ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has fined the State Life Insurance Corporation of Pakistan Rs2 million for failing to maintain adequate internal controls and troubling policyholders.

The order, which related to Rs1m fines each in two separate decisions, was issued by a two-member SECP appellate bench comprising commissioners Zafar Abdullah and Tahir Mahmood.

One case related to a 10-year policy obtained by a woman in December 2004 with an annual premium of Rs22,188.

The policyholder was entitled to get Rs460,000 at the time of maturity of the policy. However, the State Life paid only Rs282,194.

The SECP bench directed the State Life to compensate the loss of Rs177,806 and pay a fine of Rs355,612 to the woman.

The second case related to a policy by a retired professor who obtained a 10-year insurance policy form in December 2004. He was entitled to receive Rs1.84m at the time of maturity of policy, but State Life paid him only Rs1.14m.

The bench directed the insurance company to compensate the loss and also pay him another Rs1.39m.

`The case in hand is a classic example of breach of trust and this act of the corporation can hamper the confidence of existing and potential policyholders, the bench noted.

The bench has also directed SECP`s insurance commissioner to open an investigation into other policies sold in 2004 to trace more policyholders who might have suffered similar fate.

The appellate bench observed that being the largest public-sector life insurance entity in Pakistan, State Life`s conduct must be in accordance with the law and in the interest of policyholders.