31 July 2019 12:01 am
As per the directive given by the Insurance Regulatory Commission of Sri Lanka (IRCSL) has not been heeded by the Agriculture and Agrarian Insurance Board (AAIB), Ceylinco General Insurance Ltd. has taken the lead to challenge AAIB for the issuance of insurance covers to the public for motor vehicles and other insurance covers not related to agricultural activities.
Earlier, the Insurance Association of Sri Lanka made representations to IRCSL on this matter, resulting in IRCSL advising AAIB against its practice but the inaction of AAIB has resulted in a legal battle.
Ceylinco General Insurance., in the petition filed in the Court of Appeal, alleged that AAIB is issuing insurance covers to the general public of Sri Lanka, violating the provision of Agricultural and Agrarian Services Act.
Ceylinco General Insurance maintains that AAIB is empowered to issue insurance covers only to the agriculturists as defined in Section 7 of the Act.
Ceylinco General Insurance has also alleged that AAIB is not a regulated body that comes under the purview of the IRCSL, and as such the public is exposed to the risk of having their claims denied by AAIB.
Further, Ceylinco General Insurance maintains that AAIB does not have any reinsurance on the policies issued by them.
Hence, Ceylinco General Insurance has sought interim orders preventing AAIB issuing motor and health insurance covers which exposes the general public to undue risks, as AAIB is engaged in unfair trade practices. As a final relief, Ceylinco General Insurance Ltd has pray for writ of prohibition and writ of mandamus, preventing AAIB engaging in illegal issuance of policies and limiting the issuance of policies in terms of the said Act. After hearing the application, the Court of Appeal has issued notice to AAIB and its board members to appear in court on September 2, 2019.