify all types of payments. No payment will be made without internal auditing except
commission payment.
There are many types of policy holders services payments which are dealt by this
department for their verification i.e. death claims, maturity claims, accidental claims,
surrender of policies, loan on policies, survival of benefits etc. Policyholder service
department completes all the procedure of payment on various plans then they send it to
internal audit department for verifying that whether the amount calculated is correct or
wrong. If there is any mistake committed by P.H.S department the internal audit
department attached objection with the policy documents so that to rectify the error.
In connection with the medical this department verify all the bills, which are
received from Hospitals due for the hospitalization charges of the employees in respect of
their designation because staff and officers are allowed to the hospitalization. Moreover
bills received from chemists laboratories etc are also verified by this department.
Functions
Following are the main functions performed by this department:
1. To verify the accuracy and authenticity of various payments to policyholders and

the functions relating to the billing, lapsations and alterations.
2. To insure the accuracy and authenticity of all payments to pay bills, staff benefits,
purchase of stationary, stores, furniture’s and other fixed assets.

3. To have a close examination of the periodic trial balances revenue accounts,

balance sheet and other supporting statement of loan and present the true picture
of the financial affairs of the corporation.
4. To examine the policy of the corporation relating to office and field training
publicity and sales promotion.
5. To verify the existence of the assets and properties of the corporation.
6. To review and inform the efficiency and adequacy of the systems and procedures
in practice.
7. To review and inform the efficiency of various functionaries in the performance

of their job keeping in the view of the objectives and the policies of the
corporation.
4.7- Human Resource Development Department (HRD)

The important function of this department is to provide the chances of development for
the field force of the state life insurance corporation of Pakistan. This department also
provides the training facilities to all the recrutee of the sales and development department
and agency administration department.
This department also makes the arrangement of different courses and seminars for the
Human Resource Development.
Functions
Monthly salary payable by the corporation to the staff is known as payroll. With the
instructions of P & GS Department, salaries payable to staff are prepared and paid by this
section.
Cash Counter Section

The cash counter is head by an Executive Officer with him two Junior Clerks for his
assistance. State Life Insurance Corporation is non-trading concern. Its procedure
regarding the sales and purchase is different. Here the policies are sold to the public and
cash is collected. Therefore its main function is to collect premium and issue receipts
against that premium.
The cash counter premium is collected in cash, cheques, demand drafts and pay orders
from the policyholders and different kinds of receipts are issued to them e.g. Provisional
receipts, Official receipts etc. Besides this, license fee and late fee etc are also collected
in the counter section and send to the Bank to credit the corporation account.
1 Daily Collection Statement Section

The incharge of this section is superintendent, along with two clerks for his assistance.
The main function of this section is to prepare the statement of daily collection and send
it to the Principal Office Karachi for feeding in the Computer.
There are the following eight types of Statements:
1. Counter Collection Statement (A)
2. Counter Collection Statement (B)
3. Banker Memorandum Daily Collection Statement.
4. Suspense Adjustment Statement.
5. Official Receipt Statement.
6. Return Cheques Statement.
7. Sundry Daily Collection Statement.
8. First Premium Receipt Statement.
Every summary of all statements is prepared and these statements are sent
to Principal Office.
2 Book Keeping Section

Assistant and one senior clerk for his assistance head this section. The main function of
the book keeping section is to keep the record of the assets and liabilities of the
corporation. Whenever any item is purchased i.e. furniture, fixture or any sort of Assets, a
code number is issued for convenience purposed. This section keeps the record of all the

assets and tells the story of the corporation from time to time. When the corporation
makes any transaction, the statement is sent to the Book Keeping Section to pass the
journal voucher. They are responsible for preparing Trial Balance Profit and loss Account
with Balance Sheet in order to disclose the financial position of the corporation.
The Book Keeping Section uses the double accounting system. The work of book
keeping require an extra care and attention, because it is very sensitive work and need the
use of rules and methods of actually accounting system.
4.8- Computer Department

Computer department has resolved Y2k problems in house on VAX/VMS environment at
principal office as well as in Unix Oracle environment at computerizes zone. Computer
department is in a process to replace environment at principal office from Cobol to Unix
Oracle. Soft ware development is his respect by M/S cres-soft is under testing phase,
purchase of new hardware for principal office and six zonal offices is in process.
Personnel Policies
In State Life Insurance Corporation “Peshawar Zone” the personnel in the following
order adopt the following policies.
Delegation Of Power
1. The Board may delegate any powers vested in it by these regulations to the Chairman
or the Executive Directors
2. The Chairman or the executive Directors may with the prior approval of the Board
delegate any power rested in them by these regulations to any of the officer
subordinate to them.

4.9- Appointments, Probation, Confirmation, Increment And Promotions
1) Appointments
Subject to such general and specified directions the chairman may give from time to
time.
(a) Appointments to all posts in category A & B are made in zone by the
Zonal Heads and in the Principal Office by the Executive Director
(Administration).
(b) Appointments to all posts in corporation in category C & D are made by
Executive Director Administration.
(c) All appointments are made on the recommendation of Selection
Committee constituted by the appointing authority concern the purpose.
All appointments are made on minimum pay scale, the qualification and experience
of the post standing of the person so, but the appointment authority can give a higher
scale if a person have higher qualification. No person can be appointed to a post
unless he has been certified by a medical officer specified on his behalf by the
corporation to be physically fit for service.
The employee of the corporation must be a citizen of Pakistan, but if the corporation
needs the service of any outsider, the approval of the Board is necessary.
Qualification, Experience & Age

Board may lay down qualification and experience for appointments to various posts in
corporation from time to time.
The minimum age for entry into corporation service shall be 18 years and the maximum
age shall be as follow:
1. For appointments in Grade I to 6 25 years
2. For appointments in Grade 7 to 10 35 years
3. For appointments in Grade 11 & above 45 years

