General insurance industry urges innovation

Wednesday, 11 May 2016 00:00 -     - {{hitsCtrl.values.hits}}

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By Shehana Dain

Reflecting on the lacklustre growth in general insurance penetration a top official yesterday urged insurers to make maximum use of its sales staff to rev traditional thinking patterns back into the new age of business. 

In that context while the insurance industry has lost its yester year attractiveness in the form of margins due to intense price competition insures are facing yet another impediment due to leasing and finance companies intensifying the motor insurance business competition. 

Out of 39 insurance companies in Sri Lanka 17 are in the general insurance sector. The growth rate recorded in this sector was 13% in 2015 compared to 2014 and generated Rs. 69 billion GWP; however the penetration levels have increased only marginally. Out of this total GWP motor insurance grabs the bigger share of the pie constituting around 60% while fire insurance remains low at around 10% and miscellaneous which includes health insurance amounts to only 20%. 

Addressing the gathering at the first ever general insurance sales congress (GISCO) themed ‘growth through innovation’ yesterday, Insurance Board of Sri Lanka Chairperson Indrani Sugathadasa said: “Growth won’t come if you do the same thing again and again; these figures show that general business is over relying on motor insurance. It’s high time to concentrate on other classes of business as there is a scope and potential to achieve a growth in that sector. A business cannot overlook innovation that should be encouraged otherwise the outcome might be rather negative.” 

 Noting that insurance is yet to be recognised as a risk mitigation tool by the majority of the population she said that issues such as lack of consumer awareness, understanding and trust continue to prevail and have contributed significantly to the low penetration levels.

“The low penetration level is an indicator that there is disconnect or broad gap between the consumer and the insurance providers. Therefore there is a need to bridge this gap,” he added. 

Furthermore she pointed out that the sales force could be of greater importance if the senior management look at them as information feeders for the product design team which in turn could result in innovative product portfolios preferred by customers. 

Stressing on the inadequate innovative ideas Amana Takaful Insurance CEO Fazal Ghafoor highlighted: “In the area of process innovation I have to say today the industry is far too sleepy. The industry has changed, the business has moved on but the same old practices prevail but we have to be stead first in some of the things. In our organisations we have customs which are not really relevant today but even the youngsters’ fear change. All the innovation we do in the industry is cutting price.” 

Ceylinco General CEO Ajith Gunawardena citing his experiences on modernism in the motor insurance business said: “Today all the policies that we sell are the same whether its fire, marine, bonds you name it its almost identical, only the name of the company is different. Only thing they do is they look at the easiest way of getting the business and undercutting the premium.”

Pix by Upul Abayasekara