Unsatisfactory conduct of insurance regulator

THREE months ago, at a session of the Committee on Public Finance (COPF), its Chairman Dr. Harsha de Silva slammed the conduct of Sri Lanka's insurance watchdog - the Insurance Regulatory Commission of Sri Lanka (IRCSL) - over its apparent failure to address serious market distortion by the premier State-owned insurance provider - the Sri Lanka Insurance Corporation (SLIC).

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As per the regulations of the insurance regulatory body, insurance companies in the country were required to separate their life and general insurance businesses before 1 January 2015. However, even though private insurance entities complied with the directives of the IRCSL, the SLIC did not fulfil the requirement imposed by the Commission close to a decade. It was only last year SLIC finally segregated its life and general insurance businesses into two separate entities. Interestingly, no penalty had been imposed on the State-owned insurance entity by the regulator despite the obvious violation of the rule by the former.

As per the COPF Chief, the regulator had not adequately explained the selective enforcement of the rule during the proceedings. In an obvious instance of partiality towards the Government ownership of SLIC, the Regulation of Insurance Industry (Amendment) Act No. 23 of 2017 exempted SLIC from being listed in the stock exchange as long as it is under the ownership of the Government. On the other hand, private insurance firms are mandated to become listed entities, thus, subjecting them to tighter compliance and financial reporting requirements.