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The Motor insurance was tariff based and the last revision of the motor tariff was done in 1989. As most of the insurance companies were incurring losses on motor insurance, the Insurance Association of Sri Lanka (IASL) appointed a Committee for the revision of the motor tariff based on the industry statistics on motor insurance business.

The Committee submitted its report on the Revision of Motor Tariff in 1995 to the Controller of Insurance requesting an overall upward revision of the premium rates by 18%. The Ministry of Finance appointed a committee to study the Revision Report and the committee after an indepth study endorsed the recommendation in 1999. However, the motor tariff was not revised.

After the establishment of the Insurance Board of Sri Lanka (IBSL) under the Regulation of Insurance Industry Act No. 43 of 2000 from March 2001, the IASL requested the IBSL to revise the premium rates based on the Motor Tariff Revision Report of 1995. With a view to de-regulating the tariff on motor insurance, the IBSL called for representations from the public and other interested parties. Based on the representations made, the tariff on motor insurance was de-regulated from January 1, 2002.

Insurance companies raised the premium rates on motor insurance by approximately one third from August 1, 2002. The IBSL intervened in this matter and pursuant to discussions with the IASL regarding the increase of the premium rates, Insurance Companies have now agreed to offer a lower tariff in respect of insurance of motor coaches.

The IBSL and the IASL will be continuing their dialogue to ensure that the services being provided by insurers will increasingly be made more beneficial to policy-holders.

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