IFRS 17 to reshape competition in life insurance

Thursday, 2 July 2026 04:22 - - {{hitsCtrl.values.hits}}

Sri Lanka’s life insurers are expecting International Financial Reporting Standard (IFRS) 17 to alter not only financial reporting but also how companies compete, shifting the focus from premium volumes to profitability and long-term value creation.

IFRS 17 was adopted in Sri Lanka as Sri Lanka Financial Reporting Standard (SLFRS) 17 last January, but the first two quarters’ reporting were deferred till 30 September 2026 in order to clarify accounting and taxation-related issues (see https://www.ft.lk/columns/Does-new-IR-Bill-violate-Constitution-over-IFRS-17/4-789752).

The Inland Revenue Department (IRD) withdrew certain provisions in the tax code related to SLFRS 17 after they were challenged in the Supreme Court.

Softlogic Life CEO Iftikar Ahamed said the accounting standard would improve transparency by making insurers’ contractual service margins (CSM) and underlying profitability more visible to investors.

HNB Life CEO Lasitha Wimalaratne said the longstanding emphasis on Gross Written Premium (GWP) would give way to insurance service revenue and CSM, allowing investors to compare insurers on the value they create rather than the volume of premiums written.

He also said IFRS 17 would encourage insurers to place greater emphasis on protection products than investment-oriented business.

“We don’t have a choice but pushing more and more protection in this market,” he said, adding that only the protection component of a policy is recognised as insurance service revenue under the new standard.

Union Assurance CEO Senath Jayatilake said the evolving reporting and solvency framework could encourage consolidation over time, while making Sri Lankan insurers more comparable with regional peers and potentially more attractive to foreign investors.