The country’s insurance industry regulator is to issue guidelines to some industry stakeholders, such as loss adjusters and auditors in a move to streamline its scope in regulating while bringing efficiency to the industry, according to an Insurance Board of Sri Lanka (IBSL) source.
“The IBSL is trying to stipulate some ‘qualifications’ to become a loss adjuster and also get the industry auditors to comply with the Regulation of Insurance Industry (RII) Act,” the source told the Business Times.
This comments were made on the back of IBSL Chairman IBSL Udayasri Kariyawasam announcing the industry’s performance last year, to the media.
“Presently there’s nothing to prevent anyone from becoming a loss adjuster. What IBSL will do is formulate guidelines such as registering with the IBSL if one wants to become a loss adjuster and also outline the manner in which accounts are presented and disclosures are made to the auditors,” the source said.
He said that in the past there has not been any streamlining with regard to the RII Act and the accounting standards which will be addressed with the new plans.
Mr. Kariyawasam said the Central Bank regulates the bank and non-bank financial systems and they have issued guidelines to auditors to present accounts in a certain way so as to make monitoring easy. “The IBSL wants to do the same. There is no issue with the accounting standards.
It is only that we would like to see certain industry specific details captured in the accounts more clearly," he said.
He said under section 47 of the RII Act, the IBSL is authorised to issue such guidelines to auditors.
"Loss adjusters are the ones who are called into evaluate damage before a claim is paid. They are either employed by the insurance company itself or function as independent professionals. Their activities are not regulated by the IBSL and this is one area we would like to bring under our purview," Mr. Kariyawasam said.
IBSL will also propose a rating system to rate the insurance firms. “It’s still at the discussion stage and we would soon call for views and recommendations from the industry. Insurance companies like to make certain proclamations that they are the market leaders, or the number one insurance company.
The rating system will help the public compare what the insurance companies say of themselves to what the regulator has to say.
We are planning to formulate a checklist of different facets of an insurance company and the rating would be determined on how each company matches up to these standards,” he noted. The overall gross written premium incomes of the 18 IBSL registered firms saw a slight decline of 0.42 % to Rs. 57.9 billion from Rs. 58.1 billion in 2008.
Total premium incomes from general insurance lines declined by 2.31% to Rs. 33.7 billion in 2009 from Rs. 34.5 billion a year ago. Mr. Kariyawasam said that last year the industry experienced the affects of the global financial crisis, experienced high fuel prices and the peak of the war against terrorism during the first half of the year.
He noted that when the war ended in May, things changed and the industry was able to better manage the downside risks caused by external factors and keep the decline to a minimal.
Meanwhile Ceylinco Insurance led the insurance market in both the life and general segments last year, the IBSL said in a report.
It said Ceylinco had a 31.13 % share against Sri Lanka Insurance’s (SLIC) 19.94 % in the life segment while in general it had a 26.9 % share against second-best SLIC’s 25.97%.
However Ceylinco saw its market share in both these segments shrink last year. Ceylinco’s life insurance was 34.97% in 2008 (a decrease of 3.84%) in 2009 with general insurance recording a 5.77% decline in 2009 compared to its 32.67% in 2008.
Industry analysts said that this was mainly due to the Ceylinco Group company, Golden Key crisis witnessed during the past year. Mr. Kariyawasam said that during 2009, the smaller 13 firms out of the 18 firms registered with IBSL saw their collective market share rise dramatically in both insurance segments.
The life segment saw these companies record 12.7% last year against the 4.11% in 2008 with the general insurance seeing a 17.54% increase in 2009 against the 2.68% in 2008.