Insurance sector Ditwah-related exposure limited but weaknesses persist: Fitch

WHILE the Government and insurance industry regulator have urged insurers to expedite Ditwah-related settlements, Fitch Ratings has said that the exposure to flood and landslide risks were in fact limited.

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Motor insurance accounted for 46.8% of total general insurance premiums in the third quarter of 2025, remaining the dominant segment. Health insurance followed with a 15.2% share, while Strike, Riot and Civil Commotion (SRCC) insurance contributed 14.3%. Fire insurance represented 11.9% of total premiums, other insurance categories accounted for 8.5%, and marine insurance made up the remaining 3.4% of the total.

Fitch Ratings yesterday said insurance losses arising from recent flooding due to Cyclone Ditwah are likely to be limited for most rated insurers in Sri Lanka, because of low retention levels in the non-motor segment and reinsurance protection.

However, the country's sole local reinsurer, National Insurance Trust Fund Board (NITF, BBB (lka)/Stable), is more exposed to losses due to its lack of retrocession cover.

Fitch expects the sector's underwriting profitability to come under pressure in 2025, although this is unlikely to threaten most rated insurers' credit profiles.

"Non-motor losses will be largely absorbed by reinsurance, but increased motor claims and reinsurance reinstatement premiums will weigh on underwriting performance. We believe insured losses will exceed previous records, given the extent of the flood damage," Fitch said.

The severe weather associated with Cyclone Ditwah triggered widespread flooding and localised landslides in Sri Lanka. Around 643 lives have been lost and over 70,000 people affected, with significant damage to housing, small businesses and road networks.