On the back of a 19.63% growth in the insurance industry coupled with some amendments to the law, insurance firms came together last week to create awareness in insurance to the general public, in a bid to capitalise on the peace dividend.
“The Regulation of Insurance Industry Act (RII Act) was amended in early February and now the industry has been called to be streamlined with this Act,” an industry source told the Business Times. In March last year the Business Times reported that Insurance Board of Sri Lanka (IBSL) will bring in more regulation to the industry.
According to IBSL sources, the Act now requires insurance firms to segregate their life and general sections into separate entities and also they are required to go public by 2016. “The Act has permitted firms to function as agents. So far they've only enabled them, but the criteria in which they should act was drafted and sent by the IBSL board to the industry for comments," a source told the Business Times.
He said that the National Insurance Trust Fund (NITF) now is under the IBSL. The Insurance Association of Sri Lanka (IASL) last year was raising concerns with the IBSL regarding the entry of NIFT into commercial insurance.
At the time they said that NIFT was not meant for such a purpose and also the fact that it has been exempted from the Insurance Act raises serious issues on how NIFT is governed. “They said that all the insurers are governed by this Act. Exempting NIFT from this regulation when its competitors are governed by this Act creates a stark imbalance in the market, so the IBSL got NIFT into its fold,” the IBSL source said. He also said that IBSL will stipulate some ‘qualifications’ to become a loss adjuster and also for their registration. “Presently there’s nothing to prevent anyone from becoming a loss adjuster. What IBSL will do is formulate guidelines such as registering with the IBSL if one wants to become a loss adjuster and also outline the manner in which accounts are presented and disclosures are made to the auditors,” the source said.
The overall gross written premium incomes of the 18 IBSL registered firms saw a 19.63% growth last year to Rs 68.4 billion compared to Rs 57.2 billion in 2009.
In this backdrop, the IASL launched a campaign to raise public awareness of their products on Thursday to combat the low understanding by people and also enhance their penetration. “The insurance product has not been perceived positively and understood correctly by the general public when compared with other financial services in the market," Ramal Jasinghe, President IASL told media.
"This is mainly due to the lack of awareness of the concept of insurance among the insurable public," he said, adding that IASL designated May 5 as ‘Insurance Awareness Creation Day’.