- Insurance business to be split before Govt. divestment
- Bifurcation will take place regardless of restructuring: Shah
Steps are being taken to split the life and general insurance businesses of Sri Lanka Insurance Corporation Ltd. (SLIC) into two separate entities prior to the divestment of the Government’s controlling stake in SLIC, the State-Owned Enterprise Restructuring Unit (SOERU) of the Ministry of Finance reveals.
Speaking to The Sunday Morning Business, SOERU Head Suresh Shah stated that in accordance with the law, the SLIC would have to separate its life and general insurance businesses before the SOERU went ahead with privatisation plans.
Elaborating further, he stated: “Whether we divest or not, according to the law, one company cannot engage in both the life and general insurance businesses. Therefore, it must fall in line with the law. This matter came up before Parliament and the Committee on Public Enterprises (COPE) and COPE specifically instructed that it be split up.”
He stated that steps were accordingly being taken by the SLIC and the SOERU to split the corporation’s core businesses. However, he was unable to provide a timeline for when the split would formally occur.
Commenting further, Shah stated that the privatisation of the SLIC was likely to take longer than the other smaller SOEs that were being considered for privatisation and that he was hopeful that the entire privatisation process would be completed by mid-2024.
In terms of Section 53 of the Regulation of Insurance Industry (Amendment) Act No.3 of 2011, it was made compulsory to segregate the life and general insurance businesses of all composite insurance companies into two separate entities on or before February 2015.
Accordingly, all composite insurance companies segregated their life and general insurance businesses into two separate entities. The only exceptions were SLIC and MBSL Insurance Company Ltd. In the case of MBSL Insurance Company, it has stopped underwriting new life insurance businesses from 1 June 2020.