By Chandeepa Wettasinghe
Ax Insurance Brokers (Pvt.) Ltd (AxIB) launched its operations last week to provide the insurance industry of Sri Lanka with reinsurance brokering and actuary advice, in partnership with NMG Consulting, the largest provider of general insurance actuary advice in Sri Lanka.
“The reinsurance space is not being provided analytics. The reinsurance business was Rs.3 billion in 1998. It has gone up to Rs.9 billion in 2013. Since big international brokers won’t come, we found a gap,” AxIB Managing Director Roshan Perera said.
He further added that AxIB is currently in negotiations with a large international reinsurance company to expand its service base in Sri Lanka.
Currently, the state-owned National Insurance Trust Fund claims over 80 percent of the reinsurance market, as regulations require primary insurance businesses to cede 30 percent of their liabilities to the state institution.
NMG Consulting Partner Matthew Maguire said that since the Sri Lankan insurance industry is capitalized above the risk-based capital requirements, the industry will be moving into an optimization phase, giving AxIB a golden opportunity.
“The industry is moving into an optimization phase of linking business plans to capital requirements. They will attempt to find the optimal mix in business, pricing structures, reinsurance and assets and also go into enterprise resource management and stress testing,” he said.
Perera said that for the past 15 years, the gross loss ratio in the local industry was lesser than the net loss, unlike in other countries, showing a good pattern of profitability.
Maguire said that while 80 percent of the insurance industry is still comprised of motor insurance, trends show medical insurance having strong growth. AxIB was formed earlier this year, following the purchase of Asset Eye Insurance Brokers (Pvt.) Ltd in October 2014.
It will be approaching every major insurance company in Sri Lanka with the support of NMG Consulting to jump start its business in the coming weeks.