Delays cripple overseas investments by local insurance firms

The insurance industry is raising concerns about the delay in pushing necessary regulations through to let them invest abroad despite the Insurance Board of Sri Lanka (IBSL) having talks with the Central Bank to liberalise the directives.

“We are talking to the Central Bank about it. Presently, on a case by case basis we approve companies, but we are looking at a blanket law,” Lasinee Seresinhe, IBSL told The Sunday Times FT.

The government through a gazette notification allowed insurance firms to invest up to 20 percent of their ‘investable’ funds in companies abroad under the Insurance Act last year, but there was a mismatch with the exchange control regulations, as they were not amended accordingly.“Since exchange control does not recognise this, we cannot invest directly, but on a case by case basis approvals are granted by the Central Bank,” Manjula de Silva, CEO HNB Assurance told The Sunday Times FT. However, he noted that by the time the exchange control approvals are granted, the business will be lost, due to the entire ‘process’ taking long. “The stocks or the funds in which we want to invest will be grabbed by another competitor by the time approvals are granted,” he explained, adding that IBSL has brought this to the notice of the Central Bank.

A Central Bank source confirmed that they are in dialogue with IBSL, but did not indicate when they will alter the rules. “There has just been one application,” he said, but insurance industry sources said the companies do not apply for the very reason that the procedure is long drawn.

De Silva said the concept behind the move to allow insurance firms to invest in other countries was good, because it will help the companies to structure more attractive products for the customers. “We can give a better deal to our potential customers and existing policy holders,” he added.