Financial Times

SLI accuses unnamed firms of unfair practices
Sri Lanka insurance (SLI) has accused unnamed insurance competitors of inventing 'products' purely to increase premiums and increase market share at any cost.

Damien Fernando, SLI Director in a letter to the Secretary General of Insurance Association of Sri Lanka (IASL), says for this reason it has decided not to share sales information with other companies, because this approach (unfair practice) has resulted in a downward trend in premiums to a level that is unprofitable for everyone.

"Naturally sharing business figures with the industry creates a motivation for gross written premium (GWP) based underwriting. Many companies are only focussed in increasing the market share at any cost. The customers lose in the long term as some insurers obtain reinsurance from low end reinsurers or refrain from reinsuring to stay competitive," Fernando has said in the letter.
He pointed out that if a financially unsound insurer is bankrupt because of a heavy claim for which there is inadequate cover it will result in loss of confidence in insurance in the public, loss of jobs and a bad name for the industry.

SLI in support of its claim cited the case of the life product marketed by a company where the premium is four fold of the sum assured. "It is our belief that this is not an insurance product. Before long there would be a company who will be selling a life insurance product for a single-week duration and renewing it for the next 51 weeks of the year to get a multiple effect of premia. This is making a mockery of insurance sales data reported by other companies," the letter said.

Fernando said there is credible information of some firms inflating the business figures by reporting bogus businesses that is adjusted in the subsequent periods under other headings. "The advertising on market standing based on such erroneous sales figures would naturally mislead the consumers and the public," he said.

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