Overview of Insurance Industry


National Insurance Trust Fund (NITF)

The National Insurance Trust Fund Board established by the National Insurance Trust Fund Act, No. 28 of 2006 (NITF Act) was brought under the purview of the Board by the Amendment Act.

In terms of the NITF Act, the NITF absorbed the Strike, Riot, Civil Commotion and Terrorism Fund maintained by the Ministry of Finance and Planning.   Insurers issuing insurance covers against strike, riot, civil commotion and terrorism risks on behalf of the NITF are required to remit premiums collected on same to the NITF.

The Act as amended by Act, No. 27 of 2007 requires all registered insurers to reinsure in respect of general insurance business a percentage not exceeding 50% of the liability sought to be reinsured with NITF. In terms of the above provision, an order has been made by the Hon. Minister of Finance & Planning directing all insurers to cede 30% of all types of Reinsurance Treaties and Facultative Reinsurance arrangements to NITF with effect from 1st January 2013. Prior to this the percentage was 20%. 

Other Related Matters

The National Council for Road Safety established under the Motor Traffic Act is under the purview of the Ministry of Transport. Every insurer providing motor insurance cover is required to contribute 1% of third-party insurance premiums to the Road Safety Fund created under the NCRS. The Board is represented on the Board of NCRS.

The Inter Regulatory Institutions Council was established by the Central Bank of Sri Lanka (CBSL). This high-level committee chaired by the Governor of the CBSL was set up to ensure that appropriate policy directions are set out for orderly development of financial markets, and that all financial regulatory agencies co-ordinate and exchange information in the interests of the entire financial system. The Board is represented on the IRIC.

The Insurance Association of Sri Lanka (IASL) was established in 1989 and every insurer registered under the Act is eligible for membership. All insurers other than NITF are members of IASL.

The Executive Committee of IASL which comprises of CEOs of all insurance companies is responsible for the overall management of Association activities, and is assisted by the following committees which make recommendations to the Executive Committee on subjects relating to their respective areas :

  • Life Insurance Forum
  • General Insurance Forum
  • Finance Technical Sub-Committee
  • Legal Advisory Forum
  • HR Sub Committee
  • IT Sub Committee
  • Marketing and Sales Forum

The main objectives of IASL are to:-

  1. Bring together all insurers in order to afford opportunities for consultation and co-operation in matters affecting the common interests and welfare of its members and the insuring public.
  2. Promote and maintain uniform / sound practices and high ethical standards so as to develop confidence among the insuring public.
  3. Build awareness regarding the need and value of insurance among the public.
  4. Monitor  legislative  /   regulatory  requirements  and  make representations to the relevant authorities in order to ensure stability and growth in the industry.
  5. Review and examine insurance practices and techniques in other countries and adopt best practices as applicable to the Sri Lankan market.
  6. Encourage, actively assist and promote professionalism in the insurance industry through education and training by organizing and conducting classes, conferences, seminars, forums,  consultations, workshops and meetings.

Website: http://www.iasl.lk/ 

The Sri Lanka Insurance Brokers’ Association (SLIBA) is the only Association of insurance brokers that has been approved by the Board. In terms of Section 79 of the Act, it is mandatory that all applicants seeking registration as insurance brokers obtain membership of this Association prior to registration as an insurance broker by the Board. The members are subject to a code of conduct adopted by SLIBA.

The main Objectives of SLIBA are:
  • To create awareness of the insurance broker’s role to the public;
  • To enhance the technical knowledge of fellow members and build a high level of competency and professionalism;
  • To encourage and help members to follow insurance courses and obtain professional qualifications;
  • To maintain goodwill and mutually beneficial relationships with the Regulator, insurers and the public.

   Website : http://www.sliba.lk/

The Sri Lanka Insurance Institute (SLII) which was established in 1982 is a non-profit making organization whose main objective is to develop the skills and knowledge of persons who are in the insurance business. Funding for SLII is through contributions made by insurers and annual subscriptions from its members.

The main objectives of SLII are :
  • To  provide  and  maintain  a  central  organization for  the  promotion of efficiency, progress and general development among persons engaged or employed in insurance, whether members of the SLII or not, with a view not only to their own advantage but to rendering the conduct of such business more effective, and to instill and maintain professionalism in the industry;
  • To conduct courses leading to Diploma and Certificate qualifications in order to develop knowledge on insurance.  Conduct examinations to encourage and assist the professional study of any subject bearing on any branch of insurance through any recognized Educational institutions;
  • To hold conferences and meetings for the discussion of professional affairs,  interests  and  duties,  the  reading  of  papers  and  delivery of lectures; to compile lists, registers and records of events and proceedings of interest to the members;
  • To exercise professional supervision and control over the members of SLII to safeguard their interests and welfare, to further their advancement, and to promote whatever may lead to the improvement of the status of insurance officials in general and the members of SLII in particular;
  • SLII is affiliated to the Chartered Insurance Institute of London and administers the examinations of professional bodies such as the Chartered Insurance Institute in London, Insurance Institute in India and the Actuarial Society of India. The Institute conducts short term diploma courses in insurance to persons employed in the insurance industry;
  • The Board has entrusted the Institute with the responsibility of conducting the pre-recruitment tests for persons who wish to be appointed as insurance agents. The Institute continues to conduct pre-recruitment tests in respect of both classes of insurance business.

 

Website: http://www.slii.lk/

As a member of the International Association of Insurance Supervisors (IAIS), the Board regularly receives publications, guidelines such as insurance core principles, and information on the activities of IAIS. Some of the core principles recommended by the IAIS are adopted by the Board for effective supervision and monitoring of the insurance industry in Sri Lanka.

Website: http://www.iaisweb.org/

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