By Duruthu Edirimuni Chandrasekera
Sri Lanka’s insurance market is slated to undergo a equivalent consolidation to that of the finance sector which is now in that procedure when new regulatory measures are imposed early next yr, industry specialists say.
“The (insurance) regulations (effective) February 2015 are to boost the risk primarily based capital (RBC) to Rs. 500 million per class of organization – Life and Non Lifestyle Insurance coverage business, from Rs. 25 million,” one business analyst advised the Business Instances.
Some insurance coverage firms agreed, saying that the construction for the split with Existence and the Non Daily life Insurance coverage (general) firms will shrink the asset base of these companies. “As a end result not all would want to remain in this business or some might want to focus only on both life or standard insurance coverage. As a outcome some companies may be sold or merged as they may be as well tiny after the split takes place,” Prakash Schaffter, CEO Janashakthi told the Organization Instances on the sidelines of a media conference this week to announce their 2013 benefits.
He said Janashakthi Insurance coverage was prepared to split its daily life and basic businesses, later on checklist the 2nd unit and also move to a RBC.
One of the important actions taken towards splitting by the business, he said was that their Product sales, Claims and Underwriting functions which have been managed separately to a large extent had been further segregated in the course of the year. “The firm also developed a new submit and recruited a Deputy CEO for the duration of the 12 months.
An inner activity force was appointed to make certain regulatory compliance and a smooth operational transition by 2015. Furthermore, a restructure of the Existence business was initiated for the duration of the year to area the Life organization on a more powerful platform for enhanced growth and marketplace leadership in 2015. The thorough programme of restructure which is currently underway would incorporate strategic, marketing as properly as operational adjustments in the Existence organization.”
The segregation of some of the functions this kind of as Income and Advertising and marketing will require efforts to deal with these incremental costs, he explained. “We will appear in direction of the optimistic options that we foresee, such as the higher concentrate on the separate segments of organizations which we think will sooner or later consequence in greater effectiveness and enhanced productivity and thus development of profitability in both segregated businesses.”
Sri Lanka’s insurance business consists of 21 companies as at 31st December, 2013, of which 12 businesses engage in composite insurance (Daily life and Non Daily life), and 6 transact only Non Existence. This number of companies for a population of just over twenty million has produced the insurance coverage market in Sri Lanka intensely competitive. Regardless of the presence of so numerous entities, the penetration of Daily life Insurance coverage nonetheless stands at a mere twelve.1 per cent of the population, and at 29.1 per cent of the doing work population.
Meanwhile Janashakthi Insurance coverage reached its highest ever consolidated revenue of Rs.9.9 billion reflecting 20 per cent development, the results for 2013 showed. The organization also noticed its highest Profit following Tax of Rs. 1 billion and biggest recorded consumer base of 700,000 clients.
The firm attained these outcomes whilst honouring over Rs. 4.4 billion in claims above the previous 12 months alone, according to Mr. Schaffter.
Janashakthi also reported a complete asset base of Rs. 18.6 billion, whilst its stated capital of Rs. 1.49 billion is the highest in the class.
In addition, the firm attained Rs. 76 billion Gross Written Premium more than 75 per cent of which is made up of non-lifestyle premiums, reflecting the company’s renewed focus on diversification.