SL’s insurance sector premium income increases with reprised policies
By: Staff Writer
January 25, Colombo (LNW): Sri Lanka’s insurance sector witnessed an increase in Gross Written Premium (GWP) with reprised policies amidst rising price levels while insurance claims also increased during the first half of 2023, central bank report revealed.
The size of the insurance market in Sri Lanka has been growing in recent years, although it still remains relatively small compared to other countries in the region. According to recent estimates, the total premium income of the insurance industry in Sri Lanka was around LKR 80 billion (approximately USD 400 million).
Lifeinsurance continues to be the largest segment of the insurance market, accounting for around 70% of total premium income.
The general insurance segment, which includes products such as motor and health insurance, has been growing at a faster pace and is expected to continue to do so in the coming years.
Meanwhile, general insurance lagged behind long-term insurance in terms of profitability while liquidity ratios improved for both segments.
In terms of capital adequacy, these segments showed a divergent performance with the general insurance segment recording a decline in the capital adequacy ratio while the same for the long-term insurance sector improved.
Going forward financial institutions, particularly banks, LFCs and insurance companies would have to closely monitor their exposure to the sovereign and implement prudent measures to minimise such risks to ensure stability of the sector.
Moreover, Sri Lanka’s payment and settlement system exhibited resilience despite the dynamic nature of the financial landscape and the evolving digital payment systems during 2023.
The insurance industry in Sri Lanka has been growing steadily over the past few years, with several new players entering the market and offering innovative products to meet the changing needs of consumers.
The industry is largely dominated by life insurance, although there has been a recent increase in demand for general insurance products such as motor and health insurance.
One of the key challenges facing the insurance industry in Sri Lanka is a low level of awareness among consumers about the benefits of insurance and the various products available.
This has resulted in a relatively low penetration rate for insurance products in the country, with many people still relying on traditional forms of savings and investment.
Despite these challenges, the industry is poised for growth, driven by rising incomes, urbanization, and the increasing importance of the middle class.
The government has also been supportive of the industry, with a number of initiatives aimed at increasing access to insurance and improving the regulatory framework.