Govt eases burden on insurance industry
The burden on the insurance industry is less as the government has
decided to pay compensation for loss and damage of property to the
victims of the ammo dump fire at the Salawa army camp in Kosgama.
Insurance industry officials said there will not be an adverse impact
on the insurance industry as the government has undertaken to provide
relief to those affected.
Chairman, National Insurance Trust Fund Board (NITFB), Manjula de
Silva said the destruction due to explosions is not covered by NITFB
schemes. “As a result there will not be claims arising from the
disaster.” However, he said there could be claims such as damage to
property and assets which the insurers will look into and pay
compensation after assessing the damage. The National Natural Disaster
Insurance Scheme under which compensation is paid to flood victims is
not applicable to the Kosgama incident which was not a natural disaster.
“But if a house is damaged and its owner had obtained an explosion cover
he or she could claim compensation from the insurer,” de Silva said.
He said the NITFB has yet not heard from insurance companies of
claims being made due to the explosions following the Kosgama fire last
With regard to the ability of the insurance industry to cope with the
double blow, de Silva said NITFB provides 30% of the re-insurance to the
insurance industry and added that the introduction of retro-cession is a
sound move which enables insurers to re-insure its liabilities in the
The NITFB too has re-insured its liabilities in the re-insurance
market and as a result the NITFB is able to limit its losses to around
Rs. 1 billion from claims of around Rs. 2 billion from the natural
disaster last month.
The government obtained an insurance policy through the Natural
Disaster Insurance Scheme to cover its obligations in the event of a
The NITFB funds the compensation for repairing houses and micro
enterprises with a turnover less than Rs. 10 million a year affected by
natural disasters following assessment of damage. “Around 700 houses
were fully damaged while around 5,000 were partially damaged by the
recent floods. Only a small percentage of those affected were insured,”
de Silva said.
The insurance scheme also pays a compensation of Rs.100,000 to the
next of kin of the deceased in a natural disaster.
The NITFB set up in 2006 as a State entity takes care of the
under-served segment in insurance.
The Principal Officer of Insurance Board of Sri Lanka and CEO, Union
Assurance, Dirk Pereira said the Kosgama fire will not have a major
impact on the insurance industry as the government has undertaken to
re-build the houses and support the factories destroyed by the fire.
Therefore, the insurance industry will have limited responsibility in
COO, Janashakthi General Insurance Ltd., Dayalanie Abeygunawardena
said there were no intimations made so far from the Kosgama incident.
CEO, Asian Alliance, Ramal Jasinghe said as far as Asian Alliance was
concerned there were no claims so far.
“We do not have a single claim as yet. There may be claims on
property later on, but no property or life insurance claims at present,”
Deputy Chairman, Senaratne Insurance Brokers (Pvt) Ltd., Ainsley
Alles said the Kosgama armory explosion was another blow to the
insurance industry but the Army and the Government went on record
stating they would compensate the victims and the damage caused to their
It would be great if the authorities stick to their word as many are
uninsured, he said.