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EXECUTIVE SUMMERY

In todays life Insurance has taken place as a need of human life because no part

of our life remains untouched by the Insurance. State Life Insurance Corporationproviding services to the people of all ages and stages. The main objective SLIC is the

welfare of the people of the country. Government nationalizes State Life Insurance

Corporation at March 18, 1973 under the nationalization order1972. State Life Insurance

Corporation plays a very important role in everyday lives of the people and also

contributing a lot to the economy of the country by providing the government a lot of

fund.

The purpose of this internship possesses objectives like this study has given mechance to learn something new practically and this is also the partial requirement of the

degree of BBA (Hons). This internship has given me chance to get the practical

experience in this large organization, and this internship also endows me the knowledge

of different departments and their working in the organization. Internship at SLIC is very

beneficial for me, it provides me an opportunity to acquaint myself to the actual work,

and place and writing of its project requires me to use all the skills, abilities during the

internship. It makes me more practical, confident and professional.

SLIC has the privilege of having the largest distribution network. Corporation has

a continued training and development program to have a strong and trained field force

and always makes endeavors by creating new employment opportunities for youths to

join the corporation's field force by arranging seminars, workshops and by imparting

training and conducting special courses. The primary purpose of the SLIC is to provide

quality service to the policyholders of the Corporation. In this regard, measures were

taken at all the zonal offices to improve the services such as prompt settlement of claims

and handling of complaints of policyholders or their successors on priority basis. These

steps not only have increased the level of customer satisfaction but have also contributed

towards the retention of our existing policyholders.


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INTRODUCTION TO INSURANCE SECTOR


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INSURANCE SECTOR

DEFINE INSURANCE

Financial protection against loss or harm

Insurance, in law and economics, is a form of risk management primarily used to

hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer

of the risk of a loss, from one entity to another, in exchange for a premium, and can be

thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An

insurer is a company selling the insurance; an insured is the person or entity buying the

insurance. The insurance rate is a factor used to determine the amount to be charged for a

certain amount of insurance coverage, called the premium. Risk management, the

practice of appraising and controlling risk, has evolved as a discrete field of study and

practice.

CONTRACT OF INSURANCE

The insurance contract is a contract whereby the insurer will pay the insured (the

person whom benefits would be paid to, or on the behalf of), if certain defined events

occur. Subject to the "fortuity principle", the event must be uncertain. The uncertaintycan be either as to when the event will happen (i.e. in a life insurance policy, the time of

the insured's death is uncertain) or as to if it will happen at all (i.e. a fire insurance

policy).

Insurance contracts are generally considered contracts of adhesion because theinsurer draws up the contract and the insured has little or no ability to make

material changes to it. This is interpreted to mean that the insurer bears the

burden if there is any ambiguity in any terms of the contract.

Insurance contracts are unilateral, meaning that only the insurer makes legallyenforceable promises in the contract. The insured is not required to pay the

premiums, but the insurer is required to pay the benefits under the contract if

the insured has paid the premiums and met certain other basic provisions.


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Insurance contracts are governed by the principle of utmost good faith whichrequires both parties of the insurance contact to deal in good faith and in

particular it imparts on the insured a duty to disclose all material facts which

relate to the risk to be covered. This contrasts with the legal doctrine that

covers most other types of contracts, caveat emptor.

REASONS FOR INSURANCE

Sometimes in life it is not possible to avoid the losses. For example People may

become ill. They may die of illness or accidents or their homes or other property may

undergo damage or theft. So in all these cases and they have to face the loss of income or

savings. So insurance is a manner of financially insuring that if such an incident comes

about then the loss does not affect the present well being of the person.

DOCTRINES OF INSURANCE

There should be a certain definite loss taken place at a known time, in a knownplace and from a known cause. Therefore the time, place and the cause of loss

should be clear enough.

The incident that represents the cause of the claim should be accidental or beyondthe control of the beneficiary.

The size of the loss must be significant from the perspective of the insured.Insurance premiums should cover both the estimated cost of losses, plus the cost

of policy, regulating the losses, and providing the principal required to logically

assure that the insurer would be able to reimburse claims.

The amount of premium should be affordable. The possibility of loss and the cost of compensation should be calculable or

estimable.

TYPES OF INSURANCE

Below are two main kinds of insurances.


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1. LIFE INSURANCELife insurance policy insures the life of the insured. The insurance company is

legally bound to provide a monetary benefit to a decedent's family or the beneficiary after

the death of the policyholder. The proceeds are paid to the beneficiary either in a lumpsum amount or an annuity.

2. GENERAL INSURANCEIt includes automobiles insurance, business insurance, property insurance etc.

i. AUTOMOBILE INSURANCEIn UK this insurance is called motor insurance. It compensates the loss or damage

occurred to the vehicle. But in United States auto insurance policy is essential to legally

operate a vehicle on public roads.

ii. BUSINESS INSURANCEBusiness insurance protects the businesses against risks of losses and damages

and compensates in case of loss.

iii. PROPERTY INSURANCEThis type of insurance protects the property against the risks like fire, theft etc.

This category also includes fire insurance, flood insurance, earthquake insurance etc.

iv. FIRE INSURANCEIt is an insurance covering the damage to the property caused by fire.

POLICY TERMS

Insurance policies also an amount at which coverage ends, known as the policy

limit. Most types of insurance specify the limit as an amount written in the contract.

PREMIUM

An insurance company sets a policys premium by multiplying a rate for each unit

of insurance coverage by the total amount of coverage being purchased. Most people pay


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insurance premium once or twice a year. Other people choose to make automatic monthly

payments to their insurance company for a bank account.

CLAIMS, BENEFITS AND DIVIDENDS

Insurance contracts always contain a condition that the insured must provide a

proof of loss in order to b paid. Insured individuals who have suffered losses and want to

receive payments must notify their insurance company through a process called claim.

Insurance contracts always contain a condition that the insured must provide a proof of

loss in order to pay.

BUYING INSURANCE

People have many choices while buying insurance policies. They commonly

chose an insurance provider based on several criteria. Some of the most important of

these include:

The financial stability of the insurance company. The price of policies. Detail coverage and service.

Only a financial sound company can fulfill its promise to pay in all circumstances.

Company with proven records of stability can provide insurance security.


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INTRODUCTION TO STATE LIFE INSURANCE

CORPORATION OF PAKISTAN (SLIC)


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INSURANCE INDUSTRY IN PAKISTAN

The insurance industry in Pakistan, which should be described as a business rather

than an industry has shown some rapid progress in recent years. When Pakistan was

established in 1947, there were 77 insurance companies in all. Today there are 52. In1947, 70 of those 77 companies were foreign companies and/or their branches. Today

there are 10. The seven local companies have 47 years later become 42, and might have

been more had 32 of them not been nationalized on March 18, 1972, when their life

insurance business was brought into the public sector.

GENERAL INSURANCE BUSINESS

Today, Pakistan has 52 companies conducting general business. They offer

primarily Fire, Marine, Motor and Accident cover. The composition of general insurance

business is Understandable, considering the lack of sophistication of our domestic

environment.

STATE LIFE INSURANCE CORPORATION OF PAKISTAN

ESTABLISHMENT OF SLIC

The Life Insurance Business in Pakistan was nationalized during March 1972.

Initially Life Insurance business of 32 Insurance Companies was merged and placed

under three Beema Units named A, B and C Beema Units. However, later these

32.20%

23%

33.10%

11.70%

GROSS DIRECT PREMIUM

FIRE

MARINE

MOTOR

ACCIDENT


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Beema Units were merged and effective November 1, 1972 the Management of the Life

Insurance Business was consolidated and entrusted to the State Life Insurance

Corporation of Pakistan.