The Board can relax the minimum age limit in suitable case for the purpose. The
reasons must be in written.
2) PROBATION
All employees except those appointed on contract or on deputation or on special term or

on temporary basis shall on appointment be placed on probation for a period of six
months. The appointment authority may at his discretion extend the period of any
employee's probation, but it shall not be extended by more than further period of three
months without notice. If an employee appointed on probation shows unsatisfactory
performance during his probation, the appointing authority may terminate his service.
3) Confirmation
On satisfactory completion of period of probation whether initial or extended the

appointing authority may confirm an employee by an order in writing.
Extension of Temporary Appointments

Appointments on temporary basis or any subsequent extension of such appointment shall
not entitle an employee by to an extension or further extension of the same or to
confirmation.
4) Increment

1. Annual increment in a pay scale shall accrue to an employee on the 1st

January each year provided the employee has completed on that date at least six
months service in the said pay scale. In case of an employee whose service on 1st
January in a pay scale is less than six months the increment shall occurs on 1st
January of the next following year.
2. Subject to an employee service being satisfactory, the increment shall be
granted to him on the date of accrual as aforesaid under the order of the officer
designated in this behalf. The power to with held or defers increment for reason of
inefficiency shall vest in the authority competent to make appointments in the
grade to which the employee belongs.
5) Fixation Of Pay On Promotion
On promotion to a grade the pay of an employee shall be fixed in the pay scale of that
grade at the stage next above his pay before promotion.
Retirement, Resignation & Termination Of Service

1. The superannuating for the employees in general is 60 years. However the
authorities can employ a person on contract basis beyond the age of sixty years.
2. Resignation:
A continued employee in category A or B can resign from service of the
Corporation by giving one-month notice in writing. A confirmed employee in
category C or D may resign from service of the corporation by giving three
months notice in writing. The resignation shall become effective on expiry of the
said period of notice. However no resignation shall become effective during the
pondency of any disciplinary proceeding against an employee.
The employee shall have an option to surrender the corporation at any
time during the continuance of the notice sum equal of his pay for unexpired
period of notice in which the case of resignation shall become effective on the
date of such payment provided further that the appointing authority with the
unexpired period of notice and forage any payment in lieu thereof and accept the

resignation not with standing the pondency of any disciplinary proceeding against
the employee where upon the service of the employee shall stand discontinued.
3) Unless the resignation become effective in one of the ways mentioned herein the
employees, the employee shall not absent himself from duty without leave of
absence previously obtained from the corporation. On willful contravention of
this provision, the employee shall forefeet the corporation an amount equal to his
pay for the unexplored period of notice and may also be liable to dismissal.
4) The employee who is on probation or has been employed on a temporary basis
may resign his service in the corporation at 7 days notice. The resignation shall
not become effective unless accepted by appointing authority; on such acceptance
the service of such employee shall stand discontinued.
Termination Of Service
The appointing authority can terminate the services of a confirmed employee by giving
him due notice in writing without assigning any reason. The notice period is one month in
respect of employee category A & B and period of three months in respect of employee
in category C & D.
The appointing authority shall have the option to pay employee at any time during the
continuance of notice a sum equal to his pay for the unexpired period of notice in which
case the termination shall become effective on the date such payment is tendered.
The services of a temporary employee can be terminated by a notice of 7 days in writing
with out assigning any reason. The services of an employee who has absented himself
from duty unauthority for more than ten (10) days may be terminated without any notice
or compensation.
Record Of Service
1. A record of service of such employee is been maintained in prescribed form,
prescribed by the Executive Director Administration.
2. Confidential Reports on the performance of an employee of category 'D' and above
are written in such form and subject to such condition as may be prescribed by the
Board.

If there is any adverse remark in the annual confidential report of the employee.
He will be informed in written, and an opportunity is given to him to explain his position.
General Conduct And Discipline

Compliance with order; Every employee is banned comply with and obey all
orders directions which may from time to time are given to any person or persons, under
whose Jurisdiction superintendent or control he is for the time being be placed.
On entering to the service of corporation every employee will execute a fidelity
declaration prescribed by the corporation.
At all time and at every place during the continuance of his employment with the
corporation an employee is bound to respect his declaration of fidelity and secrecy and
act upon and adhere to it.
Addressing Representation and Applications

An employee to the Zonal Head or Executive Directors as the case may be through the
immediate officers, if any shall address all representations and applications affecting
personal matters.
Acceptance of Gratification or Gift
No employee is allowed to accept either directly or indirectly any gratification or reward
from any person in his official capacity.
If an employee accepts any fight in occupational circumstances he will report to the
Chairman in a minimum possible time. All employees of the corporation and whole time
employee, are not allowed to under take any outside employment or office or engage for
any trade, commerce or business activity, with remuneration or otherwise on his own
account or for any other person without the prior approval of the Board.
The Board may in appropriate cases grant such approval stimulating that such part of any
fee on remuneration received by the employer as may be determined by the Board shall
be paid to the corporation.
Defense And Punishment
An employee who
(a) Commit breach of rules, regulations or order of the corporation or

(b) Commit breach of discipline
(c) Display negligence or inefficiency or

(d) Commit or assist in committing acts of misappropriation or embezzlement of funds,
which belongs to or on meant to belong to the corporation.
(e) Is convicted of an offence involving moral turpitude

(f) Is guilty of any super misconduct shall be liable to one or more of the following
punishment:
1) Censure: With holding of increment or promotion for a specified period not
exceeding one year.
2) Reduction to a lower post or to a lower stage in pay scale.
3) Dismissal without payment without any compensation in lieu of notice, without
prejudice to die generality of the terms the following acts and commission shall be
treated as misconduct:
i) Willful in subordination or disobedience whether alone or in combination with
other to any order of the superior.
ii) Theft, fraud or dishonesty in connection with corporation property.
iii) Willful damage to or loss of corporation goods or property.
iv) Taking or giving bribes at any illegal gratification.
v) Habitual absences without leave for more than 10 days.

vi) Riotous or disorderly behavior during working hours in office premises or any
act of misconduct.
vii) Making false or miss-leading statements.
viii) Malingering
ix) Striking or inciting other to strike in contravention of the provisions of any law
rule having the force of law.
x) Go slaw
xi) Tempering with record.

Procedure For Award Of Punishment
The appointing authority, in the case of an employee is competent to award punishment.

