Insurance industry to increase penetration in the country

Sanjeevi Jayasuriya

The insurance industry has taken a collective effort to increase the penetration in the country with special emphasis on customers from the grass roots level.

“The main challenge the country’s insurance industry faces at present is the low penetration. We are working towards overcoming this situation with a collective effort and this synergy will go a long way in contributing for the industry growth,” Insurance Association of Sri Lanka President Ramal G. Jasinghe said. “We need to position insurance as a financially worthy product. The insurance cover could be a better social security option as the country do not have a strong social security network,” he said.

The insurance industry is the third highest spender in advertising. It needs a higher growth rate to achieve a higher percentage of margins. It should improve the credibility of the products to attract more customers by positioning as a stable investment option in the market. The insurance product has an investment portion, however it could not be considered as an equal to the banking instrument. Therefore, greater awareness needs to be created to attract customers to this industry which is growing at a slow pace compared to the banking industry.

“There are 18 insurance companies in the country at present and we need a growing market to sustain our margins. The insurance company assets were increased three fold during the past few years. However, this growth has not been matched with an increase in the number of policy holders,” he said.

There is a 50 percent lap ratio in the insurance industry and this has hampered the industrial growth. The country needs active insurance industry to contribute significantly to the socio economic growth. The total insurance premium is less than two percent of the country’s total GDP. This needs to be improved and the industry players are making an effort to increase penetration by educating potential customers, he said. “The risk profiles have changed and the weather patterns too have changed. These changes have paved the way for risk protection and insurance companies could capture new market segments. Insurance could be a strong social service from which the community could benefit,” Jasinghe said.