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Sunday, 14 March 2010

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More insurance penetration in North and East

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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