State Life Insurance Corporation of Pakistan is headed by a Chairman and

assisted by the Executive Directors appointed by Federal Government. Up to July 2000

the Corporation was run by Board of Directors constituted under Life Insurance

(Nationalization) Order 1972. In July 2000, under Insurance Ordinance 2000, the Federal

Government reconstituted the Board ofDirectors of State Life which runs the affair of

this Corporation.

The basic structure of the Corporation consists of Four Regional Offices, Twenty-

Six Zonal Offices, a few Sub-Zonal Offices, 111 Sector Offices, and a network of 461

Area Offices across the country for Individual Life Insurance; Four Zonal Offices and 6

Sector Offices with 20 Sector Heads for Group & Pension are involved in the Marketing

of Life Insurance Plans policies and products offered by State Life and a Principal Office.

The Zonal Offices deal exclusively with Sales and Marketing. Underwriting of Life

Insurance Policies and the Policyholders Services. Regional Offices, each headed by a

Regional Chief, supervise business activities of the Zones functioning under them. The

Principal Office, based at Karachi, is responsible for corporate activities such as

investment, real estate, actuarial, overseas operations, etc.

MAJOR ACHIEVEMENTS

The major function of the State Life Insurance Corporation of Pakistan is to carry

out Life Insurance Business; however, it is also involved in the other related business

activities such as investment of policyholders fund in Government securities, Stock

market, Real Estate etc. The major achievements of State Life are as under:

On the commencement of the operations, the Corporation took a very importantstep by effecting reduction up to 33% in the premiums on the past and potential

Life Policies for the benefit of the Policyholders.


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State Life is profitable organization and it paid Rs.1.729 billion as dividend to theGovernment of Pakistan since its inception in 1972.

State Life has played very vital role in the economy by providing employment tothe people of the country as permanent employees and as part of its marketing

force and by investing the huge funds in different sectors of the economy. The

Investment Portfolio of State Life as at 31.12.2009 stands at Rs. 205.804 millions.

Investment portfolio also includes investment in Real Estate which stands at abook value of Rs.16.046million as at 31.12.2009 whereas it fair value is aroundRs.100 million in the same period.

The Paid up Capital increased from Rs.10 million in 1972 to Rs.900 million. The Premium income increased from Rs.0.317 billion in 1972 to 13.820 billion in

2009. Similarly Investment income including rental income increased from

Rs.0.81 billion in 1972 to 13.106 billion in 2009.

Total statutory fund of State Life stands at Rs.211.658 billion in 2009 as againstRs.1.494 billion in 1972.

State Life is smoothly striving towards its objective of making life insurance

available to large section of the society by extending it to common man. As at December,

2009 the total number of policies enforce under individual life were 4.044 million and

number of lives covered under group life insurance were 5.731 million.

OBJECTIVES OF SLIC

To run life insurance business on sound line. To provide more efficient service to the policyholders. To maximum the return to 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 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 affluent sections of society to the common man in towns and villages.

To use the policyholders fund in the wider interest of the community.


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QUALITY POLICY

To ensure satisfaction of our valued policyholders in processing new business,

providing after sales service and optimizing return on Life Fund through a quality culture

and to maintain ourselves leading life insurer in Pakistan.

MISSION STATEMENT

To remain the leading insurer in the country by extending the benefits if insuranceto all sections of society and meeting our commitments to our policy holders and the

nation.


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REGIONAL NETWORK OF SLIC


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BASIC STRUCTURE OF SLIC

The basic structure of the State Life Insurance 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 countrys peoples 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 94 billion at the

end of April 2003. In addition, the government of Pakistan guarantees all individual life

insurance policies. State lifes 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 atop management comprising men with a vision and wisdom. State life offers a large

number of plans for the benefits of Pakistani families.


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ORGANIZATION CHART

(cont.)


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IL: INDIVIDUAL LIFE BUSINESS

GL: GROUP LIFE BUSINESSRE: REAL ESTATE BUSINESS


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MODES OF INSURANCE

1. Whole Life Insurance2. Term Insurance (General Insurance)3. Endowment Insurance

1. WHOLE LIFE INSURANCEWhole life insurance plan is a unique combination of protection and savings. This

can be purchased at a very economical premium payable annually or half yearly,

quarterly or monthly installments. Death at any time before age 85 years terminates

payments of premium and the sum insured (plus bonuses, if any) become payable.

2. TERM INSURANCEIt is a popular in America because of its short payments and big claim benefits

and used in general as well as life insurance, it is conditional contract and for particular

period. It pays claim during the contractual period, after expiry of that period there is

nothing to be paid for claim.

3. CHILD PROTECTION POLICYChild protection policies are issued jointly on the lives of the child and the father.

If the father is not alive or his life is not insurable, the mother will be allowed to be the

payer prospers i.e. policyholder, subject to any special conditions applicable to female

lives. No other relative will be allowed to be a payer. If the payer and the child both

survive, the term of the policy the sum assured along with accrued bonuses (if any),

become payable.

4. ENDOWMENT INSURANCEEndowment assurance is the safest and surest method of guaranteed cash

provision at a specified or at death. It means the requirement of the family in various

shapes byway of financial help as at retirement, amount for the education of children or

capital for business. Endowment assurance policies are available both on With &

Without Profit basis.


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5. GROUP ENDOWMENT INSURANCEGroup Endowment Scheme is a unique saving and protection scheme through

which the employees of an employer can enjoy insurance protection throughout their

service and also get a lump sum cash amount upon their retirement if they survive up to

retirement.

BENEFITS OF GROUP ENDOWMENT INSURANCE

Under this scheme each employee is provided insurance protection for an amount

which may be flat or depends upon the designation or salary of the employee. The

amount of insurance is payable on maturity or death if it occurs earlier. In most cases the

term of the endowment insurance for each employee is determined in such a way that the

policy matures at or near his retirement date. This enables the maturity proceeds to

coincide with retirement and supplement the retirement benefits.

Profit Participation---The endowment insurance is issued on a with profits basis.The same bonus rate is applicable as for the corresponding individual endowment

insurance policies.

Premium Rates---The same premium rates are applicable as for individualendowment policy but with the added attraction that in group form some volume

discounts are also applicable depending upon the size of the annual premium.

Loan Facility---Under this scheme if the member needs immediate liquidity anda policy has acquired Surrender Value in respect of member, he/she can avail a

maximum loan of 80% of the net surrender value of the policy.

OTHER POLICIES OF SLIC

Jeewan Sathi Shadabad Plan Personal Pension Scheme Sunehry policy Three Payment Plan


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SUPPLEMENTARY CONTRACT/RIDERS

Supplementary contracts are those contracts which make the insurance more

attractive. They provide certain incentives on certain situations. They make the plan

attractive in sense that if someone is purchasing supplementary contracts with a policy

then he will be awarded the officers of the supplementary contracts too along with policy

or insurance plans.

State Life offers a number of supplementary covers to enhance coverage under

different plans. These supplementary covers can be attached with the main policy and are

not available exclusively.

Accidental Death & Indemnity Benefit (AIB) Accidental Death Benefit (ADB) Family Income Benefit (FIB) Waiver of Premium (WP) Special Waiver of Premium (SWP) Term Insurance (TI) Refund of Premium Rider (RPR)

1. ACCIDENT DEATH & INDEMNITY BENEFIT (AIB)This supplementary cover provides for payment of additional amount equal to the

sum insured under the policy in the event of death by accidental means, or in the event of

loss of two or more limbs or loss of sight in both eyes. One-half of the sums insured will

be paid for loss of one limb; one-third of sum insured in the event of loss of one eye and

one-fourth of sum insured will be paid for loss of thumb and index finger. Moreover,

weekly indemnities are also available for total and partial disability of the life insured asa result of the accident. If the life insured becomes permanent and total disable, an

annuity of 10% of sum insured will be payable for a maximum period of ten years.

