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SL’s insurance industry profits grows by 16.4% to Rs 53,990 Mn

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The profitability of the insurance industry in Sri Lanka unveiled a moderate growth of 16.4% by reporting LKR 53,990 million profitability for the year 2022.

Every long-term insurer except two, achieved favorable profitability results for the year amidst the hectic socio-economic environment, which was prevalent in the country. However, profits were notably lesser than the preceding year primarily owing to weak GWP growth and substantial mark-to-market losses induced by the high interest rate environment.

General insurance business demonstrated a remarkable year-over-year profit growth of 43.2% in 2022, which was largely influenced by promising expansion in overall premium income and noteworthy foreign exchange gains reported by several general insurers which emerged from foreign currency denominated investments.

The highest recorded profitability was in 2022, while the lowest was in 2019. Unfavourable economic conditions prevailed in the country, coupled with negative effects created by Easter Sunday attacks challenged the performance of the insurance industry during the year 2019.

During 2020, the insurance industry displayed a significant financial performance by posting a year-over-year profit growth of 37.64%. The contribution of general insurers to overall profitability exceeded the long-term insurers in 2022 and recorded LKR 27,992 million.

As at December 31, 2022, 28 insurers were registered with the Insurance Regulatory Commission of Sri Lanka and 77 insurance broking companies were registered with the Commission as at December 31, 2022. The total GWP generated through the insurance brokering business amounted to LKR 38,852 million and recorded an increase of 28.28% in 2022 compared to LKR 30,286 million generated in 2021.

The long-term insurance business contributed to LKR 4,013 million, while the general insurance business contributed LKR 34,839 million. Meanwhile the Gross Written Premium (GWP) of both long-term and general insurance business increased to LKR 258,100 million in 2022 demonstrating a subdued growth of 10.5% in comparison to the previous year’s overall premium growth of 12.1%.

Regardless of the formidable challenges that unfolded in the post-pandemic era of the year 2022, the long-term insurance industry sustained by recording a moderate growth of 9.4% (2021: 21.0%) with an overall GWP of LKR 136,271 million. Rising interest rates hampered the loan granting facility and adversely affected the premium growth of loan protection insurance covers.

Depleted real income of households due to soaring inflation has resulted in significant drop in new long term insurance policies issued during the year, resulting in subdued premium growth. Insurance penetration declined to 1.1% from 1.3% year-over-year mainly as a result of subdued total premium growth and relative increase in gross domestic product at current market price.

The net claims incurred in the long-term insurance industry recorded LKR 61,642 million during the year 2022.

The growth rate was recorded at 34.1%, which is the highest growth rate recorded for the past five years. The increase emanated basically from maturity benefits, surrenders, and others. In 2022, the general insurance industry witnessed a significant increase in total net claims, reaching LKR 60,172 million (excluding SRCC & T).

This indicates a substantial surge of 24.7% compared to the amount of LKR 48,239 million reported in 2021. The claims of the general insurance sector have witnessed a surge due to multiple factors. Firstly, there has been an increase in costs for repairs and replacements resulting from high inflationary conditions prevailing in the country.

The post SL’s insurance industry profits grows by 16.4% to Rs 53,990 Mn appeared first on DailyNews.

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