People’s Insurance wins global and local awards for reporting excellence

Despite being a relatively young insurer in Sri Lanka, People’s Insurance Plc was recognised recently locally and internationally for its reporting excellence where it bagged two Awards at League of American Professionals Communication (LAPC) Vision Awards and two more awards at the CMA Integrated Reporting Awards for the 2016 Annual report. 

Peoples Insurance Plc released its first annual report for 2012 together with its first financial statements which were prepared in accordance with the revised Sri Lanka Accounting Standards (SLFRS/LKAS). The company has focused on setting high benchmarks in all aspects of its operations, successfully concluding the implementation of a customised enterprise resource planning (ERP) system, which has automated and integrated its key business processes – underwriting, claims and general ledger across the company, including the regional offices and window offices. People’s Insurance Ltd. commenced commercial operations in January 2010 as a non-life (general) insurance provider and offers a wide range of products to suit both individual and corporate clients under lifestyle products and business products.

The Daily FT recently met up with its Chairman Jehan Amaratunga, CEO Deepal Abeysekera and Finance Head Nilushan Somarathna where they shared insights on these two international and local accolades, performance, challenges and future plans.

Following are the excerpts 

of the interview:

By Charumini De Silva

Q: Could you elaborate on the awards the company won and how important they are for a young insurance company?

Amaratunga: We are honoured to be recognised at both Vision Awards and CMA Integrated Reporting Awards once again. These awards are a testimony for our commitment towards quality reporting. I would like to extend my appreciation to our team at People’s Insurance who worked hard with the highest enthusiasm to deliver a well-rounded annual report which is now aligned with the guidelines of the Integrated Reporting Framework and GRI – G4 Sustainability Reporting.

Somarathna: At the 2016 Vision Awards we won the Silver Award for Excellence within the Insurance Industry (world-wide) and ranked amongst the Top 80 Reports in the Asia-Pacific Region (all industry categories). People’s Insurance competed under the insurance category, while nearly 1,000 entities representing more than 24 countries have participated in the 16th LACP Vision Awards. In addition, we were recognised at CMA Integrated Reporting Awards. This year we received two awards namely Best SME Integrated Reporting Award and Overall Merit Award. It was the first time they introduced the SME category of awards and it was good to be recognised. We are proud to be recognised for excellence within the insurance industry globally and locally. I think it is a journey which we have started and we will keep on improving.

Q: How important is adopting Integrated Reporting in relation to the company’s stakeholders?

Somarathna:  Integrated reporting is new to Sri Lanka and if you look at the CMA Awards, only 40 companies applied for it. We started publishing the Annual Report in 2012 way ahead of getting listed in the Colombo Stock Exchange (CSE) in 2016. In the first couple of years we also prepared the normal Annual Report, but gradually we started adopting integrated reporting guidelines and published accordingly. We follow two major frameworks, one is Integrated Reporting and the other is GRI-G4 guidelines. This shows how transparent we are as a company in terms of making the public aware of our strengths. A typical Annual Report basically focuses on the shareholders only, but in Integrated Reporting we will have to take care of all stakeholders involved and address their interests. I think it is good for companies to adopt these reporting standards even though they are essentially not listed in the CSE.

Q: How do you see the challenges and competition?

Somarathna: I think insurance industry is one of the sectors where the prices have dropped rather than increasing due to the competition. The prices are not increasing in line with the inflation; perhaps it is coming down. It is very competitive. At the moment the insurance industry is still very crowded.  With the segregation requirement by the Insurance Board of Sri Lanka (IBSL), a few companies are in distress as they have to maintain those capital requirements as individual entities and for each business minimum capital requirement is Rs.500 million. As we heard, some companies are finding it difficult to meet this capital requirement. It has created concerns among companies if they could make profits and grow in the meantime. I think, in this background we are expecting couple of more mergers and acquisitions in the industry. There are two types of revenue generation methods in general insurance; one is through underwriting profits and the other is investment income. However, in Sri Lanka I think most of the companies are running at an underwriting profit loss. Before the segregation, companies were able to amalgamate life insurance and general insurance performance together and show results, but it is no longer possible. Companies cannot hide behind consolidated profits. Though some may criticise, I think it is a good challenge which will always allow the companies to have a better focus on the business as it reflects in their performances. Another challenge is the operational cost. After the segregation of life and general some companies have decided to have a separate HR division, which is costly; but it also depends on the approach.

Q: Being a fairly new company, how did your company manage to withstand these challenges?

Somarathna: We are backed by two major giants in the financial industry, People’s Bank and People’s Leasing. We have been maintaining our underwriting profitability in the past four years, while maintaining a strong bottom-line. We have maintained a return on equity of over 20%, which is clearly reflected in our shares. Our initial public offering (IPO) was one of the most successful ones in the recent times, which was oversubscribed six times. Considering the highly volatile performance of the CSE, most shares did not perform well. However, being a fairly new kid in the block, we had a very good upward trend. Over 50% of our earnings were declared as dividends so that stakeholders get a better return and not only corporate gains. Profits increased by 40% from Rs.450 million to Rs.658 million. After listing in the CSE, company’s overall performance as well as the profitability improved.

Q: What are the strategies and future plans?

Abeysekera: Established with a vision to be appreciated for building lasting trust based on strength, stability and sustainability – we would like to be the most trusted insurer in Sri Lanka. We are very much concerned about the quality of our service. Backed by two giants, People’s Leasing and People’s Bank; we want to maintain that confidence and we have a responsibility to do so. I do not think any of the other insurance company can claim the stability that we have being a part of such two financial giants in the country. People’s Bank is the most valued brand in Sri Lanka and the second loved financial organisation. We want to make People’s Insurance the best loved insurance company in Sri Lanka. In terms of strategies, we are looking at exploring new horizons in service levels, beyond the traditional delivery channels to offer best convenience to the customer. We want to provide protection for people’s hard earned assets and dreams. We understand the sensitivity of that. Although we will introduce new delivery methods, our customers will always have a good hearing from us backed by a spontaneous response. People’s Insurance is truly poised to meet the rapidly evolving demands of our customers.