For the punishment of dismissal the following procedure shall be compulsory:
1. A charge sheet along with a statement of allegation leveled against the employee shall
be served on him while serving the charge sheet the employee hall be given
reasonable time not being less than seven days to explain his position and /or produce
any evidence in his defense. He will also be allowed to be heard in person, if he
wishes so.
2. An enquiry officer shall be appointed to examine the defense so offered by accused
and to give a report their on indicating whether or not the charges made against the
employee are established.
The report of enquiry officer must be submitted to the competent authority, which
may accept or reject or for reasons to be recorded in writing order a fresh enquiry on the
receipt of final report enquiry to competent authority shall give his decision. Provided
where the appointing authority happens to be lower than chairman, Executive Director,
Zonal Head as the case may be shall be obtained before passing an order of dismissal.
The Discharge Of A Person
(a) Appointed on probation

(b) Appointed otherwise than under contract to held temporary appointments, on the
expire of period of appointment
(c) Engaged under contract in accordance with terms of his contract does not amount to
dismissal within meaning of this regulation.
Suspension
Where for the purpose of conducting an inquiry against an employee the competent
authority if consider it necessary can suspend the employee. However the suspension
period in the case of employees of category A or B is fifteen days.
The order of suspension shall be in writing and shall take effect immediately or being
sent to the employee by hand or by registered post at his last known address during the
period of suspension. The employee is paid a subsistence allowance equal to 50% of his

pay. If the employee is not found guilty. The suspension period will be treated as duty.
He will be allowed full amount, as he was drawing before his suspension.
Appeals And Applications For Revision And Review

An employee has the right of appeal or making an application for revision or review
against any of the punishment imposed under regulation NO. 30.
The review applications can be addressed to the following authorities according to
category of employees.
a) In the case of employees in category 'D' to the Board Which shall the same to the
standing committee of the three Directors including the Chairman. The committee
shall consider the application and submit its recommendations to the Board for such
final order as the latter may deem fit to make.
b) In the case of other employees the authority next higher to that which passed the
order in question provided that in every case, where the employee concern so desire
he will have a right to be heard in person before the authority competent to decide
the application or appeal (Standing Committee) in the case of category 'D' employees
as the case may be.
The appeal and revision application must be supported with the following documents:
i) It shall contain all materials, statements and grounds relied upon and shall be
completed in all respect, it self.
ii) It shall specify the relief desired.

iii) It shall be made within 30 days from the date of the receipt of the impugned
order.
The authority passing the original order may withhold an appeal or an application for
revision.
i) It does not comply with the requirement of clause (3).
ii) It deals with a matter, which does not concern the employee's personality.
iii) It repeats an appeal or application for revision already repeated by the
authority to which the appeal or application for revision is addressed and does

not. In the opinion of authority passing the original order, disclose any new
points of circumstances, which afford ground for reconsideration.
iv) It is addressed to an authority to which no appeal or application for revision
lies under those regulations.
In every case in which an appeal or application for revision is with-held, the authority
with-holding it simultaneously the said authority, shall also inform the appellate or
revising authority of the fact of with holding and such authority may call for any appeal
or application admissible under the regulations and may pass such order therein as it
consider fit.
An appeal which is not held under clause (a) shall not be forwarded as soon as possible to
appropriate authority with all relevant recorders with comments of the authority against
whose order the appeal has been filed.
4.10- Allowances For Employees:

Conveyance Allowance
a) The conveyance allowance has been enhanced to Rs 450/- per month

b) The employees who owns possesses a scooter/Motorcycle, registered in their names
and which are under their use, would be paid scooter/Motorcycle Maintenance
Allowance at the rate of Rs 600/- per month.
Technical Allowance
a) Technical Allowance to the Telephone/Telex/Fax Operators, Franking
Machine/Adrema Operators, Assistant Mechanical/Electricians, Photostat Machine
Operators, Gestetner Operators, Lift Operators, Assistant Lift Mechanics Rs 100/-
per month.
b) Technical Allowance to Central Unit (CPU) Operators in Grade-4 to 7 will Rs 300/-
per month.
Outdoor/Cycle Stand Allowance

Out-door Duty Allowance to employees in grade 1 to 3 will be Rs 150/-per month. Cycle
stand charges at the rate of Rs 50/- per month shall continue to be reimbursed.

Education Allowance
The Children Education Relief/Education Allowance shall be paid to an employee at a
uniform rate of Rs 300/- per month per child for all children either school/college going
or receiving religious education, for Upto a maximum of four children and subject to a
maximum of Rs 1200/- per month.
Washing Allowance
All employees who are provided with liveries and uniforms i.e. Drivers, Qasids, Naib
Qasids, Security Guards, Gardeners, Record Sorters, Gestetner Operators, Sanitary
Workers, Liftman, Subedars (Security), Electricians, Mechanics, Carpenters and Painters,
shall be paid Washing allowance @ Rs 120/-per month.
Winter Allowance At Hill Stations

The employees in grade 1 to 7, SS-I to SS III and MN-1 to MN-III post at prescribed hill
stations which are exposed to extreme cold climate will be paid winter allowance @ Rs
500 per month from November to April each year.
Subsidy
1. House Maintenance subsidy; Effective from 1.1.1997 has maintenance subsidy shall
be paid @ 15% of pay.
2. Utility; A subsidy at the rate of Rs 300/- per month shall be paid on account utility
expenses.
House Building Loan And Conveyance Loan
1. House Building Loan

An additional budget of Rs 20 million has been allocated on all Pakistan bases for the
purpose of granting house-building loan.
2. Bicycle/Motor Cycle/Scooter/Advance

i. For Motor-cycle/scooter from Rs 40,000/- to Rs 50,000/- or Natural cost which

ever is less.
ii. For bicycle from Rs 2500/- to Rs 3500/- or actual cost which ever is less.
Daily Allowance
The rate of daily allowance shall be as under
Pay upto Rs 2000/- Rs 220/- per day
From Rs 2001 to 3500/- Rs 280/- per day
From Rs 3501/ and above Rs 3601/- per day
In case an employee does not in the hotel and does not claim expenses in this regard,
such employee can claim additional 50% of daily allowance in lieu of hotel expenses.
However, the expenses on account of hotel accommodation shall be paid to employee
@ 1.5 times or 3 times of rate of Daily Allowance stated above for different cities
respectively as prescribed for officer.
Funeral Expenses:
The limit of Funeral Expenses has been increased from Rs 3000/- to Rs 5000/- for the
employees in Grade 1 to 7.
Medical Facilities
A) Outdoor Treatment/Cost of Medicine
i) Rs 6000/- per annum for unmarried employees
ii) Rs 7800/- per annum for married employees

