Sri Lanka’s insurance industry managed to maintain stability, demonstrating a strong commitment to protecting policyholders and ensuring business continuity.
In 2023, there were gradual improvements in both the life and general insurance sectors, supported by the proactive regulatory measures implemented by the Insurance Regulatory Commission of Sri Lanka (IRCSL). The third quarter of 2024 further reflects this positive trajectory, with a steady increase in the Gross Written Premium (GWP).
As at September 30, 2024, 15 insurance companies engaged in Long-Term (Life) Insurance Business and 14 insurance companies engaged in General Insurance Business. The total GWP escalated to LKR 280,100 million in 2023, compared to LKR 200,646 million recorded in 2019, displaying a growth of39.6%. Life insurance GWP rose from LKR 88,787 million in 2019 to LKR 152,652 million in 2023, marking a notable increase.
This steady rise reflects the sector’s strengthening appeal and demand for long-term financial security. The general insurance sector also experienced growth over this period, with GWP rising from LKR 107,685 million in 2019 to LKR 124,820 million in 2023.
GWP for Q3 2024 stood at LKR 237,382 million, reflecting 16.5% growth compared to LKR 203,696 million in Q3 2023. This represents a year-on-year increase of LKR 33,686 million. Long-Term Insurance Business reported GWP of LKR 131,184 million, a significant growth of 19.33% from LKR 109,931 million in Q3 2023.
Meanwhile, the General Insurance Business recorded GWP of LKR 106,198 million, a moderate growth of 13.26% compared to LKR 93,765 million in the same period in 2023. The total assets surpassed LKR one trillion and reached LKR 1,133,631 million by the end of 2023. Life insurance assets saw substantial growth, from LKR 485,121 million in 2019 to LKR 818,176 million in 2023. General insurance assets showed a more moderate increase, from LKR 205,130 million in 2019 to LKR 305,217 million in 2023.
The year-on-year asset growth rates highlight a positive upward trend, with a notable increase of 19.3% in 2023. While asset growth remained modest in 2022, consistent asset accumulation within the insurance sector in previous years with growth rates of 10.5% in 2019, 14.3% in 2020, and 11.7% in 2021 supported sustained overall growth.
As displayed in chart 4, in Q3 2024, the total assets of insurance companies increased to LKR 1,152,053 million, reflecting 5.75% growth compared to LKR 1,089,456 million in Q3 2023. The assets of the Long-Term Insurance Business grew by 10.53% to LKR 872,979 million, up from LKR 789,819 million in the same period in 2023.
Conversely, the assets of the General Insurance Business decreased by 6.86%, totaling LKR 279,074 million compared to LKR 299,637 million in Q3 2023.
In the life insurance segment, claims incurred have steadily increased each year, rising from LKR 35,139 million in 2019 to LKR 76,207 million in 2023. This growth reflects a substantial 117% increase over the five-year period, indicating an increasing reliance on life insurance products and a corresponding rise in policyholder claims.
General insurance claims incurred displayed notable fluctuations, with a decline to LKR 42,520 million in 2020, followed by an increase to LKR 48,276 million in 2021 and a further rise to LKR 61,407 million in 2022. In 2023, general insurance claims incurred experienced a marginal increase, reaching LKR 62,263 million. Overall, total claims incurred by the insurance sector increased from LKR 93,288 million in 2019 to LKR 138,470 million in 2023, marking a growth of approximately 48%.
Total claims incurred by both the Long-Term and General Insurance Businesses amounted to LKR 108,969 million, reflecting a 6.15% year-on-year increase compared to LKR 102,656 million in Q3 2023. Claims incurred from the Long-Term Insurance Business, including maturity and death benefits, rose by 11.2% to LKR 62,185 million, up from LKR 55,921 million in the same period in 2023. Meanwhile, claims incurred in the General Insurance Business, covering Motor, Fire, Marine, and other categories, saw a marginal increase of 0.11% to LKR 46,783 million compared to LKR 46,734 million in Q3 2023.
Profitability of Sri Lanka’s insurance industry has experienced significant fluctuations over the past five years, however 2020 saw a strong recovery, with a 37.6% increase in profit, driven by strong performance in the General Insurance sector due to the outcome of declined claim experience, especially in motor class, as the mobility was restricted by the lockdown measures imposed in the country.
For Long-Term Insurance Business, the PBT decreased from LKR 19,630 million in Q3 2023 to LKR 18,390 million in Q3 2024, reflecting a decline of 6.31%. The General Insurance Business experienced a substantial decline, with the PBT dropping from LKR 16,836 million in Q3 2023 to LKR 15,044 million in Q3 2024, marking a significant decrease of 10.64%. In 2023, the total GWP of both General and Long-Term Insurance business generated by brokers reached LKR 44,884 million, a significant increase from LKR 37,110 million in 2022, marking a growth of 20.9%.
Brokers’ contribution to the total GWP also grew, rising from 12.8% in 2022 to 14.4% in 2023.
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