Could you give our readers some information on Sri Lanka Insurance Corporation in terms of its historical background, the structure of the company and its main activities today?
The Sri Lanka Insurance Corporation was formed in 1962 with the nationalisation of all insurance companies in Sri Lanka. It is a limited liability company with a majority of the Directors having private sector experience. Until recently there were 2 insurance companies, which were owned by the government. One was privatised a month ago and now we remain the only insurance company with a 100% government stake. Nevertheless we believe that in 2 years time there might be a reduction in the government's stake. We are steering the company in a manner to maximise shareholder value.
Do you already have any concrete plans as far as privatisation plans are concerned and how many shares do you want to sell to investors?
We are still in the conceptual stage. We prefer a managed privatisation, if the government has no objection to it. If so it would be a gradual privatisation.
As you said you are the only remaining government- owned Insurance Company. What has been the development in the insurance sector in the last couple of years and how do you see your Insurance Corporation's contribution to that development?
During the last couple of years many new insurance companies have been formed in Sri Lanka. One has a significant foreign share holding while the others are local companies. Some are medium sized while the others are relatively small. All these companies are fiercely competing with us, but I am happy to say that we are able to maintain our leadership in market share. In fact we have gained some market share this year.
Talking about your market share, you are still the leading insurance company in Sri Lanka with approximately 45% of the market share. What has been the company's philosophy to achieve that goal and how do you plan maintain that leader status in this sector?
We consider social responsibility as a primary obligation of the organisation, while ensuring that we don't run at a loss. Now we are having negotiations with the government over the health scheme for the public service. We have expressed a desire to ensure that it is not abused as we have faced a few problems with claims for spectacles and outdoor treatment.
As far as your services are concerned, are you focusing more on life products or non-life products? Moreover, are there any new services you have introduced recently or which are in the pipeline and ready for a launch?
We believe in "womb to tomb" life insurance cover. In addition we cover every type of general insurance. We offer health insurance from the first breath, for the rest of life. Recently we introduced an inflation adjusted comprehensive funeral expenses cover. We are now looking at a confinement insurance cover, to make "womb to tomb" cover a reality. In addition all our health policies and critical insurance policies are being reviewed, to offer in each case best value for money.
We have also launched an insurance cover for migrant workers. For this purpose we have gone a step further than merely being an insurance company. We are looking at insurance in terms of our social responsibility. The problem that we have identified is that those who go to the Middle East countries as domestics find that some employers take their passports and some times do not pay their wages. As a result they are stranded. We have addressed this issue using the Web. Our policyholders are provided with a return air ticket in case of harassment. Because of our relationship with Sri Lankan Airlines, they will check the validity of the cover by accessing our web site "srilankainsurance.com". The web site provides links to the Foreign Employment Bureau, the Immigration Department, and embassies, to email and get the necessary documents. The cover itself is quite extensive.
We have gone a step further through an arrangement with Bank of Ceylon, to provide the facility of opening a non-resident foreign currency account, free of charge. On receipt of a remittance of 400 Dollars, the Bank provides a guarantee for a return air ticket on demand, which will be shown in our web site. This is an example of our focus on social responsibility.
You mentioned that you are introducing new technology within your services. We have interviewed other insurance companies as well who claim that they introduced a new approach and a more customer oriented approach in the sense that they offer a more personalised product as opposed to those in the past. Is the new approach that you are taking aimed to offer more personalised products to your customers?
Our senior staff and front line staff are being exposed to customer service excellence programmes, to change their outlook. Any customer with a life policy has the option of getting additional cover to satisfy every need and want at the time of a renewal. We are hoping to offer even more extensive facilities in the near future in the area of personalised cover. When a person takes a life insurance policy with us, it is a bond for life.
You also mentioned that you cover all kinds of insurance. Is there any new niche market you are trying to approach and to which to offer new services?
