Roadmap targets tripling insurance penetration by 2035 with mandatory cover, State-backed schemes

• IRCSL, industry unveil plan to double penetration by 2030
• Premiums at Rs. 380 b in 2025; target over Rs. 700 b by 2030
• Sector manages Rs. 1.4 t in assets, pays Rs. 172 b in claims annually
• Penetration remains just above 1% of GDP, highlighting protection gap
• Digital motor insurance card introduced with verification capability 
• Collaboration with CRIB to strengthen data use and underwriting standards

IRCSL Director General Damayanthi Fernando

IASL President and HNB Assurance PLC CEO Lasitha Wimalaratne

The regulator and insurance industry have unveiled a national roadmap aimed at doubling insurance penetration by 2030 and tripling it by 2035, including proposals to introduce mandatory home insurance and Government-supported schemes to widen coverage.

The Insurance Regulatory Commission of Sri Lanka (IRCSL), in partnership with the Insurance Association of Sri Lanka (IASL), yesterday launched the Insurance Industry Development Roadmap.

IRCSL Director General Damayanthi Fernando said the industry has grown into a significant contributor to the economy, managing over Rs. 1.4 trillion in assets, supporting more than 69,000 jobs and paying out approximately Rs. 172 billion in claims annually across both life and general insurance segments.

“The industry manages over Rs. 1.4 trillion in assets, supports more than 69,000 jobs, inclusive of insurance agents and advisors, and pays out approximately Rs. 172 billion in claims annually,” she said. “Though it is not widely recognised, the industry pays around Rs. 172 billion in claims per year.”

She said total insurance premiums reached Rs. 380 billion in 2025 across 29 insurance companies, recording double-digit growth, with the industry targeting further expansion.

“Sri Lanka’s insurance premium stood at Rs. 380 billion in 2025, with a double-digit growth rate, and we are on a trajectory towards over Rs. 700 billion by 2030 at approximately 14% year-on-year growth,” Fernando said, describing the sector as a resilient and maturing market.

However, she said insurance penetration remains just above 1% of GDP, below regional peers such as India, Thailand and Malaysia, indicating a persistent protection gap.

“As we know, in Sri Lanka insurance is not bought but sold. This protection gap is not a weakness, but an extraordinary opportunity for the industry,” she said, citing past disasters including the 2004 tsunami, the 2017 floods and the 2025 cyclone, where only around 5 to 6% of losses were insured.

Against this backdrop, Fernando said the industry’s long-term vision is to expand access and strengthen its role in economic resilience.

“By 2035, we aim to triple insurance penetration, ensuring that every Sri Lankan, regardless of income or background, has access to protection that is affordable, accessible and trusted,” she said. “It is about protecting families from hardship, empowering small businesses and enabling enterprises to invest and expand with confidence.”

She said delivery would be anchored in a time-bound execution framework with measurable outcomes.

“This is not a distant vision. Within the next three to six months, we will develop clear action plans under each pillar with defined responsibilities, timelines and measurable outcomes, and thereafter move into full execution,” Fernando said.

The roadmap is structured around seven pillars targeting coverage, distribution, regulation, capital formation and governance.

Pillar A focuses on expanding coverage through affordable, standardised products, including Government-backed schemes, mandatory home and hotel insurance, and health protection schemes aimed at reducing pressure on the public healthcare system, with a focus on low-income groups and SMEs.

Pillar B targets distribution reforms through bancassurance, digital on-boarding, electronic know-your-customer (e-KYC) systems and alternative channels such as telecommunications providers, cooperatives and digital platforms.

Pillar C introduces tax parity and regulatory reforms aligned with international standards, including IFRS 17, alongside income tax relief on protection products.

Pillar D focuses on strengthening the industry’s capital base and positioning Sri Lanka as a regional reinsurance hub linked to the Colombo Port City, alongside enhancing the role of the National Insurance Trust Fund as the national reinsurer.

Pillar E aims to build a “trust infrastructure” through a centralised data ecosystem, standardised health coding and stronger market conduct standards.

Pillar F prioritises human capital development, including embedding insurance literacy from Grade 6 and developing actuarial pathways.

Pillar G sets out the execution framework, with a tripartite task force comprising the Finance Ministry, IRCSL and the industry, supported by monthly reviews, quarterly KPI tracking and a steering committee.

The roadmap also integrates sustainability into governance and execution, with a focus on long-term social, environmental and economic outcomes.

IASL President and HNB Assurance PLC Chief Executive Officer Lasitha Wimalaratne said the industry is moving to digitalise core processes while tightening discipline in key segments such as motor insurance.

He said a digital insurance card with verification capability will be introduced as part of this shift, aligned with the Government’s wider push to digitise services.

“We are introducing a digital insurance card with verification capability as part of taking the industry to the next level. This aligns with the Government’s ambition to digitise the nation, and the industry will be part of that transition,” he said.

He said the rollout would require coordination with agencies including the Sri Lanka Police to enable verification and support adoption at the grassroots level.

“This is one of several digital initiatives we are implementing. The first phase will include a verification option, and the Sri Lanka Police will have a key role in supporting adoption and extending it to the grassroots level,” he said.

Wimalaratne said the industry has also begun working with the Credit Information Bureau (CRIB) to strengthen data use and improve underwriting outcomes.

“Our collaboration with CRIB will enhance data capabilities and deliver value to both customers and the industry,” he said.

He added that credit practices in motor insurance will be tightened, with a phased move away from extended credit periods towards a cash-before-cover model.

“We are moving away from extended credit periods towards a more disciplined model. The current 30 to 90-day credit cycle will be reduced to 30 days from 1 May and will be phased out over time,” he said.