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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2403

Sri Lanka: State boosts Insurance Market value to over US $ 12 Bn overnight with a Free Insurance Scheme for all 4.5 Mn Students

By Special Correspondent in Colombo
Colombo, 07 October, (Asiantribune.com):

Stepping towards a landmark in the history of education in Sri Lanka, the Government of Sri Lanka has launched a free medical and personal accident cover for all schoolchildren of the nation. This is the first time such a program is launched not only in Sri Lanka but in the whole of the South Asian region.

Government offers free insurance scheme ‘Suraksha’ for all school children via state owned Sri Lanka Insurance,
Insurance Market value to grow at US $ 600 Million annually as a result
Over 400,000 school children to be insured annually
Countrywide Life Insurance Penetration rise to 35% from 13%
President Sirisena – Prime Minister Wickremesinghe Government marks history by insuring all children of the country
Sirisena-Wickremesinghe duo enters history by being first President & PM to insure future generations of the population
Country’s all students get safety status
For the first time in the world, the step marks an offering of a Mega Social Scheme by a 21st Century Government

Sri Lanka’s President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe on 2nd October 2011 launched the insurance scheme ‘Suraksha’ for the benefit of the country’s all 4.5 million school children including student Buddhist monks. This marks Sri Lanka initiating and entering into a part of an Universal Health Care plan, which also referred to as Universal Health Coverage or a health care system that provides health care and financial protection to all citizens or majority age group of a country.

Further the initiative marks the first ever historical moment that a Sri Lankan government has step forward to promote insurance targeting future of the population, and marks a larger social security scheme implemented in value amounting to over Rs. 1.8 trillion or US $ 12 billion disbursed to future countrymen’s safety and health. This social security initiative if continues also will insure over 400,000 young kids entering grade 1 of the school every year, and automatically increases Sri Lanka’s life insurance (long term insurance) penetration to reach over 35% of the population from the current level of 13% and creates and environment which makes Life Insurance market in the country to increase by over US $ 600 million annually as a result. According to analysts, this will result Sri Lankan students adopting to a system that they require insurance and Sri Lanka will reach the goal of 100% Life Insurance penetration by at least 2030 when Sri Lankans over the generations gets to learn the value of protection by this initiative. The insurance covers 4.5 million children of 11,242 schools throughout the island.

The objective of this insurance scheme is to make the school children healthy and pave the way for them to get the utmost use of the educational opportunities. The insurance scheme is facilitated through the nation’s strongest and largest insurer, Sri Lanka Insurance Corporation (SLIC) and the service will be offered through its extensive network of 150 branches island wide. According to reports although a total of Rs. 1.8 trillion is required to insure all 4.5 million students at Rs. 400,000 per policy for each student, the present Government had only allocated Rs. 2.7 billion for this year. There is no initial payment from any party and the government bears the total cost.

‘Suraksha’ is an accidental and death benefit insurance, introduced under the theme 'Sada Surakimu Daye Daruwan' is free for all school children in the country. The policy is implemented by the Ministry of Education and the government bears the cost.

Under the ‘Suraksha’ scheme, each schoolchild would receive an insurance cover of around Rs. 400,000, including a hospitalization cover worth Rs. 200,000. The scheme will provide coverage to an estimated 4.5 million schoolchildren from all walks of life in government, private and international schools. It will also be extended to the student priests in ‘Pirivena’ education. The benefits that would be available through the scheme include Rs. 10,000 as reimbursement of OPD medical bills, Rs. 100,000 to be paid upon the sudden death of the policyholder or Rs. 75,000 to be paid on the death of a parent and Rs. 100,000 and Rs. 50,000, respectively to be paid on full or partial disability of the child. The ‘Suraksha’ policyholders will also be entitled to additional benefits such as discounts on hospitalization, discounts on consultants’ fees, etc. The illnesses and procedures covered under the policy include cancer, renal failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplantation, coronary artery (by-pass) surgery, surgery-aorta, heart valve replacement, stroke, myocardial infarction, heart attack, coma, blindness and paralysis.

Speaking at the ceremony held on Monday at the Temple Trees to launch the 'Suraksha Insurance Scheme' for the children in Sri Lanka, the President Sirisena said the current government is giving priority to the safety and the future of the children. He said the government is following the United Nations and international charters, agreements and statements on children while fulfilling a comprehensive task beyond that for the children of the nation. Speaking further, the President said the government, in line with its policies, implemented number of programs for children in the last two and half years. President Sirisena symbolically handed over documents of insurance to student Buddhist monks studying at Pirivenas and some school children.

The insurance scheme, which is said to be a brainchild of Education Minister Akila Viraj Kariyawasam was also present at the ceremony with theSpeaker Karu Jayasuriya, Kabir Hashim, Vajira Abeywardena, Rauf Hakim, Daya Gamage, and Sarath Fonseka, State Ministers P. Radhakrishnan and Ruwan Wijewardene, MP Ravi Karunanayake and the Secretary to the Ministry of Education Sunil Hettiarachchi.

Sri Lanka’s Insurance Market

In 2016, long term insurers had issued 662,701 new life insurance policies decreasing by 10.51% compared to 740,511 new policies issued in 2015. Accordingly, the total life insurance policies in force reached 2,895,542 as at the end of 2016 (2015: 2,889,763).

In Sri Lanka, the high dependency rate is a major drawback to increase life insurance penetration, which is at a low level in the country, according many analysts from the insurance industry. The dependency rate in Sri Lanka which is around 52 percent, is an indication of the aging population which lacks a solid income in their retirement. A large number of parents depend on their children for financial support. Many of them are left to themselves, as the children are either overseas or do not pay adequate attention to parental needs. Sri Lanka’s life insurance penetration is less than five percent in terms of its premium to GDP ratio. However, household life insurance penetration is around 23 percent. Lack of education and disinterest in insurance are key factors for the low penetration in the life insurance sector.

Despite the challenging environment, year 2016 ended with a positive note for the Sri Lankan insurance industry where the total Gross Written Premium (GWP) generated from long term and general insurance sectors collectively recorded a growth of 16.27% (2015: 16.22%) and generated premium income amounting to Rs. 142,969 million or Rs. 142. 9 billion (2015: Rs. 122,962 million). Similar to the previous year, the growth in GWP recorded in 2016 resulted from the increase in premiums of both long term and general insurance sectors which posted growth rates of 18.26% (2015: 20.40%) and 14.73% (2015: 13.18%) respectively.

The long term insurance sector generated GWP amounting to Rs. 63,495 million in 2016, up by 18.26% against the GWP of Rs. 53,691 million generated in 2015. This significant growth was attributable to factors such as increased awareness on life insurance, introduction of new life insurance products to cater dynamic customer requirements such as retirement solutions and investment products, enhanced customer service, etc.

The general insurance sector recorded GWP amounting to Rs. 79,474 million in 2016, posting a growth of 14.73% compared to Rs. 69,271 million recorded in 2015. General insurers were able to increase their premiums steadily year on year amid strong competition prevailing in the general insurance market by means such as focus on niche markets, introduction of innovative general insurance products, implementing Enterprise Risk Management strategies, focusing on risk selection and pricing, etc.

- Asian Tribune -

Sri Lanka: State boosts Insurance Market value to over US $ 12 Bn overnight with a Free Insurance Scheme for all 4.5 Mn Students
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