We have a lot to cover in terms of these personalised services, as we have not been focusing adequately, on some of these needs, but we prefer to remain silent until the launch. We are certainly looking at removing the hassle of getting an insurance policy, which crept in during the days of the monopoly. A lot of attention is being paid to monitoring customer service. We were the first company in Sri Lanka to offer toll free lines to named customer service executives, for life insurance, motor insurance and general insurance. We advertise the availability of these toll free lines and get a good feed back from our customers regarding their needs and wants. | You are the leading insurance company in Sri Lanka, can you give us some statistics and figures in terms of your number of staff, branches, and how successful have you been last year?
We had a premium income of Rupees 6.2 billion last year, which is a growth of 7.5% from the previous year. Our company is unique as the life insurance fund is maintained 100% for the benefit of the life insurance policyholders. This fund had a growth of 15% last year to reach 13.9 billion Rupees. In general insurance we had a premium income of 3.8 billion rupees. The profit before tax of 978 million rupees is an increase of 54% above the previous year. The Return on Net Assets of 18.7% is satisfactory. We have 3100 employees, 50 less than the previous year. Staff cost as a percentage of Value added of 14.6 % compares favourably with the private sector. We have further room for growth with good management.
We were the first company to buy an IBM mainframe but the level of computerisation is low. Now the thrust is on rapid computerisation and I am looking forward to total computerisation in one years time. We have an Ernst & Young team present in the premises, doing the project management of this rapid computerisation operation. We have handed over the Business Process Re-engineering exercise to the Postgraduate Institute of Management. In a year's time we will have a new organisation structure with the implementation of the Business Process Re-engineering exercise.
You mentioned that you are looking at total computerisation. What kind of investment are you looking for in order to computerise all your branches?
Fibre optic cables are being laid on every floor of this building to establish an extensive local area network. A 'wide area network' connecting 40 out of our 75 branches will follow this. The balance branches will be connected through the Internet. We are investing in a new IBM computer at a cost of 40 million rupees to serve this network. We are increasing our number of branches, but these are not going to be conventional branches. The new branches that we are forming will be called mini branches and will be located inside our associate Commercial Bank.
As the leading insurance company in the country, how would you describe your image in the country and moreover, what is the image you would like to project?
Our market studies indicate that we have a slightly mature public sector organisation image. We are aiming at projecting an image of being a highly customer centred organisation. We are using our connections with the banks, which are highly computerised to move in that direction. For example, in the past the customers had to pay their premiums directly to the Insurance Corporation, but now we are arranging for it to be paid to any branch of the Commercial Bank. We also offer a 5 % discount for life insurance payments by standing order. Similarly we are hoping to settle motor claims within two weeks by using direct payments through the banking system.
You mentioned that you have very good relationships with the Commercial Bank and Bank of Ceylon. Do you have any foreign partners?
We have excellent relations with long-standing re-insurers. We would be interested in them taking a nominal stake at the time of privatisation, in order to cement the bond.
In 2 to 3 years time the Far Eastern Economic Review will be back to do a new report on Sri Lanka, where do you see your self within that future?
I come from the marketing profession. Before I accepted this job, I was the Managing Director and C.E.O. of ICI Paints in Sri Lanka. I am used to being a market leader and hope to remain the market leader in insurance.
Our readers are also leaders and executives in different countries around the world who are always interested in the profile of leaders in other countries. Can you tell us something about yourself, your background and what would you say has been your biggest achievement as the Chairman of Sri Lanka Insurance Corporation?
During my period at ICI Paints as the CEO and Managing Director, I was also heavily involved in the business Chamber movement. I was the Chairman of the Chamber of Industries and later the President of the Federation of Chambers. I used to speak on behalf of the business sector to the government. Now I am somewhat on the other side, but still I do understand the needs of the private sector and I try to convey the thinking of the private sector to the government. I am also a Director of Bank of Ceylon and Chairman of "Tharuna Aruna Institute" which is a Graduate Placement and Training Institute.
My biggest achievement has been making the Insurance Corporation far more customer oriented.
What is your last message to our readers who are all businessmen looking for investment opportunities in Sri Lanka?
Sri Lanka with a Dividend yield of 6.5 to 7%, profit growth exceeding 10% and average GDP growth over 5 %, is an attractive emerging market for long-term investors.
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