Climate change causing concern to insurers

The string of natural catastrophes that wreaked havoc in 2008, costing the global economy $225 billion and leaving insurers with their second costliest year in history, graphically highlights the increasing risks to businesses of extreme weather events.

Many companies are now grappling with the consequences of more frequent and more intense extreme weather events, such as hurricanes, tornadoes, floods and rainstorms.

January saw the heaviest rainfall in nearly a century to hit Queensland, Australia. The resulting heavy flooding to major coal mines disrupted production for months, pushed up the global price for coking coal and cost insurers billions of dollars.

That the two most expensive years for insurers on record, according to research by Swiss Re, should come during the last four again spurs debate: is climate change already having an effect on our weather?

"Whether the recent higher tropical cyclone activity is the result of climate change is the source of much controversy within the scientific community," Professor Bill McGuire, Director of the Aon Benfield UCL Hazard Research Centre, said."

Global warming at work

The fact that out of a total insured catastrophe bill of $50bn - the highest after 2005's record year - storms account for the lion's share, costing the industry $39bn, is evidence for some scientists and underwriters that global warming is already at work.

They cite the fact that the ten warmest years ever-recorded have all occurred in the last 12 years (with 2008 the tenth-warmest) according to the World Meteorological Organisation, and point to initial forecasts warning of another unusually active hurricane season this year as proof that climate change is already occurring.

"2008 fits in well with the trend of ever-increasing losses from natural catastrophes," Ernst Rauch, Head of Munich Re's Corporate Climate Centre, said. Statistics show a sharp rise in catastrophe-related insurance losses over the past two decades.

"We can clearly see that the driver behind these increased losses is weather-related events: rainstorms, hurricanes, tornadoes and flooding. The number of geological events, such as earthquakes and volcanic eruptions, and the losses resulting from them has remained flat over the last five decades," Rauch says.

"Even if we adjust historical events for inflation, or if we go further into socio-economic changes, such as shifts in wealth and population, there is still a residual trend that cannot be explained simply by socio-economic factors," Rauch says.

"We can identify from our data an increasing number and size of weather-related events, so to us it is obvious and logical that climate change is one of the drivers behind increasing losses from natural catastrophes over the past few decades," Rauch concludes.

Warm weather phase

But other scientists and insurers argue that the recent spate of costly natural catastrophes is part of the current warm weather phase that has increased sea surface temperatures in the Atlantic, and that the resulting higher hurricane activity may be explained as being part of a natural variability that occurs in the global climate over the course of several decades.

Tropical cyclone losses or any weather-related losses in general are linked to climate, which is simply defined as the weather averaged over 30 years, David Bresch, Head of Sustainability and Emerging Risk at Swiss Re, says.

For Bresch the rise in insured losses from natural catastrophes since the 1970s is mainly driven by the growth in insured values and the increased exposure in catastrophe-prone regions, such as Florida coastal areas.

During any such period you will see quite a lot of variability in weather: the first decade you may not have many cyclones, the next decade you may see a lot, while the third phase may see an average number, he says.

So 2008 high activity - and 2009's forecast for further high activity - compared to the lack of activity in 2006 and 2007 can be explained in terms of climate variability.

Climate change is a fact. But in many regions there is not yet enough evidence to attribute local extremes of weather to global warming, Bresch adds.

Businesses need to act immediately

Although there is no consensus among insurers and scientists over whether the recent string of natural disasters are a definite signal of climate change, they all agree that climate change will occur and warn businesses to act immediately to protect themselves from an increased frequency and intensity of natural disasters.

A recent study by Swiss Re with the Swiss Federal Institute of Technology shows that claims are forecast to steadily increase due to more frequent and intense winter storms in Europe, ultimately rising by between 16% and 68% over the period 1975 to 2085.

Meanwhile, Lloyd's report Rapid Climate Change (November 2006) highlights the possibility of climate change taking place this century at a faster pace than expected, with flood and drought risk particularly exacerbated.

Companies must therefore reduce their vulnerability to catastrophes as well as reducing their carbon footprints to prevent global warming from escalating.

There is no point in saying just because we can't turn back the clock we should give up, says McGuire. "We have to act now otherwise climate change will be even worse than it is currently forecast to be."

Many companies are already taking big strides to make themselves carbon neutral, but some may be failing to plan for the effects of climate change in their risk management strategies.

As severe weather events become more frequent risk managers are taking account of them in their plans,  Paul Hopkin, Technical Director at AIRMIC, the British risk management organisation, said.

Measures taken to adapt to more extreme weather events can effectively reduce the risk of prolonged outages to firms' key facilities.

They are paying more attention to preventing losses from occurring. They are looking at how their buildings are constructed and maintained, as well as other issues such as simply keeping the drains clear to prevent flooding, Hopkin said.