AIB is suitable for office commuters and individuals who travel and use different

modes of transport. The rates of premium for this supplementary benefit range from Rs 4


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to Rs10 per thousand sum insured depending upon the occupational rating of proposed

for standard lives whose age should be between 18 to 55 years.

2. ACCIDENTAL DEATH BENEFIT (ADB)This supplementary cover will provide for payment of an additional amount equal

to sum insured in the event of death by an accident as defined in the contract. On

payment of a modest premium, a handsome accidental coverage is obtained through this

supplementary cover. ADB is highly recommended for individuals who travel daily

through road transport.

The cover is available to lives between 5 and 55 years of ages. Maximum term of

this supplementary benefit is not allowed to exceed the premium paying term of the basic

policy, or 60 years of age of the life proposed whichever is earlier.

3. FAMILY INCOME BENEFIT (FIB)This supplementary cover provides that incase of death of the life insured during

term of this cover, an annuity of 10% to 50% per annum of the basic sum insured will be

payable till the completion of term of this cover. For instance, if a life insured has taken

25% FIB supplementary cover for 20 years on his policy having sum insured of Rs

1,000,000. If the life insured expires during term of FIB, say at the end of fourth year, an

annual sum of Rs 250,000 will be payable for rest of 16 years.

While the basic plan provides a lump sum, FIB provides a regular stream of

income to the dependents and helps in meeting the day to day expenses. This

supplementary cover is available to lives between 18 and 55 years of ages.

4. WAIVER OF PREMIUM (WP)This supplementary cover provides for waiver of due premiums in the event of the

life insureds Total and Permanent Disability caused by accident as defined in the

contract. With the help of WP, the life insured gets relieved of vagaries of paying

premiums in case of his or her being incapacitated as a result of accident. The rate of


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premium for standard risk will be Rs 0.50 to 1.00 per thousand of sum insured depending

upon the age of life insured.

5. SPECIAL WAIVER OF PREMIUM (SWP)This supplementary cover will provide for waiver of premiums under the policy in

case of the life insureds Total and Permanent Disability due to accident or disease which

renders him unable to engage in any occupation. With the help of SWP, the life insured

gets relieved of vagaries of paying premiums in case of his or her being incapacitated as a

result of accident or disease. SWP is available to lives between 20 and 55 years of ages.

6. TERM INSURANCE (TI)In the event of death of the life insured during term of TI supplementary cover,

the sum insured will be payable in addition to the benefits payable under the basic policy.

Suppose, Mr. A, covered under a policy of Rs 1,000,000, and also attaches TI

supplementary cover with his policy. In case of his death during term of TI, a sum equal

to Rs 1,000,000 will be payable under this supplementary cover. This will be in addition

to the benefits payable under main policy.

This supplementary cover is an excellent opportunity for individuals who want to

enhance coverage of their policy substantially on payment of a meager amount of

premium. TI is available to lives between 18 and 55 years of age.

7. REFUND OF PREMIUM RIDER (RPR)RPR provides for refund of premiums paid under the policy in the event of death

of the life insured during term of the policy. It is an ideal form of enhancing the life cover

under the policy with a modest increase in premium. This supplementary cover is

available to lives between 20 and 60 years of ages. The available term ranges from 10 to

25 years.


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SLIC MULTAN ZONE

INTRODUCTION

There are five or six zones in each region. The Multan Region controls the five

zones. These are:

1. Multan2. Sahiwal3. Rahim Yar Khan4. Dera Ghazi Khan5. Bahawal Pur

DEPARTMENTS OF SLIC

State Life Insurance Corporation (SLIC) has divided its whole setup into twelve

departments. The organization setup is same in Zonal Offices, Regional Offices and

Principles Office. All the Regional and Zonal departments are directed from the Principle

Office. The twelve Departments are currently performing services in SLIC. There are two

Departments which are working only in Principle Office at Karachi. State life Insurance

Corporation of Multan Zone has following departments;

1. NB (New Business)2. Legal Affairs3. PHS (Policy Holder Service)4. IA&C (Internal Audit and compliance)5. RED (Real Estate Department)6. G&P (Group & Pension)7. FMD (Field ManpowerDevelopment)8. P&GS (Personnel And General Services)9. Agency Administration10.IT (Information Technology)11.F&A (Finance & Accounts)


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1. NEW BUSINESS DEPARTMENTINTRODUCTION

New Business (NB) is considered the soul of Insurance companies. Profitability

and survival of the business depends on the NB.

FUNCTION OF NEW BUSINESS

In this department, as the name shows, new contracts start between proposes and

Insurance Company. Proposes is a person who applies for the insurance protection. Main

function of the NB is underwriting. This department is responsible for processing the new

business introduced by the sales force right from receiving a proposal on the counter to

mailing the policy document to the policyholder. It has various section to perform the

different task relating to the acceptance or rejection of risks for life insurance, the

proposal are received and initially is checked in all respects i.e. completion of all columns

and then processed by the underwriters depending upon whether they have been

introduced under the medical or non-medical scheme. The risk is assessed keeping in

view the following factors:

Personal data, occupation, physical and social features, health, family history ofthe prospect.

Moral hazard, source of income, nomination, relationship between the nomineeand the prospect.

Previous life insurance history of the prospect if any. Field officers or sale representatives confidential report included in the proposal

form.

Financial underwriting i.e. source of income, its legality and proof, relationshipbetween the prospects income and sum assure.

In case of non-medical scheme, the prospects own statement and filed officers or

sales representatives reports have more importance. After this assessment, the

underwriting decision is made which may be acceptance of a risk at ordinary rated or


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with loading, calling additional evidences relating to health or financial status of the

prospecting for a define periods or straight way declination. Premium rates, installments

are then checked and first premium receipts are issued to the field force, and concerned

department like commission payments, agency administration, computer division and

marketing. This is brief terms are the function on the new business department. This is

also a key function as the underwriters are responsible for the financial health of the life

institution.

WORKING OF NEW BUSINESS

The precise working of NB department is as follows:

i.

PROPOSAL

NUMBER

In order to fulfill the recognition of the insurance policy, NB department allocates

a number t each insurance policy for future references. NB department verifies whether

the client is a new customer or a past customer.

ii. UNDERWRITINGUnderwriting is the process through which the underwriter assesses the risk

associated with the Insurance Proposal. Underwriter verifies the personal information

provided in the Proposal form. If he feels that client should have a medical checkup then

SLIC has its own penal of doctors to provide medical assistance.

iii. PREMIUM CALCULATIONAfter underwriting the premium of Sum Assured is calculated in Policy Brief

Sheet in according with the rate book provided by the SLIC. The policy fee is charged of

Rs. 100 or Rs 2.5 per thousands of sum assured whichever is less. Further the rates of

supplementary contracts are added in premium.

iv. POLICY ISSUE SECTION


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3. POLICY HOLDER SERVICESINTRODUCTION

Policyholder service is one of the most important departments in stat life

insurance. Better services to policyholders are of course, necessary and fundamental for

carrying good reputation among policyholders, which help in retaining business and

increasing new business. Therefore policyholders service, counters have been

establishing in majority of the zonal offices to provide one window services to the valued

policy holders. This department is divided into following sections:

1. Claim Section2.

Surrender Section

3. Loan Section4. Alteration Section5. Suspense Account Section6. Lapse & Revival Section

Each and every section of this department plays an important role and they

provide different services to policyholders.

