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“The industry has phenomenal GWP and asset growth but the penetration remains low. Instead of improving, the penetration reduced further to 1.1% in 2013,” shared IBSL Chairperson Indrani Sugathadasa while delivering an address at a workshop on ‘Promoting Microinsurance in Sri Lanka.’
In 2013 the industry had coverage of 1.1% as a percentage of GDP, which is 0.05% lower than the 1.15% achieved in 2012 and 0.1% lower than the 2011 figure of 1.2%.
Looking at the scenario as an opportunity rather than a weakness, Sugathadasa noted: “This means that there still remains a feasible portion of untapped market and thus a vast potential for insurance companies to introduce products at an affordable price that meets the needs of the general public.”
While in Sri Lanka it is mostly the urban population that is protected by insurance, she added that the industry is yet to reach out in a significant manner to the masses in rural and semi urban areas where approximately 75% of the population resides. Noting that insurance companies always cite the low disposable income of the rural populace as the prime reason for lack of diffusion on such areas, Sugathadasa asserted this is incorrect since income of the rural people has been on the increase as incidence of poverty has drastically reduced in the recent past.
“In order for us to enhance insurance access, the time has come for us to think and act differently. Doing the same thing over and over again and expecting different results is meaningless. Many insurers across the globe have found microinsurance to be profitable if operated simply and efficiently by responding to market needs and reaching out to a large number of low income people. It is up to the industry to seize the opportunity and shape the environment, by creating a sustainable future their companies,” she said.