Risk managers' questions

Insurance has played an important role in providing protection to firms against the vagaries of the weather. "Insurance, particularly reinsurance, has, in the past, been key in absorbing huge risks that go across national borders. It has helped economies to rebuild themselves quickly after a big catastrophe," Swiss Re's Bresch says.

Firms must ensure they have enough coverage to protect themselves from a prolonged period of lost business as a result of a heavy flood or devastating storm.

Risk managers are asking themselves whether they have sufficient business interruption in place. They are looking more closely now at how long it will take to get a severely damaged building back in service. Will a basic 12- month indemnity be sufficient? asks Hopkin.

While the question of whether global warming is already occurring remains hotly debated, there is no dispute that businesses are increasingly vulnerable to extreme weather events and must adapt and plan for the imminent effects of climate change.

For most it already entails cutting their carbon emissions, and many now also need to review their risk management plans to take account of more frequent and more extreme weather events. But some firms may need to go further, and even rethink their business models.

Increasing warm or cold snaps can ruin clothes retailers' plans and will require utility firms to rethink demand for their product, says Hopkin.

As the truth about climate change unfolds, it therefore seems that climate change and those responsible for managing it within the organisation are set to play an increasing role, not only in determining corporate risk management strategy but also in building a sustainable business model for the future.

Ceylinco Insurance revenue surpasses Rs.20 bn in '08

Ceylinco Insurance, the island's leading insurer, has announced that the company's turnover had exceeded the mammoth figure of Rs.20 billion, recording a total premium income of Rs.20,050 million, signalling a growth of 16.5% during 2008.

Meanwhile, Ceylinco Insurance - General, the market leader in General Insurance, announced an unprecedented growth during the year ended 31st December 2008, with the total premium income for the year standing at Rs.11,793 million (Rs.11.8 billion), indicating a growth of 14.5%, which records an increase of Rs.1,443 million, over the previous year.

Similarly, the Life Division of Ceylinco Insurance recorded an annual premium income of Rs. 8,257 million (Rs. 8.2 billion), which is an increase of Rs 1,400 million, over 2007. The figures indicate a  growth of  21 % over the previous year.

Commenting on the overall solid performance of the company, Chief Executive Director, Ceylinco Insurance - General, Ajith Gunawardena, said: "This performance becomes all the more significant, as we have achieved these impressive results in a recession scenario, where all global financial markets are direly affected, and in a situation where Sri Lanka is also gradually feeling the ill effects of it.

"We are grateful to our loyal customers for their confidence, trust and unwavering belief in us. It is their confidence in us that has enabled us to remain on top, as the market leader, for a fifth consecutive year, which is in itself, another remarkable achievement. I am also truly proud to lead a  great  team whose continued  commitment and support  make things happen."

Gunawardena  went on to elaborate further: "As a policy, Ceylinco Insurance only retains the services of the best re-insurers in the world, and we will continue to deal with the top rated entities in this sphere. This very fact has enabled us to provide the most comprehensive solutions and services to our faithful clientele, while guaranteeing, in absolute and total terms, the protection for the property and lives we insure."

Meanwhile, the technical reserves of the General Division stands at over  Rs 5,225 million, while the Life Fund has increased  to Rs.21.2 billion as at November 2008, which in turn reflects the prudent management measures adopted by Ceylinco Insurance, even within the context of one of the toughest financial market environments imaginable.

Even under such adverse conditions, Ceylinco's flagship brand - VIP On The Spot, introduced yet another unique value addition towards the end of the year, which provides benefits of up to Rs.1.5 million to each individual policyholder, in the event of death or total permanent disablement.

Suffice to say that this constitutes an immense benefit to the Sri Lankan public, which was introduced in addition to the plethora of unmatched benefits offered by the brand, with absolutely no change in premium. The foray into the medical sphere through the concept of 'Medi Spots' was also another significant event for the company during the course of 2008. Already, seven such Medi Spots are functional in several areas of the island, with many more planned for the near future.

The concept, which provides an extremely affordable service to the public, fulfilling a nationally felt need, is fast being absorbed by Sri Lankans from many walks of life. Furthermore, Ceylinco Suwa Sampatha, the leading health insurance policy in the country, was also revamped, with benefits now continuously covering even recurrent illnesses: a feature that no other insurer provides, and a feature hailed by members of the insuring public.

Moreover, already possessing the widest network of branches in Sri Lanka, Ceylinco Insurance invested heavily in expanding the IT infrastructure during 2008, in order to accommodate expansion activities, both local and international, keeping pace with global technological advancements.

