Sri Lanka: Market expects more foreign interest in non-life sector
Source: Asia Insurance Review | Mar 2018
The sale of Janashakthi General Insurance last month to global insurer Allianz has set off wide speculation of huge foreign interest in the Sri Lankan market.
The LKR16.4 billion (US$106 million) deal triggered reports that the other Sri Lankan general insurers, barring local giants Sri Lanka Insurance (SLI) and Ceylinco Insurance (Ceylinco), would be sold too, reported Business Times. Janashakthi officials said the deal has been in the works for the past 18 months.
The Janashakthi deal makes it the fourth sale to foreign companies of a general insurer since 2014.
“As Sri Lankan insurance companies adjust to changes in the market after life and general units were segregated by regulation in 2016, divesting general insurance has become an emerging trend here,” an industry expert said.
60% of premiums is from motor
Growth in the general insurance segment is expected to be slow and competition is expected to become tougher for smaller players as bigger rivals – especially foreign firms – consolidate in the general segment. The non-life sector generates around 60% of its premiums from motor insurance.
“Most local firms are inward looking which is why they aren’t interested in sustaining their general insurance arms because of slow growth, impending challenges and the competition,” the industry expert said.
Foreign insurers, on the other hand, are interested in scaling up their operations, and are willing to participate in product innovation, and research and development.
There are 13 companies operating in the non-life market in the country, with three which remain composite insurers. A