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Interview: Nalaka Godahewa, MD, Sri Lanka Insurance Corp.
"Price war not the way to take insurance forward"

With 90% of the life insurance market still untapped, Sri Lanka’s insurance industry has tremendous potential to grow as the importance of offering a protective cover to the average man becomes more poignant, says Dr. Nalaka Godahewa, Managing Director, Sri Lanka Insurance Corporation Ltd., (SLICL).

"We need to reach out to those down the line and educate them on the benefits of insurance as they have been left out while the business sector and big corporates and people at the middle-level have been covered to a great extent", he noted.

The penetration level in most insurance categories in Sri Lanka is not very high in comparison to other developing countries, Godahewa said in an interview with The Sunday Island.

"Rather than competing and engaging in price wars, we should collectively reach out to offer a protective cover to the nation through innovative products", he stressed. "That’s how we can take this 50 billion rupee plus industry forward".

The following are excerpts of the interview with Dr. Godahewa:

Q: How would you allay fears that the Sri Lanka Insurance Corporation, now back in the government fold, would not slip back to that pathetic lethargic state it was in prior to privatization?

A: There was a different culture at that time. We identified the risks from the very beginning. From day one, we ensured that situation would not arise again. We have to communicate the business angle. True, the government gets the benefits in terms of the profits we make. But at the end of the day, what counts is how we have looked after our customers and whether we have served them better. That is critical, as we need to, in the true sense of market orientation make an impact and forge ahead whether we are a private company or government-owned.

There are three stakeholders involved here. The government, which makes use of the money we make for public good – towards funding development in the country. Then employees, we have a greater responsibility towards them than the private sector. We have to see to their welfare as there are many who have spent two-thirds of their life in this institution. We have to address their needs and motivate them. Then of course the customer without whom this business cannot exist. We are managing their funds. So it is our duty to give them protection, as well as the best return.

We have launched a program where within the next six months we will be addressing operational issues. The most vital factor amongst the stakeholders is the customer. Unless we meet the needs of our customers, the business cannot run. The business will start packing up. We must be very clear on that.

Q: Has there been a drop in business volumes since Sri Lanka Insurance reverted to the government?

A: The insurance industry as a whole had slowed down in the past six months. There was growth but it was not as good as the corresponding period in 2008. The global recession also had an impact on the industry here. In the third quarter, there was a turnaround and I am confident the trade will begin to grow again. People also lost confidence in the private sector because of certain adverse developments. They have come back to government-owned businesses for investment.

As for Sri Lanka Insurance Corporation, we have not done any advertising since the ownership change in June this year. It is only now that we have started advertising with a clear message.

Q: There was a picketing campaign and some related trade union activity in recent months?

A: Yes, there were one or two isolated trade union incidents. There is a humane management here and we have a good understanding with the two trade unions which are equally distributed. There are only a few activists. The picket was of no benefit. Nothing was achieved as we have already addressed their key grievances. The employees are confident that the Board of Directors is working towards their welfare.

Q: You were handpicked by business tycoon Harry Jayewardena to head Sri Lanka Insurance as its CEO at the time it was privatized. Did it come as a surprise to bounce back as MD?

A: I was happy enjoying my academic work when the President wanted me to take over. But I was equally happy and proud when I was given this special task. I served as the Competent Authority earlier following the June 4, 2009 Supreme Court judgment until the new board was appointed. The members of the Board of Directors are professionals from various spheres, including insurance, legal, investment and marketing, who were handpicked for the job. There is a 50 billion rupee plus fund base here and as custodians, we have to manage it well.

Q: As the MD of a government-owned institution, do you have to put up with political interference now?

A: No. There has been no such political interference as this is an institution directly under the President.

Q: You mean you have been given a free hand?

A: Yes, absolutely.

Q: What are your thoughts on the insurance policy lapse ratio which is too high in Sri Lanka?

 A: It is important for an insurance advisor to understand the financial capability of a potential customer before making a sale. Life insurance policies are long term – up to 15 to 20 years – and sometimes customers cannot sustain it in the long run. Some of them also forget to pay the premium. Whatever the reasons, the policy lapses as a result. It is the duty of insurance advisors to follow up on the policies they sell.

Q: Are any new products in the offing?

A: We are revisiting our entire product portfolio, both Life and General. We are also strategically looking at business as well as the operational angles.

 Dr. Nalaka Godahewa is academically and professionally qualified in the multiple fields of Engineering, Marketing and Finance. He holds a PhD from the University of South Australia and a BSc honors degree in Electronics and Telecommunication Engineering from Moratuwa University.

He is also a Chartered Management Accountant (UK), a Certified Management Accountant (Aus) and a Chartered Marketer (UK). He has served as Consultant to Board of Investment, Chairman, Imperial College of Business Studies, and as a Director of CSC Kandia (Pvt) Ltd. He is also a Director of Lanka Hospitals Ltd where Mr. Gotabhaya Rajapakse is the Chairman.

Dr Godahewa is the current President of the Sri Lanka Branch of Institute of Certified Management Accountants of Australia, Honorary President of Global Marketing Network in Sri Lanka and the Chairman of the Association of the Licensed Bunker Operations of Sri Lanka. 

He has worked earlier at Unilever, Suntel and as CEO of several overseas operations of the apparel giant MAS Holdings.

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