SHORT TAKES

Compiled by Savithri Rodrigo 

Dinesh Yogaratnam 

Rukman Weeraratne

Q: How is the country faring in terms of insurance penetration?

Dinesh Yogaratnam (DY): Sri Lanka’s life insurance penetration in terms of gross written premium as a share of GDP is 0.54 percent. This is considerably low compared to the regional average of 2.5 percent, according to the Insurance Regu-latory Commission of Sri Lanka.

Rukman Weeraratne (RW): When it comes to life insurance, about 80 percent – a major share​ of the population – aren’t properly insured; they are either not insured or underinsured. It’s a similar story in the case of fire and miscellaneous insurance as well.

Q: So should the state play a greater role in this regard through government policy? 

DY  Yes, it is imperative that the state plays a greater role especially in increasing life insurance penetration to encourage an improved quality of life and independence.

RW  Yes, of course! The state could implement wide-ranging initiatives to bring insurance much closer to the people and businesses through prudent policy changes.

Q: What are the fastest growing segments in the insurance market?

DY  Motor insurance will dominate the non-life segment although growth will slow. Medical insurance will witness growth due to greater aware-ness of health and medical care.

RW  Health insurance will be one of the fastest growing segments as many new products are being intro-duced by insurance companies.

Q: Are adequate steps being taken to retain agents in the sector?

DY  Most certainly; not only do companies channel a considerable expenditure as part of agents’ remuneration by way of commissions and retainers, but agents also gain opportunities for career development, training, foreign travel and many other facilities designed for retention. 

RW  Many insurers implement their own programmes to build and retain a professional sales force – although there is a high turnover of agents too. Selling insurance is a difficult job with many unable to endure the pressure despite the multiple benefits that the sector offers.

Q: In your opinion, what must insurance companies do to maintain customer interest?

DY  Insurance companies should strive to offer products that are as relevant as possible to customers. They should consider how best their products and services could be intertwined with  customer lifestyles.

RW  It is at that moment of truth when a claim is honoured. And it is paramount that a customer is properly serviced once he or she signs up for an insurance product. The sector must focus moreon CRM.

Q: Would you attest to the integrity of the agency force amid allegations of malpractice in some cases? 

DY  It must be understood that malpractice is not a phenomenon in the realm of this sector alone; it permeates other sectors too, resulting in massive losses. The honest majority cannot be negatively labelled due to a dishonest few. I would certainly attest to the integrity of the agency force as a whole.

RW  Well, the ‘some cases’ referred to are in fact very few! The insurance sector is making an effort to address these issues. Being in touch with customers from day one is what insurance companies do to minimise miscommunication or misunderstanding of products that have been purchased.

Q: What are the latest product innovations in the insurance market?

DY  Some of the latest innovations have been facilitated through the integration of telcos and insurers. This includes per day insurance cover in the motor and life segments obtained through mobile phones. Specific conditions – i.e. dengue, cancer and diabetes – are also covered today.

RW  We haven’t witnessed many innovative products bar those in health insurance. But servicing is becoming innovative with companies adopting digitisation for ‘straight through processing’ on real-time policy issuance, faster claims processing and informed customer services.

Q: And what are the challenges faced by insurers?

DY  Policy consistency is a challenge as it puts pressure on disposable incomes, making new business acquisitions a greater challenge. Lacklustre performance in the motor industry is pressurising new business while adverse weather has negatively impacted the claims element.

RW  Retention of life insurance policies, recruitment and retention of a professional insurance sales team, intense competition for a small segment of the population that is already saturated and competition from the other financial instruments that target the same segment.

Q: How are insurance firms working to gain an edge over their competitors?

DY  Continuous improvement, refining product and service propositions, a special emphasis on digital and online platforms for new business acquisitions, and policy maintenance and channel development – especially bancassurance and advisor retention.

RW  By nurturing and retaining a professional sales team, product offerings that address diverse consumer segments, and the effective use of technology to reach and provide a continuous service. The mobile app is a good example of this. 

Q: Are you in favour of plans to prise open ‘black box accounts’ – i.e. a change in accounting rules to increase the visibility of how insurers earn money?

DY  The sector reports results in compliance with applicable accounting standards, and listing and regulatory requirements. Moreover, the degree of disclosure has risen over the last few years, which promotes greater transparency.

RW  The new accounting standards will provide more information on product pricing to customers. IFRS standards impact how companies market their products, prompting product transformation, distribution management and the approach of new markets.

Q: What is the role of ethical, social and governance (ESG) investing when it comes to insurance companies? 

DY  As in all businesses, insurance companies too are moving towards greater sustainability, corporate governance and ethical conduct. Entities are incorporating such principles within their systems, processes and products, and infusing ESG into operations.

RW  The sector is highly regulated and the relevant act identifies investment avenues. The composition of instruments for investment is determined primarily with the aim of protecting the customer. Reputation is measured with governance standards endorsed by the company.

Q: Should insurance firms highlight the issue of climate change more than they do at present since they’re on the front line of settling adverse weather related claims? 

DY  Most certainly, it is imperative that insurance companies highlight issues relating to climate change.

RW  Yes, but one could argue that the very existence of insurance is to attend to disasters preempted by climate change.
Dinesh is the Head of Marketing of HNB Assurance
Rukman is the Chief Officer – Business Development of Sri Lanka Insurance