More insurance penetration in North and East
by Lalin FERNANDOPULLE
Insurance penetration in the North and the East has increased
following the new environment prevailing in the provinces, said
Chairman, Insurance Board of Sri Lanka (IBSL), Udayasiri Kariyawasam
addressing the media on the progress of the insurance industry.
He said 42 insurance company branches were set up in the two
provinces since mid last year. The need for insurance has increased due
to the growth in businesse.
“Nine major insurance companies launched operations providing
employment to a large number in the region. This increase would benefit
the regional economy”, Kariyawasam said.
He said the IBSL has taken several measures to strengthen its
regulatory role and create a level playing field in the industry.
Loss adjusters will be regulated and guidelines will be introduced
for insurance auditors.
The IBSL will replace the current Rules Based Supervisory system with
a Risk Sensitive Capital Model that focuses on risks rather than rules.
The National Insurance Trust Fund has decided to reduce the premium
of the Terrorism cover by 75 percent from April this year on account of
the end of the war.
The insurance industry faced a setback in its Gross Written Premium
GWP declining from Rs. 58,166 million in 2008 to Rs. 57,919 million last
year.
Kariyawasam said the decline in GWP was due to the unfavourable
environment created by the global financial crisis that had a major
impact on all businesses.
The number of insurance broking companies dropped to 43 last year
from 54 in 2008. Insurance brokers play a vital role as intermediaries
in insurance promotion.
Amidst the dark clouds there had been a silver line of a 17 percent
increase in investment in government securities by insurance companies
last year.
In terms of Regulation of Insurance Industry Act 20 percent of
technical reserves of General insurance and 30 percent of Life fund
should be invested in government securities by insurers.
The GWP of Motor insurance also declined to Rs. 17.9 million last
year from Rs. 18.7 million in 2008. The vehicle population increased
from 3.3 million in 2008 to 3.5 million in 2009.
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