Economic transition presents insurance players opportunity

18 June 2014 04:28 am - 0 - {{hitsCtrl.values.hits}}

A A A

he period of transition Sri Lanka’s economy is currently in where low interest rates and single digit inflation is factoring in, presents the country’s insurance industry immense opportunity to grow their business and introduce new products, Central Bank Governor Ajith Nivard Cabraal said.

Addressing a forum organized by Citibank on pensions yesterday, Cabraal noted that due to the low policy interest regime now prevailing, many people specially, those who depend on interest income on their savings—may feel their income levels getting affected.

“Of course with high interest rates and high inflation that would have happened anyway, if not much worse. Because even if there were high interest rates in the past, with the very high inflation, we had their life styles could have been eroded in the longer term.

“Therefore this can be looked at as a threat and also as an opportunity. The opportunity is for the insurance industry to come up with certain products which will be attractive to this group of people,” Cabraal noted.

The Central Bank slashed policy rates by 125 basis points between December 2012 and October last year to boost economic growth.

This year, while renaming the reverse repurchase rate as Standing Lending Facility Rate, the Central Bank cut the rate by 50 basis points. Currently the Standing Deposit Facility Rate (SDFR) remains at 6.5 percent and the Standing Lending Facility Rate (SLFR) at 8 percent.

Despite the motive behind slashing the interest rate is to encourage more credit, the credit growth kept falling amid savings interest rate also declined significantly, impacting those depending on interest income from savings.

“In order to provide the background for that opportunity, we have also the Public Debt Department providing longer term bonds giving insurance companies the opportunity to make their investments.

Segregation, a “good thing”

Governor Ajith Nivard Cabraal sees consolidation in Sri Lanka’s insurance industry following the segregation of the operations of composite insurers into Life and General by 2015.

“This is already happening in the financial sector where non-banking financial institutions are encouraged to merge. Similarly, policies in insurance may be on the cards,” Cabraal noted.

“I like to see bigger and more stable insurance companies.

People will be more discerning as they will not only evaluate the insurance products but also will look at the person who is offering them,” he added.

Cabraal further identified the segregation as a “good thing” that can grow the country’s insurance market and encourage consolidation.

Order Gifts to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Vegetables, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

Sell your vehicle & house fast with hitad.lk only cost is Rs.400, Advertise in Hitad.lk for free to sell your mobile phone. Want to sell your Pet, Advertise for Free in hitad.lk Search for Houses in Sri Lanka and find the best place through Hitad.lk find your best tuition place. Find the best partner for you, visit hitad.lk Find anything at any time hitad.lk.

Comments - 0

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Economic transition presents insurance players opportunity

Segregation, a “good thing”

Comments - 0

Add comment

RECOMMENDED

Constitutional Reform for ‘System Change’

Linus Jayatilake (Sept. 1942 - May 2022): A Comrade of all Working PeopLe

Sri Lanka – In Lee Kuan Yew’s words

The Three Universal Truths in Buddhism

After night of terror, activists accuse government of smokescreening

RECOVERY OF STOLEN ASSETS – Part I

‘GotaGoGama’ rises through ashes after Monday’s nightmare

Most Viewed in News

Sri Lanka – In Lee Kuan Yew’s words

MR RESIGNS!

Sajith attacked

Airport entrance blocked preventing MPs leaving country

RANIL TO TAKE OATHS AS PM TODAY

MP Amarakeerthi Athukorala commit suicide

TODAY'S HEADLINES

Commemorating Vesak Full Moon Poya Day

New PM starts talks on Foreign Consortium for Financial Assistance

Vesak message from President Gotabaya Rajapaksa Resilience is essential in difficult situations

New Government 10 independent parties not to accept positions: Wimal

MIRROR CRICKET

England take early T20I series lead over Sri Lanka

New Zealand clinch World Test title

LPL 2nd edition from July 30-August 22-SLC

Sanath Jayasuriya signs as coach at Melbourne cricket club Mulgrave

Mathews steers Sri Lanka to 258-4 in Bangladesh Test

Neutral match officials return for Bangladesh-Sri Lanka Tests

Uncertainties prevail over Sri Lankan women’s tour of Pakistan

Every action has a reaction