State Life Insurance Corporation of

Pakistan
&
Insurance Sector of Pakistan

Presented by : Muhammad Ullah

Class: MBA (B&F)

Source:
Mohiuddin Aazam The Dawn, March 22, 2010

S.M.Abbas Zaidi Pakistan & Gulf Economist

April 19, 2010. vol: XXIX
 Summary

Why I select this topic?

The most significant measure of an industry or an activity is its

contribution towards employment generation, strengthening linkages
with other sectors of the economy in promoting growth and stability,
and creating a sizeable impact on the national income of a country. In
developed countries, the Insurance industry is a necessary part of daily life
and serves all the above mentioned purposes.
 INTRODUCTION
Insurance :
The equitable transfer of the risk of a loss , from one
entity to another , in exchange for payment .

Parties involved

Insurer :
the company selling the insurance

Insured or Policyholder :
the person or entity buying the insurance policy
 Insurance sector of
Pakistan
History :

77 foreign insurance companies were dominating the

Pakistan market post partition when the strength of
local insurers was only seven. In 1952 Government
established Pakistan Insurance Corporation to
promote the local insurance industry and number of
local insurance companies increased to 60 while
number of foreign companies reduced to seven.
 
In 1976 National Insurance Corporation (NIC) was
formed, with the purpose of undertaking General
Insurance business relating to any public property.
State Life Insurance Corporation of
Pakistan

The State Life Insurance Corporation of Pakistan

(the corporation) was incorporated in Pakistan on
November 1, 1972 under the Life Insurance
N a t i o n a l i z a t i o n O r d e r, 1 9 7 2 . T h e c o r p o r a t i o n ' s h e a d
office is located at Karachi, Pakistan. The
corporation is engaged in the life insurance
business. It is the biggest life insurance
corporation in Pakistan.
 Major Achievements

Ø Reduction up to 33% in the premiums on the past and

potential life policies for the benefit of policyholders
Ø The paid-up capital increased from Rs.10mn in 1972 to
RS.900mn in 2007.
Ø The premium income increased from Rs.0.317bn in 1972 to
RS.18.717bn in 2007.
Ø Investment income including rental income increased from
Rs.0.317bn in 1972 to Rs.17.505bn in 2007.
Ø Total statutory fund of State Life stood at Rs.156.7373bnin
2007 as against Rs.1.494bn in 1972
Major Achievements …
continued

Investment Income as at 31-12-2008 (Rs in million)

Particulars Portfolio

Govt Securities 13,084

TFCs/Approved Govt Securities 149

Equities 2,523

Bank Deposits 694

Investment properties 342

Policy Loans 1,308

Other Income 1,086

 Financial performance

During 2008, SLIC of Pakistan performed exceptionally well in its core

business operation despite of overall economic recession.

Particulars 2007 (Rs) 2008 (Rs) Increase

Total income 36,222mln 41,830mln 15.5%

Management expenses 6,266mln 8,000ml 27.67%

Expenses ratio 33.4% 35.0% 0.6%

Payment to policyholders 10,783mln 12,779mln 18.5%

Statutory funds value 156,737mln 177,459bln 13.22%

 Business portfolio wise
performance

Source of income 2007 (Rs) 2008 (Rs) Increase

individual life policies 159mln 199mln 27.89%

Group life policies 2,822 3,,564 26.29%

Real Estate 316mln 342mln 8.2%

Investment 17,187mln 18,791mln 9.33%

 International Perspective of Pakistan
insurance industry

Percentage of the GDP :

Insurance penetration rate or insurance premium as
percentage of the GDP is only 0 . 8 per cent — the lowest
among comparable countries .
Insurance premium as percentage of the GDP

Country Penetration Rate Global Ranking

India 4.6% 31st
Malaysia 4.3% 33rd
China 3.3% 43rd
Sri Lanka 1.4% 71th
Philippines 1.4% 73st
Indonesia 1.3% 75th
Iran 1.1% 78%
Bangladesh 0.9% 80th
Pakistan 0.8% 83rd
Saudi Arabia 0.6% 85th
 International Perspective …continued

In terms of the value of insurance

premiums :
Pakistan is a little better than Bangladesh and Sri
Lanka but far behind many other countries .
 Value of Insurance Premiums

Country Global Ranking Premium value in Share of World

(2008 ) Market in 2008
China 6th $140.818bln 3.30%
India 14th $56.19bln 1.23%
Malaysia 34th $9.335bln 0.22%
Indonesia 39th $6.903bln 0.16%
Iran 47th $4.243bln 0.10%
Saudi Arabia 50th $3.070bln 0.07%
Philippines 54th $2.299bln 0.05%
Pakistan 63rd $1.133bln 0.03%
Bangladesh 75th $717mln 0.02%
Sri Lanka 78th $623mln 0.01%
 Opinions …
ØInsurance penetration in rural areas to gain the
customers .
Ø
ØInsurance scheme for non - borrowing small formers .
Agriculture is a primary threat that is not insured
Ø
ØBancassurance :
Banks should provide insurance services
Ø
ØE - Commerce :
New technology should used for selling insurance . In
Pakistan a couple of
Insurers are able to provide quotes through their websites .
Ø
ØThe future :
The future looks very positive for the non - life insurance
market in Pakistan . Although there are many challenges ahead , the
low penetration in the non - life sector , and strong economic growth
are two factors likely to lead to significant premium growth in the
years
 Conclusion & Recommendations

The existence of a healthy insurance sector is an important condition for

the well being of the population and for sustainable economic growth.

The development of this sector should become a priority of

governmental economic and social policy. In order to achieve this goal,
we I have two recommendations. First, the supervisory body for
insurance activity (the “State Commission”) should be provided by the
government and by the insurance companies with significantly higher
financial resources in order to be able to fulfill its extremely important job
in a proper way. Second, consumer protection should be improved
through the creation of a neutral arbitrator.
Thank You