June 18, 2014 (LBO) - Sri Lanka's smaller insurers should merge to become larger players and which will give an assurance to customers that they will survive in the longer term, Central Bank Governor Nivard Cabraal said.
"I would like to see bigger and more stable insurers," Cabraal told a forum on pensions organized by Citibank in Colombo, with insurers being ideally placed to offer retirement products such as annuities.
"People will be more discerning; they will evaluate insurers more carefully. They will not only look at pension products; they will also look at the person who is offering them.
"That is why there will be a need to have bigger more stable companies."
Sri Lanka's insurance regulator is now in the process of splitting existing composite firms into life and general insurers.
Cabraal said the process itself may see some elements of consolidation.
"We would like to see that," he said. "Small tiny companies will find it difficult to offer products, to also assure the public that they are going to be around for the next 30 years, by the time that you are ready to retire."
"They have to have mass and that is something we have to encourage. Within the industry also there needs to be consolidation to go forward.
Cabraal said banks and non-bank lenders have already been encouraged to merge and acquire.
"That policy is taking place and a similar policy in the insurance industry may be on the cards."
Chairperson of the Insurance Board of Sri Lanka said the regulator was now focusing on the segregation and listing of insurance companies, but consolidation was being considered.
"I would like to see bigger and more stable insurers," Cabraal told a forum on pensions organized by Citibank in Colombo, with insurers being ideally placed to offer retirement products such as annuities.
"People will be more discerning; they will evaluate insurers more carefully. They will not only look at pension products; they will also look at the person who is offering them.
"That is why there will be a need to have bigger more stable companies."
Sri Lanka's insurance regulator is now in the process of splitting existing composite firms into life and general insurers.
Cabraal said the process itself may see some elements of consolidation.
"We would like to see that," he said. "Small tiny companies will find it difficult to offer products, to also assure the public that they are going to be around for the next 30 years, by the time that you are ready to retire."
"They have to have mass and that is something we have to encourage. Within the industry also there needs to be consolidation to go forward.
Cabraal said banks and non-bank lenders have already been encouraged to merge and acquire.
"That policy is taking place and a similar policy in the insurance industry may be on the cards."
Chairperson of the Insurance Board of Sri Lanka said the regulator was now focusing on the segregation and listing of insurance companies, but consolidation was being considered.
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