1. CLAIM SECTIONThis section is always busy in entertaining claims of the policyholders. It has its

own investigators and they investigate all claims and then recommend that a claim

amount may be given to the nominees of the claimants or not. They also look into all

such maturity claims and those policies which fall, mature all payments and the claim

section of the policyholder services (PHS) give houses. Claims are of Two Types:

Death Claim MaturityDeath claims are further divided into two categories. Early death claim and non-

early death claims. Death within the first two years is known as early death and after that

it is non-early death claim. In case of early death claim they do a comprehensive inquiry.


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This inquiry may be from the general public, hospital. Police station etc. then they make a

report. In case of muscularly death claim usually inquiry is done. Just look to the

documentary requirements, but if there is a chance of fraud, than inquiry will take place.

In case of suicide within the first 13 months. They just pay the premium amount which is

paid in installments.

PROCEDURE

In case of death the nominees should make death certificate for the policyholder. It may be gross the hospital, Nazim, Political Agent, etc.

Then they issue 4 forms i.e. A, B, C, D. Form A will be filled by thenominee. Form B is for Attended Doctor, Form C, a person from village

like Khan, and Malik etc. Form D if a policy holder is govt. employ, than

this form should be filled. All these forms should be attested.

If the amount is less than 300,000 then they call a meeting of zonal claim

committee (ZCC) and this committee makes decision. If amount is more than 300,000

then they forward all documents to regional claim committee (RCC Multan). And if

amount is more than 500,000 then this is the case of central claim committee after

approving from ZCC the claim file again to claim section, have they issue cheques and

make vouchers thus payment is made. In case of AIB (Accidental Indemnity Benefits)

two extra forms will be issued, one will be filled from the policy holder and the other by

the doctor. The policy holder should write about his accident.

2. SURRENDER SECTIONThis is also an important section of the PHS. All those do not want to continue

policy due to some financial or any other problem request and send their applications to

PHS surrender section. Then the staff of this section scrutinizes those applications and

issue surrender discharge vouchers of payment to the clients. After receiving vouchers

the account section issues cheques to the clients. It also issues bones certificates to the

policy holders and keeps their record in computers. Very technical and professional staff

has been recruited in this section.


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PROCEDURE

First the surrender section receives application from the policy holders alongwith other required documents like NIC etc.

Than this section issues surrender discharge vouchers, they calculate the cashvalue and mentioned in this voucher, the policy he written and this voucher

should also be signed by the policy holder.

Then they send all these documents to audit department after making the audit,the audit department again sends its to surrender section (PHS).

If the amount is more than Rs. 10,000 then it is referred to account department,they issues cheques, these cheques again come to (PHS) surrender section andthey give it to policy holders.

If amount is less than Rs. 10,000 then there is no need to send all the documentsto account department PHS directly issues cheques to the clients.

3. LOAN SECTIONLoan section is also play a very important role in calculating and issuing loans to

the policy holders on their policies. All such policies that complete three years acquire

surrender value. Loan is granted on every policy according to the surrender value of the

policy and the rate is 80% of surrender value. The rate of interest on this loan is 14%. It

gives the policy holder an extra benefit to get loans and then repay their outstanding

amount to the corporation. While the risk coverage of the policy holder is in fact within

the specified time and due of next premium the policy.

4. ALTERATION SECTIONThe alternation section is another important section of PHS. All such policies,

which require any alternation for example. Change of nominee, change of address,

change of terms, change of mode of premium and change of any other thing in the policy

directs their applications to the PHS. Authority after altering the required things in the

policy sends their policy documents to the concerned policy holder. All these sections of


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PHS are interring links with other sections and professional staff with trained officers is

busy in providing services to the clients.

5. SUSPENSE ACCOUNT SECTIONThis section is an important section that giving an application to the manager PHS

can enforce all such policies, which due lapsed. The under writers of the PHS department

scrutinizes the applications and then revive and reinforce lapse policies, there is any

requirement in the policy the premium is placed in suspense. Account and a provisional

receipt are issued to the client. A policy holder service is the heart of state life insurance

corporation. All record of the policies is kept with the PHS department and all legal and

officials letters are written and send by this department.

4. INTERNAL AUDIT AND COMPLIANCEINTRODUCTION

This department plays a supervisory role of all the other departments by checking

and verification of all the working done by the departments according to the rules and

regulations provided by PO Karachi time to time. These rules and regulation are

provided to all the Zones throughout Pakistan in shape of circular. These circulars are

attached in the book, which is called Key to PO Circular Volume. All working of the

departments are verified according to this book. In this way, the frauds, errors, and

omissions are detected

Audit means right amount of payment to the right person at right time. The Audit

department plays a supervisory role of all the other departments by checking and

verification of all the working done by the departments according to the rules and

regulations provided by PO Karachi time to time. These rules and regulation are

provided to all the Zones throughout Pakistan in shape of circular. These circulars are

attached in the book, which is called Key to PO Circular Volume. All working of the

departments are verified according to this book. In this way, the frauds, errors, and

omissions are detected.


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TYPE OF AUDIT

Following are the two types of audit:

Pre- Audit Post-Audit

PRE-AUDIT

When the audit is done before making payments, it is called Pre Audit.

POST AUDIT

Audit conducted after making payments is called Post Audit. Pre audit is

conducted for all the big payments such as purchase of assets, payment at maturity of

policy, payment on death claim etc. post audit is conducted for all day-to-day expenses

such as traveling expenses, stationery etc.

PROCESS OF AUDITING

File is received from the concerned department. To find the errors, Audit Department read the file thoroughly. If there is no error in the file, then they send it to the concerned department for the

preparation of payment voucher.

Payment voucher is checked by the Audit Department. If there is no error in the payment voucher, then cheque is prepared by the B&A

Department.

Then this cheque is given to the concerned person.SECTIONS IN AUDIT DEPARTMENT

Audit Department divides its whole structure into small section. These are:

Loan Surrender Death Accidental Injury Benefit


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Family Income Benefit Survival Benefit General Payments (Stationary, Bonuses, Salary etc.) Field Maters (Rent of AM Office, Contest etc.)

It is not necessary that the audit will be only about money, the audit of business

figures, audit of promotion files is also required.

5. REAL ESTATE DEPARTMENTINTRODUCTION

RED is a separate unit from the business of state life, they dont have any direct

link with the functioning of other departments the basic function of RED is to look after

the real estate business of the state life, all the buildings of sate life.

The ground floors of all the state life buildings in Pakistan is rented to other

companies in order to earn some revenue RED controls all the rented area and deals with

rent issues of the buildings.

It also deal with the lift system, power generation system, janitorial, paint,

security of the building, renovations, parking and it also provides a central airconditioning system, water system, all the facilities which are provided to the state life

gallery at the gate lighting of gallery and gate been provided by this department, It

provides maintenance and repairing services to all the departments in case of any

problem, in case of any service required the RED provide them the manpower and all

other expenses been beard by that department, RED is under the Lahore office, their link

is with the Lahore office.

6. GROUP & PENSION SERVICES DEPARTMENTINTRODUCTION

The market of group insurance comprises industrial and commercial

establishment. The employees of these establishments are insured on behalf of the


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employer. The premium is calculated by considering the age, designation and physical

hazards. The policy is issued for the coverage of one year. It is renewed each year. The

grace period for the payment of the premium is one month. After grace period the policy

is lapsed.

Different plants are offered by SLIC. Supplementary Contracts are added to the

plan i.e. AccidentalDeath Benefit (ADB), Partial Total Disability (PTD). The benefits

available under the PTD and ADB Riders can be provided to the member for 24 hours as

follows:

Death due to any cause at anytime (24 Hours), Permanent Total/Partial Disability caused as a result of an accident at any time

(24 Hours).

