A veteran insurance consultant has urged the creation of a Code of Conduct and an immediate halt to the current practice of under-cutting tariff rates.
Speaking to The Sunday Times FT, Consultant Insurance Adviser S.I. Fernando,who has over 40 years of experiance in the insurance field, said that consequent to the privatisation of insurance in Sri Lanka, several new companies commenced business. Due to the high competition among these companies and the two state corporations every company was all out to grab each others' business at any cost by undercutting tariff rates. This was the beginning of the ruination of the insurance industry, he said.
Privatisation in 1988 saw an increasing number of companies start under-cutting tariff rates in order to increase business. “By doing so, these companies do not give proper guidance to the client … rather they dupe the client for their benefit,” he said.
There is no unity amongst insurance companies; each one carries on in its own way. There is no proper underwriting; - policies and endorsements issued contain numerous mistakes, not like in the good old days, he said. The premiums vary from one to another and there is no uniformity. All this is because the Insurance Board of Sri Lanka adjusted tariffs of major classes of insurance like fire and motor and allowed the companies to regulate themselves by washing their hands off and sitting pretty without regulating the industry. If they were really interested, they could have taken action against the companies for cheap advertising, he said.
Prior to nationalisation, everything was operating smoothly and efficiently. Even after nationalisation, the Insurance Corporation as a monopoly, continued to operate fairly well, until a setback took place owing to it’s failure to deliver the insuring public a good service. However, things changed a lot after the formation of the National Insurance Corporation under the efficient chairmanship of Lionel Fernando. Even prior to privatisation of insurance, tariff rates were quoted and the public accepted it. There was no under-cutting of rates. If the insurance business is carried, on proper lines by following one theme, the insurance companies and the policyholders will benefit. In Sri Lanka , because of cheap competition in companies, they go all out to grab business at any cost by offering low rates without any basis for their survival and achieving targets.
He commended the growth of the insurance industry but called for more expansion highlighting the fact that only 10% of Sri Lanka’s population has any type of insurance. He said a Code of Conduct would increase transparency and lead to more faith among the masses about the industry. Recalling the support the insurance industry gave in the aftermath of the 2004 tsunami tragedy, he pointed out that this was a perfect example of how "lack of awareness of insurance and its benefits” had a direct impact on economic recovery.
Legendary inventors and insurance ads - Letter
There are several insurance advertisements on TV/ media where the professionalism of legendary inventors is matched with that of the respective insurance company’s performance.
It must be firmly emphasized that neither present day individuals nor companies could match their performances with past time legendary, brilliant inventors like Alexander Graham Bell, the Wright Brothers, Thomas Alva Edison and so on.
These legendary inventors cannot be equalled with contemporary professionalism. On the other hand we are very well familiar with how representatives of Sri Lankan insurance companies canvass their insurances going behind the public and businessmen in order to establish insurance policies whether it may be life, property or marine insurances.
Against this background, does an insurance company have a moral right to equal or match their professional performance with brilliant inventors?