Aviva NDB wins insurance race

Monday, 11 July 2011 00:24 -     - {{hitsCtrl.values.hits}}

Aviva NDB was the best performer overall in the country’s insurance industry last year securing second place in life business beating the state giant SLIC as well as gaining market share in general when most of the top players saw dip in theirs.

State giant Sri Lanka Insurance Corporation (SLIC) in 2009 had a market share of 20.27% in life business with Aviva NDB trailing marginally below with a 19.49% holding. In 2010, Aviva NDB not only overtook SLIC but at number two saw a commanding market share of 24.99%, up by 5.5%over 2009.

SLIC’s share slipped to 19.29%.

The relegation of SLIC to number three in life is a major setback for the state giant whose diversification into non-core business has caused concern among industry analysts.

Leader in life business, Ceylinco continues to hold number one slot though its share has been shrinking.

The top five market leaders accounted for 88.79% of the total industry GWP while the balance 11.21% was shared among the remaining insurers engaged in long term insurance.

In general insurance Ceylinco lost the number one place to Sri Lanka Insurance in a razor thin margin. SLIC’s market share in 2010 was 24.82% as against Ceylinco’s 24.70%. For the latter 2010 share was a big drop as opposed to 27.12% in 2009. The Government directive that all state business should be placed with SLIC and NITF may have contributed to the recoup of leadership for the former. However SLIC has managed only Rs. 502 million increase in Gross Written Premium in 2010 whereas number four Union Assurance has managed to boost its business by Rs. 457 million thereby increasing its share to 9.82% though still trailing below Janashakthi. Aviva NDB at number five saw its share improve to 7.62% from 7.48% in 2009.

The top five performers in the general insurance segment accounted for 78.94% of the total GWP with remaining insurers sharing the balance 21.06%.

Despite movements in the rankings all top players saw growth in business in tandem with rebound in the insurance market last year.

The industry was almost static in 2009 with life only growing by 0.7% and general business contracting by 3%. In 2010 life saw a healthy 31% growth (highest ever in five years) and general by 11.5%.

According to the Insurance Board of Sri Lanka (IBSL) during 2010 the aggregate Gross Written Premium (GWP) reported from long term and general insurance businesses totalled up to Rs. 68.5 billion (2009: Rs. 57.25 billion) recording a significant increase of 19.63% compared to 2009. The GWP of long term insurance business amounted to Rs. 31.15 billion (2009: Rs. 23.76 billion) showing an increase of 31.07% while GWP of general insurance business amounted to Rs. 37.34 billion (2009: Rs. 33.48 billion) reporting a growth of 11.52% compared to 2009.

The growth in GWP for both long term and general insurance sectors is mainly driven by improved business confidence after the restoration of peace, new business opportunities emerging from the North and East of the country, growth in GDP during 2010, recovery of global economy from the recession and reduction in policy lapses compared to the previous year as a result of improved socio economic factors of the country. The general insurance sector accounted for 54.52% (2009: 58.48%) of aggregate GWP while the contribution of long term insurance sector was 45.48% (2009: 41.51%) of the total GWP depicting a steady growth each year. This significant improvement in life insurance is underpinned by growth in new businesses in 2010, especially due to the introduction of new life insurance products such as investment linked products and a range of retirement products to the market.

IBSL said the total number of life insurance policies in force was reported as 2,244,245 at the end of year 2010. During the year insurers have issued 503,543 new life insurance policies which indicate an increase of 8.46% compared to 464,249 new policies issued in year 2009. This growth was mainly due to the conducive economic conditions that prevailed in the country, new long term insurance products introduced to the market and strong advertising campaigns carried out by insurers during the year. The penetration of life insurance business as a percentage of the total population was 10.9% (2009: 10.4%) while the penetration as a percentage of total labour force was 27.7% (2009:26.4%).

With regard to general business, IBSL said similar to previous years, motor insurance was the largest contributor of GWP towards the premium income of general insurance business by recording GWP of Rs. 21,222 million (2009: Rs. 17,829 million) indicating a growth of 19.03%. This represented 56.83% (2009: 53.25%) of total general insurance portfolio. Miscellaneous insurance with a premium income of Rs. 7,842 million (2009: Rs. 7,455 million) accounted for 21% (2009: 22.26%) of the total premium and indicated a growth of 5.19% over 2009. Fire insurance with a premium income of Rs. 6,720 million (2009: Rs. 6,759 million) accounted for 18.00% (2009: 20.18%) of the total premium, reflecting a decline of 0.57% compared to 2009. Marine insurance recorded GWP of Rs. 1,558 million (2009: Rs. 1,442 million) accounted for 4.17% (2009: 4.31%) of the total premium, growing by 8.08% compared to 2009.