Finance Ministry to amend Regulation of Insurance Industry Act
Insurance Board to be renamed as Insurance Regulatory Commission
Amendment to be presented to parliament in two weeks
By Chandeepa Wettasinghe
A new legislation gazetted by the Finance Ministry is attempting to amend the Regulation of Insurance Industry Act No. 43 of 2000 to allow insurance subsidiaries of foreign firms and state-owned insurance companies to be exempted from listing on the local stock market.
This will be done under the supervision of the Insurance Board of Sri Lanka (IBSL), which is expected to be renamed as the Insurance Regulatory Commission of Sri Lanka (IRCSL) under the same legislation.
“We have been requesting the name change for the past two years but the change of the government and the need to amend the act with two other matters delayed this. So all three were included in this amendment,” IBSL Chairperson Indrani Sugathadasa told Mirror Business.
She said that the amendments will be presented to parliament in two weeks.
Under the changes, if a foreign firm listed on a member stock exchange of the World Federation of Exchanges or a stock exchange recognized by the IRCSL owns at least 85 percent of a local insurance subsidiary, carries the accounts of the local subsidiary in its group level accounts and meets all compliance standards, the local insurance subsidiary will be exempted from being listed locally.
“Foreign companies requested us to exempt them from being listed locally if they are listed on a stock exchange recognized by the board. That was fair,” Sugathadasa said.
Under the 2011 amendments to the Regulation of Insurance Industry Act, all insurance companies were required to be listed locally.
The Allianz Group, listed on the Frankfurt Stock Exchange, and the Fairfax group, listed on the Toronto Stock Exchange, are the two foreign firms with unlisted local subsidiaries in Sri Lanka, which are currently accepting business.
The New York Stock Exchange-listed AIG Group, which has a local unit, is in the process of exiting Sri Lanka.
Further, under the newly gazetted amendments, the state-owned Sri Lanka Insurance Corporation and the National Insurance Trust Fund will also be exempted from being listed on the Colombo Stock Exchange.
Several years ago, the Insurance Association of Sri Lanka had expressed its disapproval of the state enterprises receiving preferential treatment.
Attempts to reach the new IASL President Deepthi Lokuarachchi—to obtain the lobby group’s current view of the exemptions for foreign and state firms—were unsuccessful.
The newly proposed amendments also include provisions to allow insurance agents to be employed by one general insurance firm and a long-term insurance firm, compared to the current law allowing an agent to be employed by just one company.
This is to address the 2011 amendments, which also directed composite insurance companies to segregate their life and general insurance businesses into separate companies.
While some companies sold off a segregated business, many have kept both life and general insurance businesses under the same brands, at times bundling services in one package.