High Court rules foreign reinsurance brokers can operate from overseas without local registration

Thursday, 26 June 2025 00:37 - - {{hitsCtrl.values.hits}}

The High Court of Civil Appeal in a significant judgment delivered last week held that foreign reinsurance brokers who operate from outside the territorial waters of Sri Lanka do not fall within the ambit of the insurance broker under the Regulation of Insurance Industry Act.

The judgment by His Lordships Dr. D.F.H. Gunawardhana, H.C.J. and Dr. Namal Bandara Balalle, H.C.J. was consequent to a case that had been instituted by a local insurance broker, Strategic Insurance Brokers Ltd., by which they sought to prevent, Tysers Insurance Brokers Ltd., a UK-based reinsurance broker, from functioning as an intermediary in placing reinsurance on behalf of Sri Lankan insurers, claiming such actions required registration under the local statute.

Tysers had functioned as a reinsurance broker for the National Insurance Trust Fund (NITF), a government owned entity, whose functions include the sole administration of Strike, Riot, Civil Commotion & Terrorism (SRCC&T) Fund, which is a government backed insurance mechanism to protect the policyholders from civil unrest civil or acts of terrorism. Tysers facilitated the placement of reinsurance for this cover with international reinsurers, acting from outside Sri Lanka.

Strategic Insurance, the local insurance broker, had obtained an order for the District Court restraining Tysers from functioning in Sri Lanka as an intermediary for the placing of insurance business for and on behalf of an insurer, a policy holder or a proposer for insurance or reinsurance, with an insurer or reinsurer, in expectation of a payment by way of brokerage or a commission

Justice Frank Gunawardhana held that a reinsurance brokering contract entered into by NITF did not fall within the scope of the Regulation of Insurance Industry Act, given that it has standalone statutory powers. Taking into account that Tysers operates from outside Sri Lanka, he concluded that, as an international reinsurance broker, Tysers is not required to be registered under the local statute.

Tysers was represented by Avindra Rodrigo, President’s Counsel, with Kasuni Jayaweera and Christina Hettiarachchi, instructed by FJ&G de Saram. Strategic Insurance was represented by Eraj De Silva, President’s Counsel, and Daminda Wijeratne and Zul Luthuff. The NITF was represented by Sumathi Dharmawardena, President’s Counsel with Senior State Counsel Avindra de Silva and State Counsel Kusuniasa Wijesundara.

This judgment clarifies a long-standing legal uncertainty in the insurance sector due to previous court orders, that a local insurer could not place international reinsurance through a foreign reinsurance brokers without registration in Sri Lanka. Observers note that this judgment ensures that SRCC&T Fund is unaffected, as NITF remains its sole administrator.

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