When it comes to accolades, Ceylinco Insurance was chosen as the People's Insurance Company for the third successive year by the people of the country. This unique achievement, which abundantly displays the confidence the people of Sri Lanka have in the company, only fuels it further to provide even more comprehensive and innovative insurance solutions.

The Ceylinco Insurance Brand meanwhile, continues to be among the highest rated in Sri Lanka, with a ranking of AA-. Providing further impetus for glory, Ceylinco Insurance also received the Gold Award for the Insurance Category at the National Business Excellence Awards, held in November 2008, while Ceylinco Life was adjudged the Service Brand of the Year at the SLIM Brand Excellence Awards, held earlier.

All in all, Ceylinco Insurance surpassed themselves, in revelling in what should have been a difficult year, which indeed it was throughout the world, and coming through with flying colours, registering an incredible growth, providing a host of innovative solutions more in tune with public needs, securing a string of awards and accolades, and in the process, winning the hearts and minds of the Sri Lankan people. Poised for the year ahead, Ceylinco Insurance is more than ready to take on its challenges head on, and ultimately benefit the people of Sri Lanka.

Insurance made easy for Eagle Customers

Eagle Insurance has developed a 'Frequently Asked Questions' booklet to simplify insurance. To most customers insurance can be a very complicated and confusing subject.

As a customer centric company, in touch with the needs and aspirations of its valued Customers, Eagle has developed a special 'Frequently Asked Questions' booklet. This is designed to educate existing and prospective customers on the basics of insurance. This ensures that customers who place their lives, investments and trust in the company are able to make well-informed choices with regard to their future.

To ensure extra convenience and reader-friendliness the booklet is developed in a 'question and answer' format. Starting with the basic question of 'What's Life Insurance', the brochure deals with a number of topics including the contents in the insurance policy document, nomination of beneficiaries, payment of premiums, using the policy as security to obtain loans and how to make a claim.

To illustrate the simplicity of the answers in the brochure, here is how it describes what Life Insurance is. "Life Insurance promises the payment of an agreed sum of money upon the death or disability of the insured within a specified period of time."

An Eagle Insurance spokesman explained that though the insurance habit has spread in the past few years, especially after the private sector companies started operations, there is a need to explain in simple terms the fundamentals of insurance, due to its complex nature.

Continuing further he adds "We are consistently striving to make the lives of our customers easier and we identified the need to help simplify insurance for our customers, in the easiest manner possible. While our agents and customer services executives and call centre representatives are fully geared to answer all questions that our customers may have, this is yet another endeavour to enhance the convenience of obtaining insurance products."

In February 2006, the Aviva Group acquired a majority stake in Eagle. Aviva is one of the world's oldest insurance groups, with a history dating back over 300 years to 1696. Today it is the world's fifth-largest insurance group and the biggest in the UK. The group has 57,000 employees serving 45 million customers worldwide with more than GBP 359 billion of assets under management.

Progress on claims payment and electronic initiatives

The International Underwriting Association (IUA) has said that speeding up claims payment is a top priority for 2009, and aims to double the number of new claims processed electronically by member companies by mid-year.

IUA Chief Executive, Dave Matcham said: "We have made so much progress with market reform that London is now becoming a leader when it comes to improving efficiency and other jurisdictions are copying our processes. But we must maintain the momentum. For instance, 40% of all new claims are currently handled electronically by IUA members via the market repository. We aim to see this number double by mid year."

In its 2009 business plan, the organisation also plans to improve the electronic processing and delivery of premiums by speeding up payments to underwriters. It also said it is supporting the Lloyd's Exchange project for electronic risk placement. The Lloyd's Exchange will provide a messaging hub that will allow brokers and underwriters to place risks electronically using the common ACORD data standards, reducing the need for paperwork and re-keying information.

Lobbying on regulatory matters is another focus for the IUA this year, with a focus on key issues, including Solvency II, reform of insurance contract law and international accounting standards.

The IUA is the world's largest representative organisation for international and wholesale insurance and reinsurance companies.

Ceylinco Takaful Insurance receives ISO 9001-2000 certification

Ceylinco Takaful Limited is fully guided by a Shari'ah Supervisory Board officially and institutionally represented by All Ceylon Jammiatul Ulama, the apex body of Muslims in Sri Lanka. Shiekan Insurance and Reinsurance Co. Ltd. of Sudan, the pioneers in Takaful, is providing technical support to Ceylinco Takaful.

The company is incorporated under the Regulations of Insurance Industry Act No 43 of 2000 under the preview of the Insurance Board of Sri Lanka. Ceylinco Takaful transacts all class of general Takaful Insurance in compliance with Islamic Shari'ah principles. The aim is to effectively meet the rising demand for Takaful products in Sri Lanka.

ISO 9001 is the world's most established quality framework, currently being used by around 897,000 organisations in 170 countries worldwide, and sets the standards not only for quality management systems, but management systems in general.

