Industry predicts rise but increasing clients remains a challenge
By Charumini de Silva
Leveraging on the positive performance in the first half of the year, the insurance industry expects to post double-digit growth in 2015 but faces a tough task to reach the majority of the population, with only 12.6% having life insurance policies.
Insurance Association of Sri Lanka (IASL) President Dirk Pereira believes the life insurance sector has much potential for development as economic landscapes and the disposal income of people are improving significantly.
“Creating more awareness among the public in an effective way will be the key to enhance the life insurance sector,” he said.
Commenting on the segregation of life and general insurance between companies, he noted the industry had taken it in a positive way. “The split of composite companies is expected to promote greater focus, transparency, policyholder protection and visibility on profitability,” Pereira added.
Nonetheless, challenges do exist. Insurance Board of Sri Lanka (IBSL) Director General Damayanthi Fernando stated Sri Lanka has low insurance penetration levels compared to most Asian countries pointing that only 12.6% of the total population has a life insurance policy while 29.6% of the working force has a life insurance policy.
“There is a vast underserved market, which needs to be tapped and developed in order to increase the life insurance penetration in the country.”
According to Fernando, the total insurance advisors working for insurance companies in 2014 was 43,000, an increase of 11% compared to 2013.
“Enhancing life insurance penetration has been and continues to be one of the biggest challenges before us. Therefore, the contribution of the insurance advisors to the industry is imperative,” she stressed.
With the announcing of September as ‘Life Insurance Awareness Month,’ the industry hopes it can reach 75,000 life insurance policies by the end of the month.
However, she said that during last year, out of 545,721 life insurance policies issued, 103,500 (19%) have been inactivated. Therefore, she urged the industry to thoroughly look into potential markets and especially tap into the life insurance segment in a more approachable manner.
“With the ever-changing socioeconomic landscape and shifting demographics in our country, we encourage the industry to be more forward-thinking and introduce innovative products, whilst ensuring that these are products that your customers are willing to pay for, in order to ensure profitable growth,” Fernando said.