Temporary disability caused because as a result of accident occurred during offduty hours only.

Rules of group insurance are different for different employees according to theirgrades.

DIFFERENCES BETWEEN INDIVIDUAL LIFE INSURANCE AND GROUP

LIFE INSURANCE

There should be at least 10 persons. There is no maturity in Group insurance, while there is maturity in life insurance. The policy is issued for the coverage of one year. If a person retires then till the 5 years of his retirement. If he dies the whole

amount of sum assured will be given to his nominee.

PROCESS OF GROUP LIFE INSURANCE

The employer gives a list of employees to be insured to G&P. The rate and amount of premium is calculated, if the party agrees on the terms

then application is demanded.

Then case is transferred to Lahore zone for underwriting and decision-making.


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Medical is done according the size of the group. If the group is large then thereare less chances of medical. If risk is high (large sum assure) then chances of

medical is greater.

Policy bond is sent from Lahore to Multan and then issued to party.PENSION

Group and pension department takes a pension policy. A particular amount is

deducted from the salary of individual employee. When employee retires then state life

gives pension for whole life.

STRUCTURE OF GROUP AND PENSION

All mater of the Group and pension are dealt by Lahore zone. If any

organization applies for group insurance then his request is send to the Lahore zone for

assessment and underwriting. The amount of premium is also sent to Lahore zone. Group

and Pension has no regional office. In Group and Pension there is only zonal office and

sector office, and they have contact with PO Karachi.

7. FIELD MANPOWER DEVELOPMENTINTRODUCTION

This department imparts training to the needy appointed staff. It teachers them all

the rules and regulations, procedures, practices regarding the insurance job. It also gives

them different dimensions regarding the acquisition of new policies. Previously this

department was called Human resource Development Department (HRDD), now it has

been changed Field Man Power department.

STATE LIFE INSURANCE TRAINING PROGRAMS

Prior to nationalization of Life Insurance in Pakistan in 1972, very few

organizations had any system of training for the field force and office personnel. Even

those companies, which had any system of training programs, were in the process of

developing their own training material and related curricula. With the nationalization of

the Life Insurance in Pakistan, one of the major positive steps taken for the field


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personnel was that training for the field personnel was made compulsory for the first

time. No agent could solicit Life Insurance business without undergoing a basic training

course of 5 days duration. Experienced executives who had decades of practical

experience of Life Insurance

PRESENT TRAINING SITUATIONS

With the passage of time, besides the basic training programs new and

sophisticated training programs were introduced, specially designed and introduced by

Life Insurance Marketing Research Association and Life Office Management in the

United States. These programs soon became popular and practical adaptability to local

conditions. Now these have been adapted in Urdu along with relevant material.

It is a proud achievement of State Life that training programs like Agent

Development Program (ADP), Marketing Orientation Program (MOP) and Marketing

Management Series (MMS) are being conducted in all the zones of the Corporation

through three Regional Academics at Karachi, Lahore and Rawalpindi and training

centers in all zones. In addition to this, holding of Training Seminars of one day and two

days duration is a regular feature.

Three computer-training centers are also operating at Kasur, Shikarpur and Jhang

under the Prime Ministers training program for semi rural communities. For holding

these courses and programs, the SLIC has developed a team of dedicated and skilled

professionalism trainers who performs their responsibilities under directions of the

Human Resource Development Division at the Principal office Karachi. Last year as

many as 1700 training courses were held which catered to the training needs of 22,000

participants. Some new training programs were also introduced on topic like

Commitment, Psychology of success, Trust, Productivity and Motivation.

SLIC is contemplating to offer training opportunities to other institutions in near

future. For the current year, the Corporation has a target of 2000 training courses catering

to the need of some 25,000 participants. This year some innovative topics both for field

and for office were introduced. I.e. Office Management, Business Communication,

Synergy for Excellence, Scientific Planning and ISO 9000.


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The Division also nominated 632 officials to renowned institutions like PIM,

NIPA and Petromen. One officer was nominated to attend a course in Tokyo, Japan. Out

of 1485 that appeared in the FLMI, 943 qualified different papers, 33 completed FLMI

and 9 completed FLMI Masters.

The training to SR, SO, SM, AM (Field workers) and office employees is given.

The training is given for three weeks in a month throughout the year. For the

development and enhancement of marketing skills of the field & office employees,

different courses are offered in the department. This department has one manager and one

assistant manager with brilliant qualification and marketing skill. They perform their job

as regular trainers. Despite some trainers are hired outside the Organization. The hired

trainers are compensated @ Rs. 500 per day during the training period. Following are the

main courses offered in the department:

One Week Basic Training Courses (BTC) for SRs, One Week Basic Training Course for Sales Officers and Sales managers. 27 Units Agent Development Program (ADP) of Life Insurance Marketing &

Research Association (LIMRA-USA).

17 Units Management Orientation Program (MOP) of LIMPRA (USA). 26 Week Study Course in Agency Management (SCAM) of LIMPRA (USA). Marketing Management Series (MMS) SLIC has 26 Training Centers throughout the country and 3 Training Academies

in Lahore, Rawalpindi, and Karachi.

FMD also provides the training to the employees of other department of state life,such as people from PHS, NEW BUSINESS are also trained here.

8. PERSONAL & GENERAL SERVICES DEPARTMENT (P&GS)INTRODUCTION

The office & general matters are dealt in P&GS Department. This department has

the sole responsibility and authority of the disciplinary action of the employees.

Selection, recruitment, termination of the employees is the main functions of the P&GS


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Department. This department also deals in medical facility to the office employees,

leaves and similar other general services. The stationary used in different department is

maintained in this department. The daily correspondence is dispatched in this

department. Followings are the main sections of this department:

PERSONNEL SECTION

All the employee matters such as appointment, promotion, demotion, transfer and

allowances are dealt by personnel section. Annual Confidential Reports ACR the

employees are prepared, under the supervision of this section, by the departmental heads.

For the appointment of the staff, an advertisement is initiated in the Newspaper. Zonal

Head is competent authority for this appointment. This appointment also depends on the

business of the Zonal Office. The appointment of officers is done by Principal office

(PO) Karachi or Regional Office. Selection Committee constituted by Zonal Head

conducts test and interview.

For promotion of the employees, there ACRs are necessary and minimum three

years are required to remain in one cadre. Each year the employees are promoted by the

criteria and instructions set by PO Karachi. PO or Regional Office does promotion of

officers. In Multan Zone, there are 362 office employees, 9 Sectors Head and 43 Area

Manager (AM). There are number of subsections in this department:

MEDICAL SECTION

All the hospitalization expenses are beard by SLIC provided that these are

incurred in approved hospital (i.e. In Multan the approved hospitals are Fatima,

Medicare, and Govt. Hospitals). The expenses of medicine are reimbursed. The

reimbursement of medicine is not allowed to staff (Having grade 1 to 8) but they are

given Rs. 600 p.a. in shape of salary as medical allowance.

LEAVE SECTION

Following are the main two types of leaves:

Casual Leave


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Medical Leave20 days casual leaves are allowed to all employees in a year. The medial leave or

application leave is allowed for 48 days in a year. Unused leaves are accumulated and

after two years these leaves in excess of 180 days can be encashed. In case of death all

leaves, not utilized, can be encashed.

