ECONOMYNEXT – The high cost of health insurance business is a challenge for all insurance companies in Sri Lanka, having the highest net claim ratio,, but also one of the sources of growth in future, a new report said.
A contraction in health insurance was one reason for the slow growth in general insurance in 2018, KPMG Sri Lanka said in their second insurance sector report.
The year had been a challenging one for Sri Lanka with the sharp depreciation of the currency and the heightened political crisis that led to slower economic growth.
Despite negativities, the insurance industry showed resilience with low but improved penetration that is bound to help long term momentum, the accounting firm said.
“The rising health spend, greater awareness of insurance benefits, rise in micro insurance and digitalization will all have a positive impact on insurance business,” the report said.
In 2018, Sri Lanka’s insurance industry recorded a growth in Gross Written Premium (GWP) of 12.20 percent in life insurance and 8.37 percent in general insurance.
“The general insurance sector grew at a decreased rate due to reduced growth in motor, fire and miscellaneous sectors and the negative growth in health insurance,” KPMG Sri Lanka said.
General insurance claims incurred in 2018 displayed a moderate increase to 52 billion rupees from 47 billion rupees in 2017.
Motor insurance remained the largest sub sector, incurring net claims over the year which amounted to 34 billion rupees which represented 66.05 percent of total claims incurred.
The second highest claims were in the health insurance sector with 23.06 percent of total claims amounting to 12 billion rupees.
“High cost of health insurance business was also a challenge for all insurance companies and recorded highest net claim ratio of 95.39 percent in 2018, up from 91.92 percent in 2017.”
However, KPMG Sri Lanka said in the long-term, they are optimistic about the industry driven by the rising disposable income, increasing insurance penetration, rising awareness and a gradual increase in the contribution from general insurance segments such as health and property.
(COLOMBO, 09 August, 2019)