Underwriting profitability for Sri Lankan non-life insurers will gradually improve as they enhance practices and shift focus to more profitable non-motor segments, Fitch Ratings says in a new report. This shift includes adjusting policy pricing, particularly for motor and medical insurance, to better cope with inflation and rising claim costs.
Motor insurance profitability faces challenges due to regulatory changes requiring full premium remittance to the National Insurance Trust Fund Board. Non-life insurers have also been diversifying into non-motor segments such as health insurance due to prolonged import restrictions on motor vehicles. This diversification led to an 11% increase in non-motor gross premiums in 2023.
Fitch believes that investment and liquidity risks have decreased following the upgrade of Sri Lanka’s sovereign rating in December 2024. Meanwhile, the upcoming implementation of IFRS 17 in January 2026 is likely to enhance transparency and comparability in the insurance market.
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