B) Out of Hospital Emergency/Specialist Treatment
i) Rs 2000/- for single employee
ii) Rs 4000/- for married employee
C) Confinement for Delivery at Residence

The rate of confinement for delivery at residence has been increased from Rs
1500 to Rs 2000/- per delivery Upto a maximum of 5 deliveries.
D) Special Medical Relief
Hepatitis-C has also been included in the list of specified chronic diseases for
allowing special medical relief.

E) Dental Treatment
The consultation fee for dental treatment shall be counted for against out of
Hospital Emergency/Special treatment
F) Provision For Wheel Chair
A wheel chair shall be allowed only to the disable employees.
G) Provision of Artificial limbs
Artificial limbs shall be provided to the disabled employees in case-to-case
basis.
Chapter No 5
RATIO ANALYSIS:
5.1- Drawbacks And Deficiencies

During the study of State Life Insurance Corporation of Pakistan “Peshawar Zone” the
following problems have been identified.
 Overstaffing
In State Life Insurance Corporation of Pakistan, it was observed that there is overstaffing.
In many departments, employees are in excess. For Example, in the commission section
of Budget and Account Department, three clerks are working with an Assistant, which is
totally needless and unnecessary. It is the case with other sections.
The result of overstaffing is that, which work is divided among two or three members,
which is supposed to be done by only one member. The member would complete their
work very rapidly and would sit idle.
 Lack of Communication:
It was observed in State Life Insurance Corporation of Pakistan that there is lack of
communication between the members of one department with the member of another
department. Not only this but also between departments. If one department employees

have to communicate with the employees of other department, there is no proper way or
channel through which massage can be conveyed.
 Strong Union:
In State Life Insurance Corporation of Pakistan there is strong union. Because of this
from grade 1 to 8 employees are recruited only with the consent of union. So only those
employees are recruited who have some sort of relations with the members of union? So
the entry of capable and experienced people is very difficult. It leads to entrance of
incapable and inexperienced people to the corporation.
 Incapable Upper Management:
It was also observed that some members in upper staff were not capable of the posts they
were working on. These members were not qualified as required by the posts they were
holding. Like in one department the manager was only B.A graduate while at least a
master degree holder should be appointed.
 Difficulty in Promotion:
In past, the employees were given promotion according to their experience and the time
they spend in corporation. Both now a days promotion is given only by passing FLMI.
There is no other way for promotion. But the main problem is that, that paper of FLMI
are very expensive and a candidate is required to secure more than 90% marks in very
paper.
 Lack of check on employees:

It was observed that there was no proper check on lower staff by upper staff. Like in a
department a staff member would leave his seat and would remain absent for a long span
of time, while the manager would not admonish him. Even the manager would not come
to know that he was missing.
 Non-observance of duty timing:

It was observed in the corporation that some staff members would ignore proper timing.
They would come to corporation very late. i.e. 10 o’clock and would leave very early i.e.
2 o’clock. In reality in any organization it should not be the case.
5.2- FINANCIAL ANALYSIS
Financial analyses provide a meaningful comparison of a company to its industry ratios

are constructed to judge comparative performance. Financial ratios, serve the similar
purpose, but one must know what is being measured to construct a ratio and to
understand the significance o the resultant number.
Financial / Ratio Analysis

A ratio is a quantitative relation between two magnitudes of the same kind. In ratio
analysis, the financial ratios of the firm are compared to that of its competitors. This
comparison allows the firm to detect major operating differences, which, if corrected,
will increase its efficiency. Another very popular method of ratio analysis is to compare
the firm’s financial ratio to industry averages.
Before discussing financial ratios, three cautions are in order:
i. A single ratio does not generally provide sufficient information to judge the
overall performance of the firm. Only when a group of ratios is used, a reasonable
judgment concerning firm’s overall financial state can be made.
ii. An analyst, when comparing financial statement, would ensure that predetermined
uniform standards are used for this purpose.
iii. It must be ensured that the data used in calculating financial ratios have been
developed in the same manner and are sound are reliable.
There is no doubt that financial ratios are a useful guide for managerial decision making
but these are not exact and definite. Ratios only suggest the questions that need to be
answered and provide no answers.
SLIC’s financial analyses are as follows in order to know how the company is
progressing. Because definition alone, carries little meaning to analyze or discuss the
financial performance of the corporation.

In this chapter, light is thrown on the financial ratios of SLIC in order to determine its
financial position. See the different ratios calculated for the last five years and comment
on them.
5.2.1- Liquidity Ratio
Liquidity ratios are used to measure a firm ability to met short-term obligation. These
ratios compare short-term obligations to short term (or current) resources available to
meet these obligations. From these ratios, much insight can be obtained into the present
cash solvency of the firm’s ability to remain solvent in the event of adversity.
YEARS Ratio Value

2007 0.79
2008 0.73
5.2.1.1- Current Ratio

Current ratio can be obtained by dividing current assets on total current liabilities. In
simple words current ratio means that the current assets are sufficient for current
liabilities or not. If the result is 1, then it means it can satisfactory meet its financial
obligation but it should be tried to improve it, mathematically it can be written as.
Current ratio = Current Assets

Current liabilities
Table No 5.1- Current Ratio

Graph No. 5.1- Current Ratio
0.8
0.78
0.76
Values
0.74
0.72
0.7
2007 2008
Years
Interpretation:
Current ratio of State life insurance Corporation for the year 2007-2008 shows that there
is a gradual decrease in the ratio. It means there is some problem with the current assets,
while the ratio is lower because of a slower increase in current liabilities as well. Keeping
in mind the fact that current ratio show the immediate liquidity position of an
organization, they must have to focus on the utilization of their current assets and should
try to reduce their current liabilities at the same time. By reducing their current liabilities
they will be able to have less to pay and more to invest somewhere else.
5.2.1.2- Acid test (Or Quick) Ratio

Quick ratio is calculated by current assets minus inventories divided by current liabilities.
It shows a firm ability to meet current liabilities with its most liquid (quick) assets.
Mathematically
Quick ratio = Current Assets – Inventory / Current Liabilities
This ratio serves as a supplement to the current ratio in analyzing liquidity. This ratio is
the same as the current ratio except that it excludes inventories. The ratio concentrates
primarily on the more liquid current assets in relation to current obligations. Thus, this
ratio provides a more penetrating measure of liquidity then does the current ratio.

