Insurance industry sitting pretty

Sanjeevi Jayasuriya

The insurance industry is well placed to enhance its performance with the continued growth trend achieved during the first quarter of this year.

We expect the industry to perform well despite the challenging environment at present.

There is a lack of awareness among the people about the importance of an insurance policy. This has resulted in low penetration to persist, HNB Assurance Managing Director Manjula de Silva told Daily News Business.

During the year 2010 the Sri Lankan economy recorded a strong and robust growth in all vital sectors as expected in the first full year of post-conflict era.

The long awaited bill to amend the Regulation of Insurance Industry Act No 43 of 2000 was finally passed in the Parliament at the turn of the year 2011. It contains some progressive steps to boost the insurance industry, he said.

The performance by the HNB Assurance for the year ended 2010 saw the company achieving the targeted volumes of turnover in respect of both its major lines of business.

The Gross Written Premium (GWP) from general insurance business grew by 19 percent to reach Rs 1.344 million while the Gross Written Premium (GWP) from life insurance business reached Rs 1,084 million recording a growth of 10 percent.

This is the first time that both GWP measures crossed the Rs 1 billion mark resulting in a combined turn over of Rs 2,428 million.

As in every single year since 2004, the company was able to record commendable growth rates in both profit before tax (PBT) and profit after tax (PAT). PBT grew by 17 percent to record Rs 270 million and PAT grew by 20 percent to reach Rs 242 million.

The market capitalization surpassed Rs 3 billion mark for the first time on September 14, 2010 when the share price crossed Rs 80.

It dipped slightly towards the end of the year to record Rs 2,925 million. The company was able to deliver a return on equity (ROE) of 24 percent maintaining it above 20 percent for the fifth successful year.

The year 2010 posed numerous challenges to the insurance industry.

The main challenges were the declining interest rates, sharp contraction in the income from terrorism covers, erosion of the level-playing filed and the unfavourable interpretation of tax rules to the detriment of the industry, he said.

In the area of life insurance, the company placed greater emphasis on regular premium endowment business. Numerous sales competitions and incentive schemes were targeted at both to generate new business as well as premium retention.

These efforts were well supported by training and development activities carried out in a structured manner for the agency force.

During this year, HNB Assurance will aim to cross traditional boundaries in search of innovation that could provide superior customer value to enhance its position in the insurance market, he said.