RENT SECTION

When Sale Manager (SM) is promoted to Area Manager (AM), he is categorized

as A, B, C, and he has entitled to have his own office at his own choice at the expense of

SLIC. A good location is selected by the AM. After selection of place, Zonal Head is

informed about the location, by application written by AM. This application is

transferred to P&GS Department for the analysis of location of the office. This location is

annualized by Zonal Rent Committee (ZRC). A lease agreement is made with the

landlord after analyzing the approved map for the location and property registration form.

The office rent entitlement for the categories of A, B, C, of AM is Rs. 2000, Rs. 2000, &

Rs. 1000 P.M. Respectively.

STATIONARY SECTION

This section maintains the record of stationary such as paper, pencil, envelops

printed letters, forms, calculators, dustbin etc. whenever any department requires the

stationary, the concerned department fills a Requisition Slip. The stationary is issued to

the concerned department and it is recorded in the register.

CAPITAL SECTION

This section is responsible for purchase, sale and maintenance of Furniture &

Fixture, Equipment etc. A Zonal Procurement Committee (ZCP) is constituted for the

purchase of assets. The assets are purchased from the suitable supplier after critically

analyzing the quotation offered by different venders. Each year assets are depreciated @

10% p.a. The entry for the purchased assets is made in the Register for Fixed Assets.

Each year the closing balance is intimated to PO Karachi.


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9. AGENCY DEPARTMENTINTRODUCTION

It is an important department of state life insurance Corporation. It keeps the

record of all the field staff in the zonal office, sector offices issues code numbers to field

workers and maintain their all business record. It also deals with licensing authority and

all licenses of the field staff are sending and received through this department. This

department is controlled by the zonal head and run through a manager with the help of

other supporting staff. It also keeps the record of promotion of the field workers and other

related matters of the field force.

MARKET FIELD FORCE OF SLIC

The sale representatives (S.R) play a key role. Consequently upon his selection,

the S.R received some basic training in sale management marketing, and on the job

training the S.R works under the supervision and guidance of sale officer. After two years

service as sale representative he is eligible for promotion, if fulfill other condition

necessary for promotion.

SalesRepresentative

Sales

Officer

SalesManager

AreaManager


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REQUIREMENTS FOR SR

Minimum qualification for SR is metric. Minimum requirement is 12 policies in one year.

Rs 50,000 should be achieved in one year.

CONDITIONS FOR PROMOTION

(From Sales Representative to Sales Officer)

Must have secured minimum Rs 75000/- FYP during immediate preceding twoCalendar year, but in any one calendar year, the FYP should not be less than Rs

25000/-

Must have at least 20 policies in force on different lives. Must have achieved a minimum second year persistency of 70% in the immediate

preceding year-

Must have achieved a minimum renewal persistency of 70% in the immediatepreceding year.

(From Sales Officer to Sales Manager)

Must have secured minimum Rs 250000/- FYP in the immediate preceding 2calendar years, but the FYP in any one year must not be less than Rs 60000/-.

Must have minimum second year persistency of 70% in the immediate precedingyear.

Must have at least 80 policies in force in his organization. Must have minimum renewal persistency of 90% in the immediate preceding

year.

10. INFORMATION TECHNOLOGYINTRODUCTION

Almost all the departments (i.e. NB, PHS, P&GS, and Cash Counter) are

interconnected by computer network. A separate computer section controls all the

activities of the departments. This computer network was established in 1995.


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SOFTWARE USED IN NETWORK

The software used in computer network both for back-end and front-end is

Oracle. SLIC has licensed this software from Oracle Corporation.

DESCRIPTION OF COMPUTER NETWORK

IBM does the entire networking and quotation they used in this computer network

is,

32 terminals in different departments with one central computer. Minicomputer 6000 Risk Coaxial Cable is used. Networking topology is Star-Bus.

DISTRIBUTION BOX

In each floor one distribution box is there. In simple words distribution box is a

machine which takes the data from main server and distributes the data to different

printers and terminals.

TERMINAL AND PASSWORD

For security purpose, each user at each terminal has his unique password.

Password is the unique address to open the computer and start the working.

MONTHLY REPORT

For each month different reports are prepared of the working of the different

department. These reports are sent to the concerned departments for reconciliation.

After reconciliation the data is transferred to the master file. Master file is a file in which

no change can be made in any way. After transferring the data to Master files the data is

copied in floppies and transferred to Principal Office (PO) Karachi. In PO different

ledgers are prepared and these are sent back to Zones. Further checking of accounts

(collection/ payments) is made and errors are detected.


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BACKUP DEVICES

Back up can be defined as the process of copying the date from hard disk to the

Cartridge or Spool Tape. Cartridge or Spool Tapes are the storage devices, where the data

is accessed sequentially. Every Friday the backup is made in SLIC.

UPS

To avoid unexpected power failure ultimate power supply device is managed,

which provide electricity from 20 to 30 minutes. It cost Rs.200, 000.

11. BUDGET AND ACCOUNTS DEPARTMENTINTRODUCTION

Every zone has its own budget which comes from the head office. The zonal head

and zonal accountant with respective regional chief and regional accountant send a

proposal to the head office; they critically analyze it and then decide. First calculation is

made here, and then sent to head office.

PROCESS OF BUDGET

Budgeted amount is equally distributed in four quarters. Big zones are rated on

total premium while small zones are rated on first year premium (FYP). In budget only

fixed expenses should be included like salary etc. When an officer is transferred to any

other zone or center, his budget will also be transferred to that zone or center.

Budgeted amountis written and

expenses are

reduced graduallyfrom it.

BUDGETPROPOSAL

Discuss theproposed budgetwith ExecutiveDirectors andChairman.

DISCUSSION

FinallySubmitted toThe Board of Directors for proposal.

SUBMITTED


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How the budget is allocated to each department within a zone; Zonal Head calls a

meeting of all departmental incharge. They all discuss the budget amount. Then budget

is allocated to each department according to their needs and requirements. If budget is in

deficit, then an additional budget is demanded. The zones should give justification for

additional budget. It happens when unexpected expenses occur like for AC plant or

Compressor burnt etc. Expenses of one quarter should be carried over to next quarter.

However, saving of one quarter may be counted for the next quarter. Chief Accountant

and Regional Accountant should check the actual expenses on their visits to zone.

ACCOUNT SECTION

Every department feeds its daily work in the computer. At the end of the month

computer summarizes it as;

Cash premium in collection books Cash paid in cash books. Adjustment in journal ledger.

After preparing the net result they make quarterly trial balance at Zonal level.

They cannot prepare Balance Sheet because Head Office prepares it.

PAYROLL SECTION

This section deals with different allowances and loans which are offered to the

employees. Two employees are working in this section. Allowances that are available for

officers are;

CONVEYANCE ALLOWANCEA. The conveyance allowance has been enhanced to Rs.850 per month.

B. The employees who own or possess cars, registered in their name and which

are under their use would be paid car allowance at the rate of Rs.1150 per month; it also

includes car maintenance allowance.

HOUSE RENTThe officers would be paid house rent allowance @40 of their basic pays.


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UTILITY ALLOWANCESUtility allowance for an officer is 10 % of his basic pay.

ALLOWANCES FOR STAFF

HOUSE RENTThe house rent allowance paid to the staff is 18 % of their basic pays.

CONVEYANCE ALLOWANCEThe staffs that possess motorcycle are paid Rs.800 per month, and those who

does not possess are paid Rs. 675 per month.

TEA ALLOWANCETea allowance is a fixed amount of Rs.535 paid to each staff member monthly.

NEWSPAPER ALLOWANCEThis is also a fixed amount of Rs. 300.

UTILITY ALLOWANCEIt is also a fixed amount of Rs.675.