Table No. 5.2- Quick Ratio
Graph No.5.2- Quick Ratio
0.74
0.72
Values 0.7
0.68
0.66
2007 2008
Years
Interpretation:
Quick ratio shows the efficiency of a firm in paying their current liabilities out of its most
YEARS Ratio Value
2007 0.74
2008 0.69
current assets. Quick ratio of state life insurance corporation for the years 2007-2008
shows that they are not that much efficient in paying their current liabilities. The reason is
decrease in current assets on one hand and prepayments are not included on the other
hand. Decrease in ratio sheds light on the fact that if the corporation cannot pay their
current liabilities out of their most liquid assets, how they can be able to pay their long-
term liabilities in time. It means that there is some problem with cash account. So they
have to take care of their current assets so that they have handsome amount at the end to
get red of their current liabilities in time.

5.2.2- Debt Ratio

Debt ratio shows that the extent to which the firm is financed by debt or to which extent
the firm is using borrowed money.
This includes
i. Debt to Total Asset ratio
ii. Debt to Equity ratio
Years Ratio Value

2007 98.1
2008 114.05
5.2.2.1- Debt to Equity Ratio

The debt to equity ratio is defined as “simply dividing the total debt of the firm by its
shareholders equity.
Mathematically, Debt to equity ratio = Total debt / Shareholders’ Equity
Table No.5.3: Debt to Equity Ratio

Graph No.5.3: Debt to Equity Ratio
115
110
105
Values
100
95
90
2007 2008
Years
Interpretation:
Debt to Equity ratio shows the extent to which the firm is financed by creditors and
shareholders. Debt to Equity ratio of state life insurance corporation shows that creditors
to larger extent finance the corporation. According to the tools and principles of analysis
the lower the debt to equity ratio the better it is for the organization. But as fact that sate
life insurance corporation s indulged in a business where they invest the money of other
people to have their own return. The ratio move from 98.1 to114.05 over the two years
showing that the organization is financed by creditors but at the same time showing their
efficiency as well. Because the people are investing in insurance policies of sate life.
5.2.2.2- Debt-to-Total-assets Ratio
The debt to total assets ratio is derived by dividing a firm’s total debt by its total assets.
Debt to total assets = Total debt / Total assets
The greater the percentage of financing provided by shareholder’s equity, the larger the
cushion of protection afforded the firm’s creditors. In short, the higher debt to total asset
ratio, the greater the financial risk; the lower this ratio, the lower the financial risk.
Table No.5.4: Debt to asset Ratio

Years Ratio Value

2007 0.99
2008 0.99
Graph No.5.4: Debt to Asset Ratio
1
0.8
0.6
Values
0.4
0.2
0
2007 2008
Years
Interpretation:

Debt to total assets ratio of the firm show the extent to which the firm’s assets are
financed by debt and equity. Debt to total assets ratio of state life insurance show that the
proportionate change is the same over the years. Because ratio for both years is the same.
It means that both creditors and shareholders finance state life insurance assets with the
same proportion.
5.2.3- Activity Ratio

Activity ratio, also known as efficiency or turn over ratio, measures how effectively the
firm is using its assets.
5.2.3.1- Receivable Turn over Ratio
This ratio provides insight into the quality of the firm’s receivables and how successful
the firm in its collections.
This ratio is calculated by dividing receivables on annual sales.
Receivables turn over ratio = Sales
Receivables
Years Ratio Value
2007 0.2
2008 0.03
This ratio tells us that the number of times account receivables has been turned over
(turned into cash) during the year. The higher the receivables turnover ratio, the shorter
the time between the typical sales and cash collection taking place.
Table No.5.5: Receivable Turnover Ratio

Graph No.5.5: Receviable Turnover Ratio
0.2
0.15
Values 0.1
0.05
0
2007 2008
Years
Interpretation:
Receivable turn over ratio show the promptness of an organization in collecting its
receivables. Receivable turn over ratio of state life insurance show that the organization is
not quite prompt in the collection of its receivables. Though there is a slight decrease but
it may lead to delay payments, which may harm their image as compare to competitors.
So they should give full and proper attention to their receivable collection cycle because
as soon as they collect the amount they will be able to pay their liabilities.
5.2.4- Profitability Ratio

Profitability ratio allow us to measure the ability of the firm to earn an adequate return on
sales, total assets and invested capital, it is also helpful for the controlling of cost in an
organization through these ratio, problems related to profitability can be explained, in
whole or in part, by the firms ability to effectively employ its resources.
Profitability ratios are important for all parties that are concerned with that company if it
is good, company will earn Good-Will and reputation.
5.2.4.1- Gross Profit Margin

This ratio shows gross profit as percentage of net sales. This can be computed by dividing
gross profit on net sales.

