The Sri Lankan insurance industry achieved a growth rate of 8.64% in terms of overall Gross Written Premium (GWP) for both long term and general insurance business sectors in 2019. The total GWP income for both sectors was Rs. 196,513 million compared to Rs. 180,880 million in 2018, recording an increase of Rs. 15,633 million.
The long term insurance sector generated a GWP of Rs. 88,781 million in 2019, up by 10.57% against the GWP of Rs. 80,294 million generated in 2018. The general insurance sector recorded a GWP of Rs. 107,732 million in 2019, posting a growth of 7.10% compared to Rs. 100,586 million recorded in 2018.
The reinsurance premium income generated by the National Insurance Trust Fund (NITF) from the compulsory reinsurance cession of general insurance business amounted to Rs.4,174 million during 2019, recording an increase of 2.91% against the reinsurance premium of Rs. 4,056 million generated in 2018.
Insurance penetration which is reflected by the insurance premium as a percentage of GDP amounted to 1.31% in 2019. Although insurance penetration had slightly increased in 2019 compared to 1.26%, which was recorded in 2018, it is still low compared to other countries in the Asian region.
Insurance density reflects the insurance premium income per person of the population. This has increased to Rs. 9,013 in 2019 compared to Rs. 8,347 recorded in 2018. The value of total assets of insurance companies has increased to Rs. 696,283 million in 2019, when compared to Rs. 630,447 million recorded in 2018, reflecting a growth of 10.44%.
The assets of Long Term Insurance Business amounted to Rs. 485,723 million (2018: Rs. 430,759 million) indicating a growth of 12.76% year-on-year. The assets of General Insurance Business amounted to Rs. 203,870 million (2018: Rs. 196,005 million) and recorded a growth of 4.01%.
Despite the constant reduction in assets observed in the previous two years, NITF managed to display a notable growth in the assets of their reinsurance business, recording a total of Rs. 6,690 million as at December 31, 2019.By the end of 2019, 67 insurance brokering companies operated in the market and generated a Gross Written Premium (GWP) amounting to Rs. 29,317 million. Accordingly, total GWP generated through insurance brokering business recorded a growth of 16.97% in 2019 when compared to Rs. 25,063 million generated in 2018.
Industry analysts predict that the general insurance sector would face a fundamental structural change over the next few decades, with a possible decline in premiums from motor class, the main line of general insurance business of today as a result of technological advances. The insurance industry is about to face unprecedented effects of COVID-19 pandemic, which has currently put the entire world at an enormous threat.
Even the healthcare systems of most powerful and richest nations in the world are struggling to cope up with the situation.
As many countries and regions had been locked down for months, the adverse impact on economies is widening continuously. The pandemic-led business interruptions and volatility in the equity markets would likely to distress the pricing of instruments and hinder the investment yields of insurance companies.
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