More needs to be done to educate the public on insurance and its benefits, the regulator of the industry, the Insurance Board of Sri Lanka (IBSL) said early this week.

The penetration of life insurance is 25 percent of the active labour force and a meager 9.6 percent of the entire population.

The IBSL says that these figures are the lowest in the region.

"Public awareness on insurance is very low and is confined to the Western province and urban areas," IBSL Director General, Lasinee Seresinhe, told the media last Tuesday.

According to the Regulation of Insurance Industry Act, IBSL is mandated to develop the insurance market in the country and create public awareness.

An official said that people are not even aware of the IBSL and its function as the regulator of the insurance industry.

"We have carried out several workshops in out station schools about insurance and its benefits. Very often, at these workshops, we have been introduced as the Sri Lanka Insurance Corporation," he said.

The Insurance Ombudsman, Dr. Wickrema Weerasooria, has time and again pleaded with the insurance companies to do more in promoting awareness on insurance as forcefully as they did their insurance products.

Read, read, read…

A persistent problem facing the insurance industry is that people have shown a tendency not to read insurance proposals before signing them and committing themselves to its contents.

"Very often people find out exactly what they are insured for when they make a claim, and it is too late by then," Seresinhe said.

The Chairman of IBSL, Udayasri Kariyawasam, said that people should not only read every single document, but advised that they find out "…what they are not covered for."

At a recent seminar on ombudsman schemes, the insurance industry was criticized for using jargon and obscure questions in their proposal forms which made it difficult for policy holders to divulge the truth.

Jagath Alwis, President of the Insurance Association of Sri Lanka (IASL), the representative body of the insurance industry, said that many insurance companies have begun to use simpler language and were making a conscientiuos effort in this regard.

However, Kariyawasam said that the insurance proposals, being legal documents, had to comply with the subscribed legal text of the country.

This was why Dr. Weerasooria told the seminar on Ombudsman schemes two weeks ago, that it would be up to the judiciary to make a change.

Countries such as Australia and the UK have even passed legislation to use ‘plain English’ in banking and insurance documents.

Kariyawasam acknowledged while this may be plausible with English, simplifying the local languages would not be too easy.

Some proposal forms are in English and are not translated because its meaning could be distorted.

About 80 percent of the proposal forms are filled in by insurance agents, the Ombudsman says.

IBSL and IASL say that measures are in place to closely monitor the insurance agents and complaints against them had declined considerably.

In the past, insurance agents had been driven by commissions and some of them have been found to have suppressed critical details from policy holders.

Insurance agents are now required to qualify themselves and an examination is carried out by the industry. A shared data-base on insurance agents is also in place.

The onus is always on the potential policy holder to read the documents carefully and understand their contents before signing.

Pay in premiums on time

The IBSL has issued a rule for general insurance policies where the premium must be paid in within 60 days of acquiring the policy, if not the policy would automatically lapse.

This rule is called the premium payment warranty.

"This was done to protect policy holders and improve the liquidity of insurance companies," Seresinhe said.

In the past insurance companies had issued policies with a credit period of 3 to 6 months to pay in the premium.

This was used a tool for competition and when a claim was made before the stipulated period of the premium payment, the claims were rejected.

A Warning: Pay premiums to registered agents

The IBSL advises the public to pay in their premiums to registered insurance companies, registered brokers or registered brokers.

Paying premiums to unauthorized third parties have resulted in the lapse of many policies because the premiums had not gone into the insurance companies on time, if they have not gone in at all.

Brain Drain

Alwis said the industry is facing an acute shortage of insurance professionals with many leaving for greener pastures in the Middle East.