Mathematically Gross profit margin = Gross Profit x 100

Net Sales
Years Ratio Value
2007 1.4
2008 1.64
Gross profit margin is affected by cost of goods, which were sold. If cost of goods is
controlled and minimized, gross profit will be higher.
This ratio tells the profit of the firm relation on sales, after deduction of the cost of
producing goods. It is a measure of the efficiency of the firm’s operation, as well as an
indication of how products are priced.
Table No5.6: Gross Profit Margin Ratio
Graph No.5.6: Gross Profit Margin
1.7
1.6
1.5
Values
1.4
1.3
1.2
2007 2008
Years

Interpretation:
Years Ratio Value

2007 5.9
2008 9.68
Gross profit margin ratio show the profit of the organization after deducting the cost
incurred. Gross profit margin ratio of state life insurance for the years 2007-2008 show
that they have a reasonable and handsome profit after the over all cost incurred to
generate this profit. The ratio move from 1.4 to 1.64 meaning that state life insurance will
have favorable net income at the end after paying the expenses required for generating
the income. But as the nature of Business they have to increase their gross profit in order
to have as much as possible. After this activity they will be able to pay their liabilities and
the organization too will have maximum for re-investment and other heads of expenses.
5.2.4.2- Net Profit Margin

A more specific measure of sales profitability is the net profit margin.
Net profit margin = Net Income after taxes * 100 / Net Sales
The net profit margin is a measure of the firms’ profitability of sales after taking account
of all expenses and Taxes. It tells a firm’s net income per Rupee of sales.
Table No.5.7: Net Profit Margin Ratio

Graph No.5.7: Net Profit Margin
10
8
6
Values
4
2
0
2007 2008
Years
Analysis:
Net profit margin ratio shows the ability of the organization to generate maximum net
income after the overall business activities. Net profit margin ratio of state life insurance
for the years 2007-2008 show that enough and quite favorable net income is generated
after the year-end activities. Maximum net income for state life insurance mean that the
policyholders will have their payments at time, the organization will have a maximum
budget for the marketing and promotional activities. On the other hand in current arena of
competition they can have modern and new tools and equipments to provide every type
of services to the customers.
5.2.4.3- Return on Investment

The second group of profitability ratios relates profits to investment. One of these
measures is the rate of return on investment (ROI), or return on assets.
This ratio measures the profitability of assets regardless of the Capital structure.
Mathematically, ROI = Net Income after Taxes
Total assets
An important test of management abilities to earn return on funds supplied from all
sources.
Table No.5.8: Return on Investment

Years Ratio Value

2007 0.002
2008 0.002
Graph No.5.8: Return on Investment
0.002
0.0015
Values 0.001
0.0005
0
2007 2008
Years
Analysis:
Return on investment show the extent to which an organization get back in access of
what they had invested. Return on investment ratio of state life insurance for the years
2007-2008 show that the return they are getting back on their investment is consistent
over the two years. It means that either the investment proportion is the same or the
increase in return is consistent. So the management should have to consider the fact that
higher return on their investment is the key to their over all net profit. Specially their
investment in capital assets must be consider the most because the return on such
investment is longer and high as well. Moreover the management of state life insurance
should invest in high and fast returning projects.

5.2.4.4- Return on Equity

Indicates the earning power of equity, return on equity compares net profit after taxes to
the equity that shareholders have invested in the firm.
ROE = Net Income after Taxes x 100
Shareholder’s Equity
This ratio tells the earning power on shareholders’ book value investment and is
Years Ratio Value

2007 0.19
2008 0.21
frequently used. A high return on equity often reflects the firm’s effective expense
management.
Table No.5.9: Return on Equity
Graph No.5.9: Return on Equity
0.21
0.205
0.2
Values 0.195
0.19
0.185
0.18
2007 2008
Years
Analysis:
Return on equity ratio show the extent to which an organization get back through the
investment of equity. Return on equity ratio of state life insurance for the years 2007-

2008 show that they are getting back a favorable amount upon the investment of their
equity in other organizations. It is a good sign for state life insurance because on one
hand the shareholders will be getting maximum and it will add to the net income of the
organization as well. But care should be taken in respect of equity investment because it
may increase their liabilities in reverse.
5.3- Critical Analysis Of Corporation

The management of the corporation is too much centralized and all the policies making
decisions are entrusted with the Board of Director.
The field staff an assets to the corporation have no role in policy-making activities of the
corporation. The sale representative, an important element in sale and promotion have
little training opportunities and their period of training is too much short and it seems
difficult that with little knowledge they will prove better results.
The trade union is too much strong and there is little scope for outsider to enter into the
corporation revise with their good potential and capabilities, particularly in grade 1-8.
The record is centralized in some of the matter for instance, the pension of the employees
are dealt in principal office which sometime causes unwanted delays.
The corporation pays bonus to their employees from grade 1-8, but the managerial cadre
is ignored, although they are also partners in the business and development of the
corporation.
 Training
Training play a basic role in the development of manpower, the corporation impart
training to their staff under two agencies held manpower Division (2) field training
division, but a training institute on the pattern banks odes not exit, which a d of the time.
An institute of insurance education must be established for more ling facilities to the field
staff.
The advertisement is too much centralized and only one media (Television) Utilized; the
services of press, magazine and newspapers should be utilized.
Although the corporation has made some contribution in insurance business in rural
areas, but the progress is not too much eventual, a major portion of rural areas have no

knowledge of the insurance, nor the insurance sense. This segment of the society should
not be ignored
 Policy Limit
The minimum amount for policy is Rs 20,000/-, which is beyond the approach of a major
portion of the population. This ceiling should be minimized to the nearest figure as
possible.
5.4- SWOT Analysis Of SLIC

It is an important tool to analysis the overall situation in which an organization is
conducting its affair. Each issue remains relevant and useful for corporate strategy
formation.
5.4.1- Strength:
1. Adequate financial resources
2. Capable top management
3. Competitive skills of employees
4. Acknowledge market leader
5. Better advertising campaigns
6. Proven management
7. Better use of IT
8. Adequate human resources
9. Good will
10. Government security
5.4.2- Weaknesses:
1. Turnover of field force
2. Increasing rate of surrender

3. Economic conditions
4. Less awareness of mass
5. Weak marketing efforts
5.4.3- Opportunities:
1. Growth of financial sector in Pakistan
2. Diversification
3. Favorable government policies
4. Innovation
5. Introductions of new policies
5.4.4- Threats:
1. New competitors
2. Recession in economies
3. Changing customer needs
4. Changing Govt. policies
5. Religion prohibition
5.5- References:
1. Annual report (2007) State Life Insurance Corporation of Pakistan
3. www.Statelife.com.pk
4. James C. Van Horne & Johan M. Wochowicz Jr. Fundamental of Financial
Management, 10th edition, Prentice-Hall International Inc.
5. List of Personnel with whom discussion was held:
 Discussion with Dr.Mujahid Afridi Manager, P & G S, Department
 Discussion with Sir Ijaz, Manager, PHS Department
 Discussion with Sir Taj Raees Khattak, Manager, Internal Audit and
Evaluation Department

 Discussion with Zakir Afridi, Manager, Agency Department.