EDUCATION ALLOWANCEThe children education relief/ education allowance should be paid to an employ at

a uniform rate of Rs. 435 per month per child to all children either school or college

going or receiving religious education, for up to a maximum of four children and subject

to a maximum of Rs. 1740 per month.

MEDICAL ALLOWANCEA. Rs.1000 per month for married.B. Rs. 725 per month for unmarried.


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TECHNICAL ALLOWANCETechnical allowance to the telephone / telex / fax operators, franking machine /

adrenal operators, photo state machine operators, lift operators Rs. 175 per month.

CASH HANDLE ALLOWANCEThis allowance is for employees who hold cash handle seats revenue stamps

policy stamps and cash counter. This allowance to cash counter is Rs. 800 per month,

and for the others it varies from Rs. 175 to Rs. 800 per month.

LOANS

Different kinds of loans are given to employees of each level.

1. TWO MONTHS SALARY ADVANCE LOANThis is gross salary and interest free loan. This loan would be payable in 20

installments, i.e. deducted from the salary over 20 months. For officers the maximum

amount is ten (10) month gross salary advance, and the rules and regulations are same for

both officers and staff.

2. CPF LOANSIts contributed provident fund loan. It has two types.

CPF 1

The maximum amount is three basic pays. This is also interest free. Deducted over 20 months.

CPF 2

The maximum amount is 12 basic pay or 90 % of CPF whichever is less. This is also interest free loan Deducted in 50 installments.


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3. HOUSE RENT ADVANCE This loan is only for staff. The maximum amount is six current basic pays.

Having 10 % interest. Deducted in 18 months. No deduction in the month of Eid.

4. CONVEYANCE LOAN The maximum amount for staff is Rs. 55000, which is known as

motorcycle loan.

10 % interested is charged. Deducted over 40 months. No deduction in the month of Eid. For officers the maximum amount is Rs 100000, which is known as car

loan.

Rules and regulations are same as above.5. HOUSE BUILDINGLOAN

The maximum amount varies from level to level, because it dependsmostly on salary.

For the maximum amount they use this formula;45 % of the salary x 1000 / 8.85

Charges 10 % interest. No deduction in the first year. This loan should be given to the employ in three installments.

In the payroll section they make calculations for all these allowances and loans

and at the end they prepared vouchers. All these things should be adjusted in journal

voucher. They use two vouchers; one is known as Debit Voucher (DV) and the other is

journal voucher (JV). In the books of account the Dr the voucher and Cr the amount.


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FINANCIAL ANALYSIS


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WHAT IS RATIO?

A ratio is a quantity that denotes the proportional amount or magnitude of onequantity relative to another.

A ratio is a simple mathematical expression of the relationship of one item toanother. Ratios can be expressed in words, fractions, decimals or percents.

There are three types for the analysis. These are

Time series analysis Cross sectional analysis Ratio analysis

RATIO ANALYSIS

It is the study of financial condition and performance through ratios derived fromitems in the financial statements.

A method of analyzing a business by looking at its balance sheet and incomestatement.

Ratio analysis is the calculation and comparison of ratios which are derived from

the information in a company's financial statements. The level and historical trends ofthese ratios can be used to make inferences about a company's financial condition, its

operations and attractiveness as an investment. The ratio analysis which I have discussed

in report regarding SLIC is as follows:

Liquidity ratios Debt ratios Activity ratios Profitability ratios

LIQUIDITY RATIO

These ratios are used to measure a firm ability to met short-term obligation. They

compare short-term obligations to short term (or current) resources available to meet


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these obligations. From these ratios, much insight can be obtained into the present cash

solvency of the firms ability to remain solvent in the event of adversity.

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

The current ratio of last five years of SLIC is as follows:

Current Ratio

Year 2005 2006 2007 2008 2009

Ratio(time) 0.89 0.85 0.79 1.36 0.96

GRAPH

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2005 2006 2007 2008 2009

0.89 0.850.79

1.36

0.96

Current Ratio

Current Ratio


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INTERPRETATION

Current ratio of State life insurance Corporation for the year 2006-2007 shows

that there is a gradual decrease in the ratio. It means that there is problem with the current

assets, while the ratio is also lower because of a slower increase in current liabilities aswell. As we know that the current ratio show the liquidity position of an organization,

that how much they can pay their current liabilities. But in 2008 its capability of paying

their current liabilities increase. So they should utilize their current assets in efficient

way and should reduce their current liability. By reducing their current liabilities they

will be able to have less to pay and more to invest somewhere else.

DEBT RATIO

Debt ratios show that up to what extant a firm is financed by debt and to which

extent the firm is using borrowed money. The debt ratio is derived by dividing a firms

total debt by its total assets. This ratio show the debt and asset position of a corporation,

mean that how much the corporation have shareholders equity and how much they have

credit. If this ratio is low then it means that shareholders equity is more than credit and

financial position will be sound. Mathematically it can be written as,

Debt ratio = Total liabilities

Total assets

The debt ratio of last five years of SLIC is as follows:

Debt Ratio

Year 2005 2006 2007 2008 2009

Ratio(time) 1.02 0.99 0.99 0.99 0.99

GRAPH


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INTERPRETATION

Debt ratio of the firm shows that up to what extent the assets of a firm are

financed by equity and how much is financed by debt. From year 2006- 2009 debt ratio

of SLIC show that the ratio for these years is same, so it means that for these year SLIC

financed their assets with same proportion, because ratio are the same. It means that

SLIC assets are financed with the same proportion by both creditors and shareholders.

ACTIVITY RATIOS

Activity ratio, also known as efficiency or turnover ratio, it measures that how

effectively a firm is using its assets.It measures the speed with which various accounts

are converted into sales or cash.

RETURN ON ASSETS

The second group of profitability ratios is about profits on investment. This ratio

measures the profitability of assets regardless of the Capital structure. An important test

of management abilities that how much they can earn on funds supplied from all sources.

Mathematically;

ROA = Net Income after taxes x 100

Total assets

0.96

0.98

1

1.02

2005 2006 2007 2008 2009

1.02

0.99 0.99 0.99 0.99

Debt Ratio

Debt Ratio


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RETURN ON EQUITY

Return on equity indicates that how much an organization can earn on equity.

Return on equity compares net profit after taxes to the equity that shareholders have

invested in the firm. This ratio tells the earning power on shareholders book value

investment and is frequently used. A high return on equity often reflects the firms

effective management.

ROE = Net Income after taxes x 100

Shareholders Equity

The ROE of last five years of SLIC is as follows:

ROE

Year 2005 2006 2007 2008 2009

Ratio % 20.75 23.9 24.4 24.8 25.3

GRAPH

0

5

10

15

20

25

30

2005 2006 2007 2008 2009

20.75

23.9 24.4 24.825.3

Return On Equity

ROE


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INTERPRETATION

Return on equity ratio show that how much an organization can get return through

the investment of equity. Return on equity ratio of SLIC from years 2005-2009 show that

they are getting back a favorable return upon the investment of their equity gradually. It

is a positive sign for state life insurance corporation because on one hand the

shareholders will get maximum return and on other hand it will also add to net profit of

corporation. But care should be taken because more equity investment will increase

equity and will increase liability of the organization.


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SWOT ANALYSIS OF SLIC


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ENVIRONMENTAL SCAN

An analysis indicating towards the organizations strengths, weaknesses,

opportunities and threat is termed as SWOT Analysis. Such an analysis is very important

for the management in retaining the strength, overcoming the weaknesses, capitalizing

over the emerging market opportunities, and carving ways to successfully tackle with the

threats and ultimately converting them in the strengths for the organization. It is an

important tools to analysis the overall situation in which an organization is conducting its

affair. Each issue remains relevant and useful for corporate strategy formation.

