Peace pays dividends for SLIC

by Gamini WARUSHAMANA

The peaceful situation in the country has helped Sri Lanka Insurance Corporation (SLIC) to negotiate attractive rates from re-insurance companies. This reduces the outflow of foreign exchange. The risk surcharge imposed on many sectors have been reduced and the negotiations are on with re insurance companies.

"Recently we received very attractive rates for the Ceylon Petroleum Corporation and we are also negotiating the rates on the insurance of Bandaranaike International Airport (BIA).

The total claim of the terrorist attack of the BIA was Rs. 46 billion and it was the highest claim we have paid," said Executive Director of SLIC Aruna Lekamge.

Lekamge in an interview with Sunday Observer Business spoke on a wide range of issues relating to SLIC and the insurance industry. Here are the Excerpts of the interview.

Q: What are the changes that have taken place in the SLIC with the change of management from private sector to state sector?

A: SLIC was dying under private management and we can show it with figures as there was no growth in any sector while the profitability of the company was on the decline. Within eight months after the new board of directors assumed duties under the Supreme Court order, we reversed the trend and now the business is growing. For instance when we took over the SLIC, in terms of growth, our life insurance business was at 6th position in the market.

Today, we have achieved 70% growth rate and we are the number one in the sector. In the first quarter of this year our General Insurance division became the number one in terms of revenue.

Our objectives changed and SLIC now works with broader national objectives against mere commercial objectives it operated under private sector management.

As a government owned financial institution in a highly important industry such as insurance we should look beyond commercial objectives.

We are now looking at peoples' requirements, broader economic development goals of the government as well as of the responsibility in the insurance industry.

Q: How will the institution survive in a highly competitive market with this kind of external objectives?

A: This does not mean we compromise our profitability and we are in line with insurance business and follow the fundamentals of the industry. Within the last few months the company profits increased.

On the other hand the customer satisfaction is also important for this business to survive and grow. For instance we provide insurance cover for the farmers, the new industries such as construction industry that is booming at this moment. These sectors need an insurance cover and it is vital for the development of the country.

We provide our service to these sectors with adequate re-insurance cover and we are also earning profits. We follow the fundamentals of the insurance business at all junctures.

We paid Rs.6 billion as bonus for our customers, the highest amount ever paid in Sri Lanka.

Q: It was not a commercial decision but a political decision wasn't it?

A: No. It was a mandatory requirement and also a commercial decision to satisfy our customers.

Q: How will you prevent breading inefficiency and corruption into the SLIC which is common in most of the state institutions?

A: If the employees are satisfied these issues may not arise. We highly consider the satisfaction of our employees. We have given an autonomy for the employees and today they are responsible for the job they do. They have to show results as they are in a highly competitive business competing with the private sector. Therefore, the environment here is different to other traditional state institutions.

Q: What are the challenges faced by the insurance industry in Sri Lanka after the global financial crisis and the crisis experienced in many local financial institutions in the recent past?

A: The crisis proved that if the companies are operating against the fundamentals of the business that will create problems.

Those financial companies had built different concepts out of the fundamentals of their industries.

We believe that the insurance business must be built on the fundamentals of insurance. The public opinion and public acceptance level will decide the final results. Satisfaction of the customers, other stakeholders and employees are most important aspects in our business.

Q: What is the vision of SLIC for the next five years?

A: We are planning a national insurance policy for the country which covers total risks of the citizens.

It includes many new industries, sectors such as agriculture and construction industry, risks associated with various professions and professionals, health insurance considering the new demographic challenges such as ageing population. We are working with the Ministry of Public Administration to provide a health insurance policy for the pensioners. We will also introduce a national health insurance policy.

On the other hand SLIC is a very important state organisation that our financial strength is highly important for the government in many aspects. We want to consolidate our position and improve the profitability of the company and fulfil our national objectives. During the eight months SLIC contributed to ensure the stability of the financial system in the country.

We did strategic investments in four major banks Seylan, DFCC, NDB and HNB. Now we have our directors in all these banks.

Q: What are the new opportunities that have opened for the insurance industry in the post war era?

A: A huge new market has been opened after nearly three decades. Our first priority is to settle all the claims in the North and the East. Our North office started in Jaffna and a marketing drive has been launched to cover livelihood development of the people.

We will give priority for agriculture and other industries.

Recruitment will begin soon and the youth in North and East will get employment opportunities.