Compiled by Savithri Rodrigo

Senaka Rajapakse
Sasith Bambaradeniya

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

Senaka Rajapakse (SR): Overall, penetration is a little over one percent, which is low in relation to the region. However, penetration of vehicle insurance is almost 100 percent as it’s compulsory whereas home, health and individual insurance penetration is extremely low, indicating growth capacity.

Sasith Bambaradeniya (SB):

Low penetration and intense competition have prompted companies to invest in product, channel and process innovation, engaging with global concepts including big data analytics, robotic process automation and multi-channel distribution capabilities.

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

SR  It should introduce a proper and consistent financial system to stabilise the economy. Higher economic activity benefits all sectors, disposable incomes rise and insurance would benefit too.

SB  The role would be to create an environment that’s conducive for the private sector to perform at its fullest capacity. A business friendly economy is a great boost for the insurance sector.

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

SR  With my focus being on general insurance, personal (including health) and related segments have great potential but remain under-penetrated due to low disposable incomes.

SB  Motor will drive growth in non-life insurance but the property, casualty and marine (PCM) category demonstrates major growth

opportunities due to emerging infrastructure development projects.

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

SR  They must evolve and be resilient to change, receptive and conscious of busy lifestyles, requiring innovation and more advanced solutions leveraged through technology. But they must never lose the human touch.

SB  The sector needs to redraw its game plan to suit an evolving Sri Lankan personality and lifestyle. Whether it is communicating, onboarding, servicing or engaging, it’s time to move from a multi-channel approach to an omni-channel one.

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

SR  Amid changing trends, traditional business models are being reshaped. In today’s context, agents and consultants are more relevant to life insurance than the general segment. Most general insurance companies rely on a direct sales force mainly due to intense competition and the speed of delivery that the market demands.

SB  All companies – in their own capacity – take action to maintain high retention rates through training and development, rewards and recognition schemes. However, the sector should unite to uplift and build a better brand for the insurance agent, to promote organic attraction and retain talent.

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

SR  The Insurance Regulatory Commission introduced a licence system and qualifying examination to become an agent. In addition, systematic monitoring by companies, and constant education on ethics and customer service, will help improve integrity.

SB  Malpractices associated with some cases isn’t an accurate representation of the intent or integrity of the insurance sector. Promoting a culture of empathy, authenticity and transparency while treating others the way you want to be treated must be practised.

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

SR  In the healthcare segment including serious illnesses, advanced benefits – viz. overseas treatment – have been introduced, making it both popular and affordable. Products offered through new channels with easy access are increasing as well.

SB  Life and non-life insurance companies are adopting usage and user based insurance solutions – which is a notable shift from traditional cookie-cutter solutions. We observe the sector moving to more customised lifestyle based insurance solutions.

Q: And what are the challenges faced by insurance firms?

SR  Price undercutting, climate conditions, fading social and tech barriers, and terror threats.

 SB  Uncertainties in the local sociopolitical environment are always a major challenge.

Q: : How are organisations in the insurance market acquiring an edge over their competitors?

SR  Service levels have to be fantastic and product offerings innovative.

SB  Engaging employees and happy customers are the keys to success.

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

SR  Globally, a new insurance sector specific accounting standard is being introduced and will come into force by 2022. This is primarily to increase understanding among stakeholders.

SB  Yes, as this would certainly enhance transparency in the sector – promoting fair play, a level playing field and healthy competition among sector participants.

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

SR  From the point of view of investors, it’s a more regulated environment, which makes it a much safer and less risky sector compared to others. Ethical and social factors are entwined as being positive as insurance is considered an honourable business.

SB  ESG could be considered an integral component of formulating the corporate brand personality. To stand out and build the right brand aura, it is important to focus on all three pillars of ethics, society and governance.

Q: Should insurance firms highlight the issue of climate change – as they’re on the front line of settling claims related to adverse weather?

SR  Yes, as witnessed by some of the larger insurance companies’ campaigns to educate and create awareness immediately after the tsunami. Moreover, increasing natural disasters have been the focus with the introduction of customised policies.

SB  Insurance companies are in the business of settling claims. A proactive approach to understanding and reacting to risks – inclusive of those being posed due to climate change – will certainly benefit the sector as well as the economy.

Q: Do you believe that further sector consolidation is likely in the near term?

SR  Due to sustainability issues, smaller players might find it challenging to survive if the market dynamics don’t change in the near future. This could result in mergers with larger players.

SB  Yes, consolidation of companies will lead to better synergies that would result in greater benefits for all stakeholders including policyholders, shareholders and the community.

Senaka is the Deputy General Manager – Marketing of Ceylinco General Insurance
Sasith is the Head of Marketing & Digital Solutions of Fairfirst Insurance