 Discussion with Sir Ghulam Habib Khattak, Zonal Accountant, B&A
Department.
 Discussion with Sir Manzoor, Assistant, Payment Section, B & A
Department.
Chapter No 6
Recommendations & Conclusion
6.1- Recommendations:
1. It is necessary that in the corporation overstaffing should be removed. It is
possible by shifting the employees among the departments. If an employee is missing in
one department, another employee should be sent to his position for the time being.
2. Among all departments communication flow should be channelized in a
smooth way. Communication plays a very vital role in development of any business.
State life Insurance corporation of Pakistan “Peshawar Zone” is divided in almost 10
departments, so among all these departments communication flow should be channelized.
If any decision is taken, it should be communicated to concerned department

and then to other departments as early as possible, without the wastage of
time. It would be possible, if communication is channelized among
departments.
3. Besides this there should be communication flow between zones and head office. Every
decision taken in the head office should be communicated to all zones.
4. It is very necessary that recruitment should be made without the interference
of the union. All those people who are capable and experienced should be
recruited, which is in the favour of the corporation. Recruitment should be
made on the merit.

5. Those members, who are not qualified as required by the posts, they are
holding, should be either trained shifted to other departments. It is very
necessary because they have to take important business decisions.
6. Promotion should be given according to the time duration and other
performance of the employees. As far as FLMI us concerned, which is
essential for promotion, the fee of the papers should be borne by corporation
up to some level.
7. In corporation there should be proper check on every staff members. It is the
responsibility of the head of every department to keep a check on them. Also their timing
should be checked. Those, who do not follow the rules, should be punished.
8. For the development of insurance sense in the society, it is absolutely necessary to launch
a mass campaign. For this purpose, different medias and documentary films should be
used different medias include both print and electric media. For Example, Television,
radio, net, newspapers, magazines, broachers etc. Should be used. It will be beneficial in
a sense that those areas where TV has no access, there radio will convey the massage of
insurance. On the other hand, now a days more and more people surf net, so through net
insurance sense can be aroused among people of different ages. Thus all these factors
will help in huge number of people coming towards the business of insurance.
9. Special policies should be adopted for government servants. Government servants serve
in many different sectors or fields. Some sectors are at more risk like Army, Police, Coal
miners etc. So special emphasis should be given on them to convince them to buy
insurance policies.
But the most important thing is that that their financial positions should be
kept in mind. Those, whose financial positions are not so strong, should be
given special relief or discount. It will help them, not only to buy policies but
also will make them able to make their policies mature.
10. People of rural areas should be given more attention. The reason is that, that such people
keep their savings in banks; in return, they are given very low interest rates. So special
attention should be given to bring them to insurance business, where they can get more
return as compared to banks.

Other reason is that, people of rural areas don’t invest their money in
business, because they have no experience or they don’t want to take risk.
Moreover, business activities are not so flourished in rural areas as compared
to cities. Therefore, people savings are not invested. Thus a campaign
should be launched to motivate these kinds of people to come to the business
of insurance.
11. In rural areas, insurance centers should be opened for the development of sensitive image
and awareness among people. Since these centers would be at the disposal of people, so
there will be a close contact with people. Not only this, But also sufficient time could be
consumed to motivate people of rural areas. This will help in creating a good and
sensitive image of insurance among people. Besides this, the people will get aware of
new packages and will help in inducing more and more people top come to insurance
business.
12. State Life Insurance Corporation of Pakistan only deals with life insurance, while the
competitors along with life insurance deal in property, cars, crops insurance. So State
Life Insurance Corporation of Pakistan should also focus on these kinds of policies. It
will help in expansion of its business. Also State Life Insurance Corporation of Pakistan
will compete its competitors in good manner.
13. A lot number of people work in field to bring new people in the business of insurance.
They are commissioned based. It is suggested, that their commission rates should be
increased. It is very motivational factors for field workers. They will work heartedly to
bring new people to insurance business for their own benefits. It is possible, because
State Life Insurance Corporation of Pakistan has a huge amount of fund reserved.
14. In order to bring maximum information about new packages and services in
attention of customers, “on Line Insurance” should be launched in short span
of time. The customers will get to know about new policies, bonuses,
premiums and services. The customers will also be able to check their up to
date record of policies. Thus the customers will not face the problems of
delay in depositing their premiums of policies. They will also collect bonuses
on time, which will help them to collect extra money which can invested
somewhere else.

15. This system will also help the fieldworkers to know about the payments of the
policies they have made. If any policyholder is facing problems in depositing
money of premium or about to surrender, the fieldworker, who has made his
policy, can solve his problem. This is possible only if “On Line Insurance” is
launched.
16. Sometimes the policyholder, due to some problems, intend to surrender which
is loss for both State Life Insurance Corporation of Pakistan and the fieldworkers, who
have made the policy, because this leads to stoppage of their commission. So all those
policyholders, who intend to surrender should be consulted and try should be made up to
the fullest extent to solve their problems, so that to avoid surrender.
17. Fieldworkers are trained before they go for business in the field. But they are
trained for very short span of time. Because of this, they lack qualities and capabilities to
motivate others to come to insurance business. Thus, it is essential to train them for not
only for a longer period of time, but also some necessary steps should be taken, so that
they could brings more and more people to insurance business. It will be beneficial for
both the corporation and fieldworkers.
18. The policyholders face many problems at the time of surrender and maturity,
so all these processes should be made easy to comfort policyholders.
6.2- Conclusion:

