Sri Lanka’s insurance industry is up in arms over a recent Treasury circular directing all State institutions, corporations and companies to secure insurance cover only through the State insurance companies – Sri Lanka Insurance Corporation (SLIC) and National Insurance Trust Fund (NITF). Earlier the State sector sought insurance with all insurance companies.
In a recent letter of protest to Udayasiri Kariyawasam, Chairman of the Insurance Board of Sri Lanka (IBSL), Sri Lanka Insurance Association President Manjula de Silva has expression concern over the decision saying it effectively shuts out a large volume of business to other insurance companies.
“We also wish to point out that Government institutions will also lose substantially due to the absence of a competitive market which would determine the right price for their insurance purchases,” the letter from the association, which represents all insurance companies, has stated.
Neither Mr. Kariyawasam nor Mr. de Silva was available for independent comment due to the long holidays.
The circular issued in September by then Treasury Secretary Sumith Abeysinghe came a few months after the judgment by the Supreme Court, cancelling the earlier privatization of SLIC and handing it back to the State. The circular directs all Government and semi-government institutions to handle all their requirements of all forms of insurance through the two State institutions.
“What is the purpose in the Government saying this is a free market and that the private sector is the engine of growth, when the public sector is precluded from getting the best insurance deal?” asked a senior insurance industry official.
However IBSL sources said the Government has a right to channel insurance to its own companies, just as much as John Keells Holdings (JKH) would channel most of its insurance business to Union Assurance Ltd (UAL), because JKH has a sizable stake and interest in UAL.
“It is up to the private sector to find new business because the insurance business is still largely untapped and there are lots of opportunities out there,” he said. |
E-mail
