ECONOMYNEXT – Sri Lanka’s insurance regulator was blocked from implementing a key regulation by trade unions of state-run Sri Lanka Insurance Corporation for almost a decade with political backing, according to revelations made at a parliamentary panel.
The Insurance Board of Sri Lanka had issued regulation asking insurers to separate their life and general businesses in 2011 which had to be completed by 2015.
But for almost a decade the separation of SLIC and MBSL had not been done, while other insurers complied.
“There were constant union agitation against segregation, that was one of the main reasons for them to delay as well,” Insurance Regulatory Commission of Sri Lanka Director General Damayanthi Fernando told the Parliament’s Committee on Public Finance.
COPF Chairman Harsha de Silva said it was not correct for regulations to be selectively implemented.
“You are the regulator,” de Silva said. “Parliament has given you the authority to uphold the law.”
Deputy Minister of Finance and Planning Harshana Suriyapperuma, questioned whether political pressure had been brought on the IBSL.
“A former secretary to the president issued a letter to the unions saying there was no need for segregation,” Fernando said. “They still have that letter and recently came and showed saying to amalgamate again.”
De Silva said some government officials had gone beyond their powers. “That letter should be withdrawn.”
De Silva questioned what penalty had been imposed on SLIC for not segregating the business.
“Why are powerful players allowed to manipulate markets while smaller companies face strict enforcement? Selective regulation is unacceptable in a fair economy,” de Silva said.
De Silva also questioned why MBSL Insurance, another company whose life and general insurance business was also not segregated.
The firm had a capital deficiency and required fresh investment, Fernando said. The segregation had been delayed until a capital was injected.
In the meantime the firm was ordered not to write new business. The company ceased writing new businesses in 2020.
Deputy Minister Harshana Suriyapperuma questioned whether there had been investor interest, and what was holding up the matter.
COPE asked that the matter be expedited. (Colombo/Mar10/2025)