It is very obvious from the annual reports of the State Life Insurance Corporation of
Pakistan, that the corporation has node a great deal of development and progress since its
inception. The Corporation has provided life security protection to 5.00 million people of
the country.
Apart from this, the corporation has provided self-finance jobs to thousands of the
countrymen. Which is a great achievement. Our country Pakistan faces many problems
including unemployment. So it can be said that State Life Insurance Corporation is a
great source of employment for the people of the country.
Besides this, the corporation contributes a lot to the economy of the country i.e. by
providing the Government huge amounts of funds every year. In country like Pakistan,
where all the Government organization are incurring losses and are being privatized.
However, State Life Insurance Corporation is on the peak of success. It is constantly
making profits. That’s why State Life Insurance Corporation is one of the leading
Government Corporation of the country.
In this report, different departments and sections of State Life Insurance Corporation
”Peshawar zone” are discussed. Their procedure of work and their functions are shed
light on. Since all the heads (Managers) of departments were very friendly and
cooperative, therefore, their guidance and supervision made me able to write a lot about
every department and section of State Life Insurance Corporation “Peshawar Zone”.
Every organization has problems and deficiencies. Some is the case with State Life
Insurance Corporation. During the Stay at State Life Insurance Corporation “Peshawar
Zone” different problems were identified. However, proper recommendations are given
at the end of the report. If these recommendations are followed or adopted, the
corporation can overcome these problems and deficiencies up to its minimum.
This report also comprises of financial ratio to judge the corporation performance. So for
this purpose graphs and tables are drawn with every financial ratio. Then at the end of
every ratio, the ratio is analyzed to show the performance of the corporation according to
the ratio defined.
SWOT Analysis is also very important for an organization to see its position i.e. its
Strength, Weaknesses, Opportunities, and Threats. The organization must keep a check
on all the above-mentioned factors. Like it should strengthen its Strengths, overcome its

weaknesses, avail the opportunities and protect itself from all the threats. So as far as
SWOT Analysis of State Life Insurance Corporation is concerned, all these factors are
discussed in the report. If these factors are kept in concern for the future. It will be very
useful and help for State Life Insurance Corporation of Pakistan “Peshawar Zone”.
At the end, it is mandatory to mention that State Life Insurance Corporation of Pakistan’s
future is very bright and brilliant. The main reasons are availability of funds, Goodwill,
Government securities and the most important the capable workers particularly in the
field. Hopefully, this corporation will play an active role in the progress, development
and prosperity of the country.
Bibliography
1. Tahhaffuz “An In-House magazine” State Life Insurance Corporation of Pakistan
(2007) p#7,8

2. Tahhaffuz “an In-House magazine” State Life Insurance Corporation of Pakistan

(2005) P#9-15
3. www.Statelife.com.pk (Dec. 25th, 2005)
4. www.paksearch.com (Dec.25th 2005)
7. State Life Insurance Convention Report (2007) State Life Insurance Corporation
of Pakistan “Peshawar Zone”.
8. Khan A. Manzoor “Insurance in Perspective” “ The News” April 28th 2005
9. James C. Van Horne & Johan M. Wochowicz Jr. Fundamental of Financial
Management, 10th edition, Prentice-Hall International Inc. P # 128-143

State Life Insurance

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

State Life Insurance

Caricato da

Copyright:

Formati disponibili

State Life Insurance Corporation Of Pakistan “Nowshera”

1.1- Background of the Report:

1.2- Purpose of the study:

1.3- Scope of the study:

1.4- Methodology of the study:

Govt. College of Management Sciences Mardan 1

Limitations of the study are:

Govt. College of Management Sciences Mardan 2

education, marriage plan, child protection policies, three payment plans,

Govt. College of Management Sciences Mardan 3

2.1- Insurance In Prospective:

There is general agreement that insurance is fundamental requirement for sound

In order to promote the establishment and development of insurance market in

Govt. College of Management Sciences Mardan 4

In developing countries, apart from the important task of insurance supervision,

Govt. College of Management Sciences Mardan 5

2.2- Pakistan Insurance Corporation

Govt. College of Management Sciences Mardan 6

Govt. College of Management Sciences Mardan 7

2.3- Definitions of Insurance

Govt. College of Management Sciences Mardan 8

of automobiles, occupancy of buildings, employment, or manufacture. Uninsurable risks

According to others it is a “collective pooling of money to be paid out to any of

2.4- Categories of Insurance

Insurance is broadly divided into two categories:

General insurance and life insurance

Govt. College of Management Sciences Mardan 9

2.5- Modern Insurance

2.6- Importance of Insurance:

Govt. College of Management Sciences Mardan 10

2.7- National Insurance Corporation

2.8- History of Insurance in Pakistan

Govt. College of Management Sciences Mardan 11

2.9- State Life Insurance Corporation

Initially management Board of trustees appointed by government of Pakistan looked after

Govt. College of Management Sciences Mardan 12

2.9.1- Basic Facts

Govt. College of Management Sciences Mardan 13

• Introduction of Lower Premium Rates on

Govt. College of Management Sciences Mardan 14

3.1- Basic structure of State Life Insurance Corporation

3.1.1- Organizational Structure

Govt. College of Management Sciences Mardan 15

Govt. College of Management Sciences Mardan 16

Govt. College of Management Sciences Mardan 17

SLIC Mission Statement:

The main objectives of SLIC are as follows:

3.2- Regional and Zonal Distribution of SLIC

Govt. College of Management Sciences Mardan 18

Regional and Zonal Distribution

Govt. College of Management Sciences Mardan 19

3.3- The Future

Insha Allah the corporation intends to:

Govt. College of Management Sciences Mardan 20

3.4.1- Jeevan Sathi Plan (with profits)

3.4.2- Mortgage Protection Policy

Govt. College of Management Sciences Mardan 21

3.4.3-Various Terms Available

Govt. College of Management Sciences Mardan 22

Normal non-medical scheme and underwriting requirements will apply.

3.4.3.3- Sunehri Policy

Govt. College of Management Sciences Mardan 23

3.4.3.4- Child Education And Marriage Plan (without benefits)