Despite Sri Lanka being positioned in a key Strategic Location in the Indian Ocean being a market that has wider access to over 4.5 billion people in Asia including China, India, Bangladesh, Indonesia, Pakistan, the largest multinational insurance firms view the country as a potential market for both general and life insurance, key analysts from Insurance industry notes.
Amidst ever changing Global Warming conditions, country’s risk in facing Disaster vulnerabilities and ongoing infrastructure development drive across the 20 million populace will give enormous opportunity from a market potential to insurers, key international insurance analysts points out.
Analysts highlight that at least two insurance firms are for sale, while many foreign and local buyers are setting the stage for consolidation in the insurance sector. Recently in February 2018, Janashakthi Insurance PLC’s (JINS) General arm was bought by multinational insurer, Germany’s Allianz at a whopping Rs. 16.4 billion, whilst Japan’s Mitsui Sumitomo Insurance Company Ltd increased its stake in Ceylinco Insurance PLC to 10.5 per cent merging as the 3rd largest shareholder in Ceylinco Insurance. Sources from industry adds that several domestic insurers may also seek to divest their insurance arms this year.
Meanwhile in early 2017, Fairfax Financial Holdings Ltd. announced that it has successfully completed the amalgamation of Fairfirst Insurance Ltd. and Union Assurance General Ltd. (UAG). UAG, a company in which Fairfax holds a majority stake since January 2015, acquired 100% shares of Asian Alliance General Insurance Ltd. (AAGI) in October 2016 and subsequently rebranded it as Fairfirst Insurance Ltd. Fairfirst has since been operating as a fully owned subsidiary of UAG.
In late 2017 Sri Lanka’s government boosted Insurance Market value to over US $ 12 billion overnight with a Free Insurance Scheme for all 4.5 Mn School Students in the country, however some students had still not received a formal document on the policy according to sources. Analysts view that the government’s move will artificially increase the enthusiasm towards purchasing personal insurance products by citizens in the long run spanning across a 20 to 30 year horizon. Accordingly in October 2017, Sri Lankan government took a step forward to promote insurance targeting future of the population, marking a larger social security scheme implemented in value amounting to over Rs. 1.8 trillion or US $ 12 billion disbursed to future countrymen’s safety and health. This social security initiative if continues also will insure over 400,000 young kids entering grade 1 of the school every year, and automatically increases Sri Lanka’s life insurance (long term insurance) penetration to reach over 35% of the population from the current level of 13% and creates and environment which makes Life Insurance market in the country to increase by over US $ 600 million annually as a result. According to analysts, this will result Sri Lankan students adopting to a system that they require insurance and Sri Lanka will reach the goal of 100% Life Insurance penetration by at least 2030 when Sri Lankans over the generations gets to learn the value of protection by this initiative. According to reports although a total of Rs. 1.8 trillion is required to insure all 4.5 million students at Rs. 400,000 per policy for each student, the present Government at the launch only allocated Rs. 2.7 billion for the year 2017. There is no initial payment from any party and the government bears the total cost.
In 2016 alone, Sri Lanka’s long term insurers had issued 662,701 new life insurance policies decreasing by 10.51% compared to 740,511 new policies issued in 2015. Accordingly, the total life insurance policies in force reached 2,895,542 as at the end of 2016 (2015: 2,889,763). Sri Lanka’s life insurance penetration is less than five percent in terms of its premium to GDP ratio. However, household life insurance penetration is around 23 percent. Lack of education and disinterest in insurance are key factors for the low penetration in the life insurance sector. Year 2016 ended with a positive note for the Sri Lankan insurance industry where the total Gross Written Premium (GWP) generated from long term and general insurance sectors collectively recorded a growth of 16.27% (2015: 16.22%) and generated premium income amounting to Rs. 142,969 million or Rs. 142. 9 billion (2015: Rs. 122,962 million). Similar to the previous year. The long term insurance sector generated GWP amounting to Rs. 63,495 million in 2016, up by 18.26% against the GWP of Rs. 53,691 million generated in 2015. This significant growth was attributable to factors such as increased awareness on life insurance, introduction of new life insurance products to cater dynamic customer requirements such as retirement solutions and investment products, enhanced customer service, etc.
The general insurance sector recorded GWP amounting to Rs. 79,474 million in 2016, posting a growth of 14.73% compared to Rs. 69,271 million recorded in 2015. General insurers were able to increase their premiums steadily year on year amid strong competition prevailing in the general insurance market by means such as focus on niche markets, introduction of innovative general insurance products, implementing Enterprise Risk Management strategies, focusing on risk selection and pricing, etc.
Source From biz.adaderana
Author: Biz Editor
#SriLanka #News #lka
Powered by WPeMatico