During six weeks of my stay at SLIC in Multan, I have come across the following

SWOT analysis of the corporation.

STRENGTH

ADEQUATE FINANCIAL RESOURCES

SLIC has adequate financial resource this is strength of SLIC. Because it can

invest in different project and can earn more, financially they have no problem.

Internal

Analysis

Strengths

Weaknesses

ExternalAnalysis

Opportunities

Threats


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BETTER ADVERTISING CAMPAIGNS

As SLIC is market leader, and big organization so it can lunch a better

advertisement campaign through any kind of media.

ADEQUATE HUMAN RESOURCES

As SLIC is a large organization, and there are large number of people who are

working. So they have adequate human resource, and they can meet any challenge relate

to human resource.

CAPABLE TOP MANAGEMENT

As they follow strict rule for promotion, so the top management of SLIC in a very

much competent experience. So their decisions give benefit to organization.

COMPETITIVE SKILLS OF EMPLOYEES

Employee of SLIC are very much competitive and very much skillful they know

very well the corporation activities, which increase the efficiency of an organization.

GOOD WILL

As SLIC is an old organization, so it develops a Goodwill, so policyholder built

trust on it, and people want to invest in it.

GOVERNMENT SECURITY

As SLIC is government organization, so there is also government support to

organization which also increases their stability and Goodwill.

WEAKNESS

TURNOVER OF FIELD FORCE

As field worker are commission based, so turn over in SLIC high because those

who fail to bring business, leave the organization.


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INCREASING RATE OF SURRENDER

Because of economic condition, when the saving of people lower they cant

continue their policy. So they surrender the policy, and this is one of the important

weaknesses of SLIC.

ECONOMIC CONDITIONS

Economic condition of Pakistan is not so good, due to which people have lass

saving, so when saving will be lass they cant be able start a policy.

LESS AWARENESS OF MASS

A large part of population is leaving in rural areas and people of that area is not

aware about life insurance.

WEAK MARKETING EFFORTS

As SLIC is market leader, and there is no other close competitor, so they not give

proper attention to marketing activities.

OPPORTUNITY

GROWTH OF FINANCIAL SECTOR IN PAKISTAN

As financial sector of Pakistan is starting better which will make better the

financial position of people and will increase saving of people. So this is an opportunities

for SLIC to increase their business.

DIVERSIFICATION

As SLIC is providing services in just only in life insurance, it can also start

general insurance, like the insurance of property etc.

FAVORABLE GOVERNMENT POLICIES

As SLIC is a government organization, so all policies of government is in the

favor of SLIC.


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INNOVATION

SLIC also bring so many innovations in their present product, like they decrease

the maturity duration of policy or can decrease sun assured of policy etc.

THREATS

NEW COMPETITORS

With the passage of time so many organization are coming to insurance business,

so there will be tuff competition for SLIC to face in future.

RECESSION IN ECONOMIES

As Pakistan economic condition is not so stable so recession in economy can

affect its performance by increasing the surrender rate of policy by policy holder.

CHANGING CUSTOMER NEEDS

As customers needs are changing, like if they have saving they might use in

some other business in stated investing in SLIC.


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PEST ANALYSIS OF SLIC


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PEST analysis stands for "Political, Economic, Social, and Technological

analysis" and describes a framework of macro-environmental factors used in the

environmental scanning component of strategic management. The model has recently

been further extended to STEEPLE and STEEPLED, adding education and demographics

factors. It is a part of the external analysis when conducting a strategic analysis or doing

market research and gives a certain overview of the different macro environmental

factors that the corporation has to take into consideration. It is a useful strategic tool for

understanding market growth or decline, business position, potential and direction for

operations.

As being a market in economy SLIC is also being affected every time by political,

economic, social and technological factors.

POLITICAL FACTORS

The political environment of Punjab is quite stable since the takeover of the recent

Government. Though some factors are always trying to pollute the social and political

environment of this province, Government has taken very positive initiatives in this

context and people fell no hesitance to invest their money in insurance packages. As the

nature reveals, insurance has always been a social and ethical code of business. So SLIC

has a favorable political environment for investment and business activities. On the other

hand government policies that regulate the overall business have no harm to their

activities.

ECONOMICAL FACTORS

The economical environment too is almost in the favor of businesses prevailing in

the province. Same is the case with SLIC, because it is a long term high return project.

The employment rate is at an increasing trend because most of the people are coming

towards their own businesses which lead to employment generation and indirect

technology base environment. Than these factors as a whole contribute to a higher per

capita income. Due to positive and friendly economic factors their vast set-up and


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business regulations people feel free to invest their savings for a long-term and safe

return.

SOCIO CULTURAL FACTORS

Socio cultural factors play an important role in the smooth running of business.

As a fact the dominant religion of Punjab is a peaceful religion Islam. People of this

province have great devotion towards the principles and teaching of Islam. Due to these

reasons a specific group of people are against the Insurance policies, which affect the

business of SLIC to a greater extent. In such circumstances word of mouth and the social

set-up matter a lot. But at the same time the people of Punjab are also not in favor of

foreign products and foreign organizations, which is a positive sign for SLIC.

TECHNOLOGICAL FACTORS

In terms of technological advancement SLIC is behind its competitors in the race

of insurance business. Few insurance corporations coming to this field with a new and

modern technology has got a reasonable market share in a short span of life. But now

SLIC is launching online business. With this facility people can get every type of

information about SLIC. Their packages, rates and also can apply for online policies.

This service will provide a new ways and segments, where SLIC can compete on strong

grounds.


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APPLICATION OF CLASS ROOM LEARING

Being a student of BBA (HONS) I find that insurance sector is the most

appropriate organization for me to learn and doing the work because you learn and seek

the concepts in practical life. Although the practical applications of marketing tools are

very different from what we learn from books and teachers in classes it seems to be very

helpful for me.

I have done my semester before internship program and in these semesters I

learnt a lot which is applicable in this sector and have a scope in insurance sector. I

studied finance and marketing subjects in my study program. There is a lot of

applicability of these courses in SLIC.

All the processes of SLIC required marketing, finance and HRM terms like ratio

analysis, 4 Ps of marketing, inventory management etc. if I did not learn all this then I

would be face difficulties but my classroom study help me very much to understand the

operations of SLIC. Moreover presentations, assignments, projects, computer skills

especially MS Office was really have a great importance in financial institutions as well

as in my organization.

Class room learning also helps me to adjust quickly in the organization, and be

familiar with the operations. Due to my class room learning, I was able to acquire, utilize

and share my knowledge as well as the knowledge I got from my organization.


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WHAT I HAVE LEARNT IN SLIC OF PAKISTAN

One of the most important aims of the student life is to express himself / herself

correctly and adequately. This was the believe in my mind when I first decided to go to

SLIC to complete my internship program. Determined, Confident and Persistent in the

pursuit of knowledge and learning, I was on my way to SLIC, Multan Zone and joined

the organization on 29th

June, 2010.

I have learnt a lot of things from SLIC where I carried out my internship for six

weeks like,

Working schedules, salary system of employees, loan facilities. How to deal with the customers and what are the basic communication skills that

must have to talk with customers.

How to keep the policy plan sales record and customer database record. Learns about different job analysis methods and techniques, different training

methods, on-job and off-job training.

How to improve Renewal Persistency. Recruitment and to get result. Policyholder Services. Commission and interest preparation system.

This type of internship will give me opportunities to learn the working condition

and how to work in the organization and how to observe the environment in every aspect

of life. This type of training gives me a lot of confident to communicate with different

people at different level. I get lot of experience from this type of training and make sure

to help me in my career building and future life as well.


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