IBSL reviews insurance industry performance in 2010

The Insurance Board of Sri Lanka (IBSL), as the regulator of the insurance industry, provides necessary guidance and direction to the Sri Lankan insurance industry.

The IBSL plays a mix of roles; protector, empowerer, developer and proactive regulator, for the benefit of both the insurance industry and customer. As a result, the insurance industry was able to achieve a significant growth during the year 2010 when compared with the year 2009.

The IBSL was established to develop, supervise and regulate the insurance industry in Sri Lanka in terms of the Regulation of Insurance Industry Act, No. 43 of 2000.

There were 19 insurance companies (insurers) registered with the IBSL at the end of year 2010. Twelve of them were composite companies (dealing in both General and Long Term Insurance businesses), five of them engaged in General Insurance business and two companies engaged only in Long Term (Life) Insurance business.

The overall Gross Written Premium (GWP) Income for Long Term Insurance and General Insurance businesses was Rs. 68,493.345 million compared with the previous year amount of Rs. 57,252 million which reflected a growth of 19.63%.

The General Insurance Business has demonstrated a progress of its overall Gross Written Premium Income during 2010 when compared to the year 2009. The Long Term Insurance Business also showed a progress of its overall Gross Written Premium Income during the first half of 2010 when compared to the year 2009.

The overall Gross Written Premium Income of General Insurance Business amounted to Rs. 37,342.19 million (2009 – Rs. 33,485 million) while the overall Gross Written Premium Income of Long Term Insurance Business amounted to Rs. 31,151.155 million (2009 – Rs. 23,767 million) during the last year.

The total assets of the insurance companies have increased to Rs. 222,242.799 million at the end of year 2010.

Total Assets valued at the end of year 2009 was Rs. 181,044.917 million.

In terms of Section 25 of the Act, 20% of assets of the Technical Reserves of General Insurance Business should be invested in Government Securities. Similarly, 30% of the assets of Long Term Insurance Fund should be invested in Government Securities.

This is a mandatory requirement that all insurance companies have to comply with, which is monitored by the IBSL.

The investment in Government Securities represents 50.19% (Rs. 70,059.073 million) of the total assets of Long Term Insurance Business and 23.70% (Rs. 19,584.153 million) of the total assets of General Insurance Business at the end of year 2010. This is in excess of the required amount of investment in Government Securities by the Act.

During the year 2010, a total of 503,543 life insurance policies have been issued, giving a penetration rate of 10.9%. This shows an improvement when compared with the rate of penetration in the year 2009, which was 10.4% with a total of 464,249 life insurance policies issued during the year 2009.

Insurance broking companies and insurance agents, as intermediaries, make a significant contribution to the insurance industry. In Sri Lanka, there are approximately 37,000 Insurance Agents, who have been appointed by and registered with insurance companies and insurance broking companies.

Insurance Agents play a vital role mainly in marketing life insurance products.

A total of 41 insurance broking companies, registered with the IBSL in terms of Section 82 of the Act, were engaged in insurance broking business.

Insurance broking companies mainly concentrated on general insurance business and their total gross written premium generated from both General Insurance business and Long Term Insurance business amounted to Rs. 9,539.66 million during the year 2010, compared with the previous year amount of Rs. 8,885.67 million, which reflected a growth of 7.36%.