IBSL enforces premium payment warranty

Hiran H. SENEWIRATNE

The Insurance Board of Sri Lanka (IBSL) will include the premium payment warranty in all general insurance policies following the circular issued in 2006. This will create healthy competition in the sector, Insurance Ombustman, Dr Wickrama Weerasuria said.

“This will enable insurance companies to reduce certain irregularities with the introduction of the circular. Certain insurance companies are giving time periods to their clients to pay premium to attract customers, “ Dr Weerasuriya said.

He said if a policy has paid the full premium on the commencement dates of the cover, the Premium Payment Warranty would not apply.

“The Premium Payment Warranty applies only where an insurance company has extended credit to policyholders. The industry and the IBSL has taken action to educate the public on this since non-adherence to this warranty may deprive the insured public of their ability to make a claim,” Dr Weerasuria said.

“Unlike other business insurance, it is a mechanism by which insured clients’ transfer risk that they cannot carry themselves to insurance companies, Insurance companies undertake to indemnify clients of such risk by way of charging a premium as a consideration in this transaction,” he said.

President of the Insurance Board of Sri Lanka Jagath Alwis said the 2006 circular to enforce the paid insurance premium warranty will enable have to be enlighten the general public on this matter.

This is why when considering the financial strength of insurance companies any debt over 60 days are not considered admissible assets. “The strength of insurance company is of significant importance in proving the type of protection clients expects,” he said.

Director General, Sri Lanka Insurance Board Lassanee Serasinhe said the objective and responsibility of the insurance circular is to make the insurance sector more competitive and professional manner. This will create the healthy competition in the sector.

She said when the insurance was liberalised it was made illegal for insurance companies to give credit because of this reason. “However with the increasing competitive business practices, providing credit has come to the insurance industry as well,” she said.