Sri Lanka: Insurance market expected to maintain growth momentum
Source: Asia Insurance Review | Jul 2018
Sri Lanka’s insurance sector is expected to continue its growth momentum, driven primarily by the rising per capita income, growing awareness on insurance and considerably lower insurance penetration, said Fitch Ratings.
In its Sri Lanka Insurance Dash Board for the second half of 2018, Fitch noted that gross written premiums in life and non-life businesses in 2017 have grown by 13% and 22%, respectively, compared to 18% and 14% in 2016.
However, the international rating agency expects the new Inland Revenue Act to weigh on the profits of life insurers as surplus distributions to shareholders from policyholder funds and investment income of shareholder funds (less allowable expenses) are taxed at 28%.
“Earlier, most of the life insurers paid lower taxes under the ‘investment income minus management fees’ method, which resulted in a lower tax base. In addition, distributions to participating life policyholders, which were not taxed previously, are now taxed at 14% and will be increased to 28% from 2021”, the rating agency said. A