The insurance industry has been impacted by the global pandemic in a manner similar to any other industry but through innovation the health insurance as a class of insurance has managed to rise from adversity. In Sri Lanka, insurance was among the very first industries to embrace the “new normal” – the industry did so by modifying their product offering to include hospitalization and death coverage for Covid-19, in an effort to stay relevant in the changing times.

Role of Digitalization:

Digitalization is synonymous with restriction in relation to contact and travel. Some health insurance service providers promptly adopted technology to ensure continued delivery of services to clients especially with regard to medical claims that soared following the pandemic outbreak. This was made possible thanks to services such as DigiMed that serve to automate the claims process for a faster and more reliable outcome. Insurance industry has a negative perception in Sri Lanka primarily because the claims process for health and motor insurance was hitherto generally understood as being highly inefficient.

Through the DigiMed services, all documents can be uploaded & processed digitally where they will also be stored for later review. DigiMed can be downloaded and installed free from the Apple App Store or Google Play Store and has a pay-as-you-go model which enables users to trial the product prior to investing in same. The app is encrypted to protect confidentiality of clients and allows all relevant parties access to track the status or progress of the claim at any given time. Being able to use the service any time during the day is an added advantage.

Experts’ views on digitalization:

Industry veteran and Managing Director of Softlogic Insurance PLC Ifthikar Ahmed was quoted in KPMG’s Sri Lanka Insurance Report published in 2020 noting: “Digitalization is not the future; it is here and now.” He goes on to explain how technology & talent are readily available today unlike 20 years ago and therefore insurers need to invest wisely on whatever brings the most effective outcome and customer convenience.

While echoing Ahmed’s sentiments on digitalization, former Managing Director of Fairfirst Insurance Limited Sanjeev Jha encouraged insurers to identify new techniques to underwrite risks that could emerge in the post Covid-19 era. He thinks cyber risk, medical insurance for tourists, Work from Home insurance are some of the areas that general insurers can focus on.

Future of the local insurance industry

For years, Sri Lankans have not perceived insurance as a necessity but a luxury. One way to change this mindset is through education. A Daily FT article published in October 2020 observed that the insurance penetration which is reflected by the insurance premium as a percentage of GDP amounted to 1.31% in 2019. Although insurance penetration had slightly increased in 2019 compared to 1.26% which was recorded in 2018, it is still low compared to other countries in the Asian region.

SAccording to latest available statistics (2019) the Sri Lankan insurance industry comprises of 27 insurance companies, 67 brokering companies and 16 loss adjusters. Out of the 27 insurers, 13 operate as life insurers while 12 engage in general insurance business. Two operate as composite insurers. One could be hopeful that with insurers embracing digitalization the penetration will improve in the ensuing years due to improved convenience, trustworthiness and efficiency.

The interest for insurance is believed to have soared following the pandemic outbreak especially among millennial and Gen Z demographics who are widely understood as being technologically-savvy. It is therefore prudent to invest in technology because the ‘new normal’ which is paperless and contactless is bound to last. Given that the industry is fairly saturated, finding ways to stay relevant and ahead is crucial.

Sources:
hhttps://assets.kpmg/content/dam/kpmg/lk/pdf/2020/11/sri-lanka-insurance-report-november-2020.pdf
https://www.marketresearch.com/Timetric-v3917/Insurance-Sri-Lanka-Key-Trends-9953854/
https://www.dig-in.com/opinion/how-insurers-are-divesting-to-shift-to-a-digital-future
hthttps://www.ft.lk/financial-services/Review-of-the-performance-of-Sri-Lankan-insurance-market-in-2019/42-707910#:~:text=Insurance%20penetration%20which%20is%20reflected,countries%20in%20the%20Asian%20region