SLIC creates history declaring Rs. 10.4 Bn Life Insurance bonus – CEO Chandana Aluthgama
The prudent financial management initiatives and the investment policy the company follows were the key for Sri Lanka insurance to create history in the insurance industry and declare a Rs. 10.4 billion worth of Life Insurance bonus for its policyholders.
Chief Executive Officer Sri Lanka Insurance (SLIC) Chandana L. Aluthgama in an interview with Daily News Business said that they are in a strong position to declare an even higher bonus in the future. He also said that their digital journey which was accelerated brought them closer to customers than they expected.
Excerpts of the interview with CEO, SLI, Chandana Aluthgama
Q: Sri Lanka Insurance Corporation (SLIC) recently declared a bonus for its life insurance policyholders. What is the significance?
Sri Lanka Insurance declared a Rs. 10.4 billion worth of Life Insurance bonus for its policyholders. This is significant because it is the first time an Insurance company has declared a bonus of Rs. 10.4 billion and it is also the first time an Insurance company has surpassed the Rs. 10 billion mark. We have been continuously challenging our own benchmark year-on-year and have raised the bar with each passing year to declare the highest Life Insurance bonus to our customers.
Q: What are the factors that have contributed to this milestone and how the company plans to sustain this momentum?
There are a couple of factors attributed to a declaration of bonus. The prudent financial management policy and the investment policy the company follows is one of the key attributes. We have prudently managed our policyholder funds and as a result we have been able to increase our Life fund to Rs. 156.7 billion.
SLIC’s management practices, and new developments in the business are also deciding factors for the continuation of paying bonuses for our customers where we set new benchmarks every year for ourselves and the industry. With our financial management and investment management policies in place and as we continue to adopt best practices in management I don’t see a reason why we can’t achieve this milestone in the years to come. In fact, I’m confident that we are in a strong position to challenge ourselves to declare a higher bonus than the previous year.
Q: The industry is constantly evolving and customer expectations are changing. How is SLIC adapting to these new developments, trying to stay ahead of the curve and meet the evolving needs of its policyholders?
The world has been evolving with so many new practices. Especially during COVID the Banking and the Insurance Industry had to make rapid changes in their processes to meet the customer needs.
The digital journey had to be accelerated which brought us closer to customers than we expected. Technology and innovation have converted an intangible product like Insurance to a tangible product. For example, in addition to payments and standard online facilities, we also provide the facility of obtaining policies online. We also introduced Virtual Claim Inspection services that allow drivers to provide their accident details and photos, speeding up the claims process.
In terms of product development post pandemic, we saw the need for protection of parents whose children were receiving education especially in private schools and international schools. We realised that in the absence of the breadwinner the children will have to face difficulties in continuing their education in their respective schools. To address this need we introduced the School Fee Protector Insurance plan to support the children to complete their school education. In a nutshell, we are evolving on a daily basis.
Q: What are the customer centric strategies implemented by SLIC in 2022?
As I mentioned above, our product positioning strategies are based on the needs of the customer. We have also developed our processes to ensure customer convenience, for example; the Virtual Claim Assistance service where we can pay out the claim within a span of a few hours if the customer is in agreement. Furthermore, we are continuously challenging our internal processes to deliver higher level of services to our customers. For an instance pre 2022 we have been providing our customers with physical Life Bonus Certificates. Understanding today’s digital customer, we now send out digital Life Bonus Certificates where we have been able to deliver convenience to our customer as well as been able to improve our internal processes and adopt cost efficient initiatives.
We are looking at opportunities to work with other service providers with whom we have a close correlation to embrace the benefits of Block chain technology. This will allow us to pass on the benefits to our customers.
Q: How do you think digitalisation will enhance overall customer experience?
Digitalization of a company’s processes will certainly bring convenience to customers and will be a value addition to enjoy a superior customer experience. The customer has a better opportunity to connect with the company through digital platforms and digital initiatives. With information being available on the digital space, customers have the freedom of understanding the products clearly and also make their own decisions when purchasing an Insurance plan. Furthermore, we have established customer convenience through numerous initiatives such as enabling payment gateways, Customer Apps, connecting with customers through chat platforms to provide solutions for their queries.
However, it is equally important for customers to embrace these changes and trust digital platforms to connect with the insurer. We can see that there is a slow but steady progress in people moving on to digital platforms to obtain services from insurance service providers which is a positive move for the Insurance industry.
Q: What’s Sri Lanka’s Life Insurance penetration?
As a percentage of GDP, the Insurance penetration in Sri Lanka amounts to 1.39 % (2020) for both Life and General insurance business. This is a marginal increase from 2019. However, the Insurance penetration in Sri Lanka is low compared to the other countries in the Asian Region. This is also an indication that the opportunities for the Sri Lankan Insurance industry to grow is endless.
Q: What is the regional and Asia’s usual penetration for Life?
The Life Insurance Penetration for Advanced Asia Pacific is 6% and 2.1 % for the Emerging Asia Pacific region. Whereas the Life Insurance penetration in Sri Lanka is 0.69% which is well below than the regional Insurance penetration figures.
Having said that, we can see some positive trends in the Insurance market. We see a majority of people having an Insurance cover from either their workplace or through a particular scheme they are a part of. For example, under the ‘Surasksha’ scheme which was underwritten by SLIC, all schoolchildren and their parents were covered. This provided cover for a large cross section of the population of the country. As a society we come from a dependent background. We depend on our immediate family, neighbours and friends. This is mainly due to the culture we have grown up in. Certainly it is a good thing to be surrounded with family and friends however, this also makes us dependent as a society and we overlook the need of having an insurance plan too. Whereas in developed countries the thinking of the people is different and they take proactive measures such as purchasing Insurance to face unforeseen situations.
I personally feel that we have a low penetration due to the dependent culture and our priorities in life. On the other hand, we also see a young budding generation who enters the job market at the age of 18 or 19 and look at investing in Insurance and saving from their earnings. We can be hopeful that the new generation will be smarter than us and understand the importance of Insurance and ensure that they allocate a reasonable amount for Insurance. Having insurance gives you peace of mind and undeniably plays the role of a safety net.
Q: With the high cost of living, do you think people prioritise Life insurance?
The important thing is understanding our priorities and if Life Insurance comes in our list of priorities. For a certain individual Life Insurance might be among the top 10 priorities and for another it might not be the same. Regardless of being an Insurance professional I feel Insurance should make it to every individual’s list of top priorities. There are a range of Insurance solutions that are available in the market and we can choose our plans based on the investment we can make. It doesn’t have to be a large investment, it can even be a small amount which you can afford. What is important is the commitment we make and continue to pay our premiums so we have a safety net in place when the need arises.
Q: Was there a demand for health insurance after COVID?
Yes, we saw a huge demand. The public awareness on life protection is believed to be increased due to the circumstances evolved by the pandemic. In general people have become more concerned about their health and expenses related to health. As per the Central Bank Annual report we saw there is a hike in the health expenses in 2022. Health expenses have increased by 40% which calls for people to have their own health and life Insurance plans. However, if the numbers have reflected this demand is a concern.
Q: Your profit target for 2023?
We had a good year in 2022 where we recorded a Profit Before Tax of Rs. 12.47 Billion. Furthermore, we recorded a Rs. 20.9 Billion in Life Insurance Premiums. With normalcy approaching we are confident that 2023 will be a better year and we will outdo ourselves. In terms of Gross Written Premium (GWP) we are looking at a considerable growth in the Life Business and if General Business is high it will also help us record a handsome profit.
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