Listing of insurance firms, separating general and the life insurance businesses and increasing insurance companies’ capital are to be implemented early next year with parliamentary approval, the insurance regulator said.
“We will be able to implement several decisions that will ensure the stability and solvency of our insurance industry: The paid up share capital for each class of insurance business will be raised from Rs.100 million to Rs.250 million immediately, and to Rs.500 million by the end of 2010 on a staggered basis. We have also requested all insurance companies to voluntarily obtain a rating of Insurers Financial Strength (IFS) from a rating agency acceptable to the Insurance Board of Sri Lanka (IBSL) as an indication of their ability to pay claims,” Udaya Sri Kariyawasam, IBSL Chairman said in his 2008 report.
An IBSL official told the Sunday Times FT that these will come through amendments to the Insurance Industry Act. Mr Kariyawasam said the paid up share capital of insurance brokers will be raised from Rs.1 million to Rs.2.5 million immediately. “We will also increase their existing professional indemnity cover of Rs.5 million to a sum equal to three times their brokerage for the last financial year prior to the inception or renewal of the policy, subject to a maximum limit of liability of Rs.10 million,” according to his report.
The IBSL has also drafted a new set of quarterly reporting formats for insurance brokers, for gathering the information needed to facilitate prompt intervention when necessary, which are expected to be gazetted in due course.
According to the IBSL annual report, the growth in Sri Lanka’s insurance industry dropped to 12.11% in 2008 from 20.56% in 2007 while overall gross written premium from long term and general insurance business was Rs. 58 billion.