The Finance Ministry is proposing to amend the insurance law to exempt insurance subsidiaries of foreign firms and state-owned insurance companies from listing on the local stock market.
Under the proposed changes, if a foreign firm listed on a member stock exchange of the World Federation of Exchanges or a stock exchange recognised by the Sri Lankan insurance regulator owns at least 85% of a local insurer, carries the accounts of the local subsidiary in its group level accounts and meets all compliance standards, the local insurance subsidiary will be exempted from being listed locally, reported Business Mirror.
“Foreign companies requested us to exempt them from being listed locally if they are listed on a stock exchange recognised by the board. That is fair,” Ms Indrani Sugathadasa, chairman of the Insurance Board of Sri Lanka (IBSL), said.
Under the 2011 amendments to the Regulation of Insurance Industry Act of 2000, all insurance companies are required to be listed locally.
The Allianz Group, listed on the Frankfurt Stock Exchange, and the Fairfax group, listed on the Toronto Stock Exchange, are the two foreign firms with unlisted local subsidiaries in Sri Lanka.
The state-owned Sri Lanka Insurance Corporation and the National Insurance Trust Fund will also be exempted from being listed on the Colombo Stock Exchange, under the proposed changes.
The proposed legislative amendments also include provisions to allow insurance agents to be employed by one general insurance firm and a long-term insurance firm, compared to the current law allowing an agent to be employed by just one company.
This is to address the 2011 amendments, which also directed composite insurance companies to segregate their life and general insurance businesses into separate companies.
While some companies sold off a segregated business, many have kept both life and general insurance businesses under the same brands, at times bundling services in one package.
The proposed amendments to the insurance law also provide for IBSL to be renamed as the Insurance Regulatory Commission of Sri Lanka (IRCSL) under the same legislation.
The Bill containing the proposed amendments will be presented to Parliament this month.