Sri Lankaâ€™s Ceylinco expands distribution as foreign competition hots up
ECONOMYNEXT – Sri Lanka’s Ceylinco Insurance PLC will rely on the expansion of its branch network in rural areas to compete with large international insurance companies now entering the local market, company officials said.
Ceylinco Insurance PLC Managing Director and chief executive Ajith Gunawardena said that already two of the world’s largest general insurance companies have acquired local firms, while other global leaders are also eyeing the local market, which is expected to create stiff competition.
“We welcome competition, either locally or from abroad. I think some of the people get scared with foreigners entering, but we are not. There’s a saying that the old broom knows the nooks and corners. We being here, we know the nooks and corners,” he said.
Gunawardena was speaking at the bell ringing ceremony at the Colombo Stock Exchange to welcome Ceylinco Insurance back into the S&P SL20 Index, following the mid-year rebalance of the index in June 2018.
The index consists of Sri Lanka’s 20 largest listed entities meeting minimum size, liquidity and financial viability thresholds.
Ceylinco Insurance last fell off the index during the annual rebalance in December 2016.
High on the agenda for competing with the international players is to expand Ceylinco’s branch network further into areas that the company sees potential in, according to Gunawardena.
“That’s why we have over 700 branches and it is ever increasing. Before the end of the year, our general insurance will open at least another 30 branches,” he said.
Further, Ceylinco Insurance is planning an overhaul of its general and life insurance services by end-2018 to make them more attractive.
“There will be many changes to the portfolio that we have, which will be backed by the world’s largest reinsurance providers,” Gunawardena said.
Ceylinco Life Insurance Ltd Managing Director and chief executive Rajkumar Renganathan said that the changes will keep in mind the need to make insurance products more attractive for rural entrepreneurs.
“We as a Sri Lankan company have an interest in the rural sector, and our strength is there,” he said.
While admitting that insurance companies have been viewed with distrust by rural Sri Lankans in the past,
Renganathan said that Ceylinco Insurance has made progress in countering this perception.
Renganathan said that even after 2008, following a major scandal which affected the Ceylinco Group, rural customers had remained loyal to the insurance arm, helping Ceylinco Insurance grow.
Meanwhile, he said that even though the growth of the Sri Lankan economy has slowed down in recent years, it would not affect the insurance industry significantly, as there exists untapped potential due to low penetration of insurance products.
With new initiatives, Ceylinco Insurance is expecting to grow its gross written premiums by 15 percent in 2018, Gunawardena said. In comparison, Ceylinco’s gross written premiums grew by 8.9 percent to Rs. 34.7 billion 2017.
(COLOMBO, June 26, 2018)