COVID-19 entices more for Health, Life Insurance
Asia is expected to emerge as the pivot for the overall insurance industry being the first to hit by C-19 and being first to recover. Among Asian countries, Sri Lanka is expected to clock a growth of 20% in 2021 as Sri Lanka’s insurance market is still one of the least developed in the region. Growth in Asian region is expected to be a further sweetener for SL’s growth trajectory. The S curve demonstrates the interrelationship between per capita income of a country and the extent of its insurance penetration. SL is currently ranked at a considerably low position in the S Curve due to low per capita income and low penetration.
However, with the country aiming to reach an annual per capita income of USD 5,000 by 2025, the premium per capita as a % of GDP per capita is expected to reach a higher position in the curve in the medium term. NCDs have shown an increasing trend and currently accounts for 83% of total deaths. In line with this, people have become more aware of risks of NCDs and looking for health/life covers which augurs well with the Life Insurance industry growth.
Insurers have taken up a range of new investments and initiatives. The top priorities include cost reduction, especially in light of rising compliance costs and increased regulatory focus, digitization of the sales force and more effective use of technology.
With the wake of COVID-19 Life insurance companies in SL have introduced various technological platforms and Digitization has led to a decline in expense ratio of the Life Insurance industry. “We expect that SL has further potential to reduce the expense ratio up to 38% by 2025E with the use of technology.’’ Insurance companies which own larger Life Insurance funds are expected to benefit from rising interest rates. Increase in earnings of Life Insurers are expected to improve Risk Based Capital Adequacy of companies enabling them to combat against future risks.”