Insurance industry resilient in 1Q; but maintaining momentum in 2Q doubtful

• Industry GWP grows 12.3% to Rs.66.5bn in 1Q22
• Life insurance GWP grows 17.5% to Rs.34.3bn
• General insurance GWP grows 7.2% to Rs.32.2bn

Sri Lanka’s insurance industry showed resilience against the initial adversities that came from an economy, which was off kilter in the first three months of the year, as the sector’s key performance indicators recorded strong growth. 

According to data released by the insurance regulator, the Gross Written Premiums (GWP) of the entire insurance sector had risen by 12.3 percent in the January – March 2022 quarter to Rs.66.5 billion over the same period in 2021, reflecting robust growth. 

The long-term or life insurance business grew by 17.5 percent to Rs.34.3 billion in GWPs while the general insurance business grew by a modest 7.2 percent to Rs.32.2 billion in the first three months of 2022. 

However, it remains doubtful whether the insurance industry could maintain the momentum in the subsequent quarter which was beset by multiple crises, including hyperinflation and loss of incomes which could weigh on insurers’ premium incomes going forward. 

However, their bottom lines could get a windfall from the surge in investment incomes after the yields of the government securities skyrocketed in the second quarter.

The data showed that Rs.277.6 billion of long-term insurance assets were in government securities, representing 49 percent of the total investments of this business segment. This also reflected an increase of 19.6 percent over the same period in 2021. 

Meanwhile, the general insurance business had 79.6 billion of investments or 50.1 percent of its total investments in government securities, marking an increase of 15.7 percent. 

The claims made by the life insurance business was Rs.13.2 billion in the quarter while the claims in the general insurance business amounted to Rs.14.6 billion, up 34.7 percent and 14.9 percent, respectively. 

The long-term insurance business generated a profit before tax of Rs.3.09 billion in the quarter, down 23.4 percent, but the general insurance reported a profit of Rs.6.3 billion, up 51.6 percent from the same quarter in 2021.

Sri Lanka has 27 insurance companies in operation, 13 companies engaged in long-term insurance and 12 companies in general insurance and 2 others in composite insurance business.