• Overall industry GWP up 10.7% to Rs.105.3bn
• Life insurance industry premiums grew 29.8% to 56.2bn
• General insurance premium income, led by motor insurance, down 5.3% to Rs.49.2 billion
• Overall claims and benefits up 12% to Rs.41bn
• Industry pre-tax profit slumped 20.4% to Rs.14.5bn

Sri Lanka’s insurance industry did well through the first six months in 2021 (1H21), led by the life insurance sector, continuing the momentum it gained in 2020, when the pandemic and its resulting health and monetary policy conditions augured favourably with the industry. 

According to the lagging data released by the Insurance Regulatory Commission of Sri Lanka (IRCSL), the industry performance widely measured by gross written premiums (GWPs) recorded Rs.105.3 billion in 1H21, logging a growth of 10.7 percent from the same period in 2020.

The life insurance industry premiums were at Rs.56.2 billion, recording a robust growth of 29.8 percent but general insurance, led by the motor insurance class, recorded a decline in premium incomes by 5.3 percent to Rs.49.2 billion, which is in line with the performance in 2020. 

Motor insurance accounts for roughly 60 percent of total general insurance premiums and the pandemic dented the motor and health premiums, bringing down the total general insurance premiums from last year’s levels. 
Meanwhile, the health scare brought about by the pandemic and the increased risk awareness of the people continued to drive the life insurance premiums through this year, as more people subscribed to life protection covers and retirement schemes.  

Besides, the higher demand for new loans and refinancing of loans, due to the fast decline in interest rates since last year, sparked a strong demand for mortgage protection policies, which forms part of long-term insurance. 
Last year, such policies, which are also referred to as Decreasing Term Assurance (DTA), saw a considerable rise, supporting the strong long-term insurance sector premiums, the regulator said then.

Sri Lanka operates with 27 insurance companies, of which 13 are engaged in long-term insurance, 12 in general insurance and two composite insurers, which are engaged in both long-term and general insurance business. Meanwhile, the claims and benefits, another mostly watched indicator in the insurance industry, rose by 12 percent to Rs.41 billion in 1H21 from a year ago, which was also led by life insurance, as the non-life insurance sector claims moved only little. 

Further, the profit before tax in the insurance industry during 1H21 was reported at Rs.14.5 billion, logging a sizeable decline of 20.4 percent from the same period last year. 

While the long-term insurance sector before-tax profits grew by 18.3 percent to Rs.7.9 billion and the general insurance profits slumped by 42.7 percent to Rs.6.6 billion, the regulator said. 

An insurance industry report developed by First Capital Research this June stated the rising interest rates could bode well on the life insurance industry, due to lower surplus transfers to life insurance fund and the higher investment incomes, as bulk of their insurance assets are in government securities, of which the yields are now on a slight upwards trend. 

“Expected rise in interest rates is expected to lower the surplus transfer to life insurance fund, due to higher discount factor used to value the fund. This is expected to boost the profitability of life insurers in the period ahead,” said Hiruni Perera, the author of the report.