IBSL hails positive 2014 as insurance sector grows 5%

Published : 9:36 am  July 3, 2015 | No comments so far |  | 


 reads | 


The year 2014 was another positive year for Sri Lanka’s insurance industry, as Gross Written Premium (GWP) of both long-term and general insurance business sectors along with the assets of the insurance companies posted considerable growth.
The insurance industry regulator Insurance Board of Sri Lanka (IBSL) yesterday said the collective GWP of long-term and life insurance businesses in 2014 grew 5.14 percent year-on-year to Rs.99, 872 million.

The long-term insurance business recorded 7.04 percent yoy growth in premium income to Rs. 44, 610 million while the general insurance business saw 3.66 percent growth to Rs.55, 262 million.
The total assets held by insurance companies in 2014 amounted to Rs. 406, 872 million, recording a yoy growth of 13.81 percent.
The assets of the long-term insurance business grew 15.52 percent yoy to Rs. 249, 850 million while the assets of the general business increased 10.39 percent yoy to Rs.163, 834 million.

At the end of 2014, the investment of total assets of long-term insurance business in government debt securities amounted to Rs.111, 600 million, representing 44.67 percent (2013:Rs.93, 539 million; 43.25 percent), while such investment of the total assets of the general insurance business amounted to Rs.25, 496 million representing 15.56 percent (2013: Rs.28, 263 million; 18.98 percent).

Accordingly, the total investment of both long-term and general insurance businesses in government debt securities amounted to Rs.137, 096 million as at December 31, 2014, compared to Rs.121, 702 million in 2013.
Meanwhile, being the insurance sector regulator in the country with powers to investigate and resolve disputes between insurers and policy holders, 284 new matters were referred to IBSL during 2014.

IBSL said it settled/closed a total 230 complaints received in 2013 and 2014 and out of the matters settled, 38 claims were honoured by insurers upon the intervention of the IBSL.
Out of 21 insurance companies operated as at December 31, 2014, 12 were composite insurers (both long-term and general), 6 were general insurers and 3 were long-term insurers.

The assets of the long-term insurance business grew 15.52 percent yoy to Rs. 249, 850 million while the assets of the general business increased 10.39 percent yoy to Rs.163, 834 million

The composite insurers have been directed to split and list the entities separate at the Colombo Stock Exchange by 2016.
Analysts opine that this would improve transparency and governance, thereby increasing policyholder protection.
Meanwhile, minimum regulatory capital has been increased to Rs.500 million from Rs.100 million and risk-based capital (RBC) model is expected to replace the current rules-based solvency regime by 2016.

As a result, Fitch Ratings in a report last year said, it was expecting consolidation in local insurance sphere in the medium and long-term, encouraged by more stringent regulations.
“Fitch views this as positive, given the high number of insurers in Sri Lanka. Many are keen to concentrate on the more profitable life business and are looking to augment their portfolios through inorganic growth. Some composites are willing to divest the fiercely competitive non-life business,” Fitch stated.

Meanwhile, IBSL said premium income generated through insurance brokering companies with respect to general insurance amounted to Rs.14, 559 million up from Rs.14, 189 in 2013, while the premium income generated with respect to long-term insurance amounted to Rs.158 million, down from 191 million in 2013.

IBSL said, similar to previous years, insurance brokers’ contribution towards long-term insurance business was insignificant in 2014.
During 2014, 59 insurance brokering companies operated in the market.