Ceylinco Takaful Insurance has been awarded the ISO 9001-2000 certificate, making it the first Takaful insurance company operating in the general insurance field in the country to get this quality standard covering all functional areas.

Ceylinco Takaful Insurance bagged the certification on account of superior management systems in key areas of customer focus, leadership, involvement of people, process approach, system approach to management, continual improvement, factual approach to decision making and mutually beneficial supplier relationships and consistent principles.

"This certification is a significant milestone in our continuous quest to offer innovative products, outstanding services and improved customer satisfaction," said Deputy Chairman, Ceylinco Takaful Ltd, K.A.S.Jayatissa.

"We always aim to satisfy the aspirations of our customers. We look beyond the traditional approach thus being a vibrant and innovative company close to the hearts of our customers in introducing innovative solutions to fulfill their needs."

"Our core values include; accepting risk with responsibility, being ethical and socially responsible, innovative, dedication to customers and encouraging everybody to contribute and excel," he said.

Ceylinco Takaful Insurance, which was founded in 2005, today has 12 owned branches and operates through 33 The Finance Company branches spread across the island with strong reinsurance arrangements and a highly experienced technical knowledge base, providing the most profitable insurance solutions to all Sri Lankans alike.

"We are transacting general insurance business operating under license issued by the Insurance Board of Sri Lanka. Ceylinco Takaful strives to ensure that policy holders are assured stability and good returns. The company maintains all statutory requirements stipulated by the Insurance Board of Sri Lanka," said K.A.S. Jayatissa.

"We transact insurance business strictly adhering to the principles of Islamic Shari'ah. Although Takaful is beneficial to all, it will be virtuous to encourage Muslims to obtain Takaful Insurance."

Takaful is an Arabic word meaning "Guaranteeing each other." The concept of Takaful in terms of insurance brings about a sense of brotherhood, mutual protection and reciprocity amongst insuring parties with the common intention of pooling resources to meet a common need; protection.

As in conventional insurance, it meets the needs of protection, but defers in concept and management of funds. It draws similar features from the origins of insurance which was mutual in concept before being institutionalised commercially. Takaful Insurance is a rapidly growing industry worldwide, even amongst other beliefs and communities, as it harmonises the conflicting aims of parties to an insurance contract.

"Our clients will also stand to benefit under our profit sharing concept or plan. At the end of a 12 month period as at 31st December each year, any surplus in the Takaful fund after payment of benefits (claims) to participants (policy holders) who are entitled to such benefits and after deducting expenses related to the management of the fund and providing statutory reserves etc., the surplus will be shared 50-50 between the company and the policy holders. We do our reinsurance transactions with leading companies having 'A' Grade ratings in Malaysia, Bahrain, Egypt and Dubai," said Jayatissa.

Eagle Insurance enhances call cost efficiency
with solutions from Dialog Enterprise

Eagle Insurance PLC recently connected to a superior total voice communications solution provided by Dialog Enterprise. Dialog Enterprise, an integrated business division of Dialog Telekom PLC, has provided Dialog Fixed Voice Solutions with state-of-the-art communication facilities at the Eagle Insurance's Head Office thus enhancing service delivery.

This solution provides a speedier and cost effective answer to all outgoing calls taken by staff at Eagle Insurance's Head Office in Colombo to all mobile numbers via the company's fixed lines.

Besides boosting Eagle Insurance's communication facilities, the solution has already drastically reduced the cost of calls to mobile numbers substantially. In real terms, this translates to more than a 30% overall drop in the billing cost, thus exemplifying the ideal challenge for Dialog Enterprise to demonstrate its capability to deliver totally cost effective fixed mobile integrated connectivity solutions for Sri Lankan enterprises.

CEO Dialog Fixed Telephony and Broadband Services Kavan Ratnayaka said, "This is yet another triumph for Dialog Fixed Line CDMA Telephony and our ability to cater to the changing demands of our customers. We are firmly convinced that our advanced technology resources enable us to meet these diverse demands. We are undoubtedly very happy to partner Eagle Insurance on this project, and are positive that our ICT solutions will not only deliver value results to its thousands of customers, but also be totally cost effective in the long run."

Managing Director Eagle Insurance PLC, Deepal Sooriyaarachchi said, "We are certainly very glad to have selected Dialog Enterprise as our technology partner for this project. A very cost effective, yet totally technically superior solution is probably the wish of any corporate in this day and age in Sri Lanka. We have found both these in Dialog's ICT solutions, and this will definitely enhance our information communication infrastructure facilities and contribute towards achieving our corporate objectives."

Dialog Enterprise offers seamless fixed and mobile connectivity solutions to large, medium, and small enterprise customers. Its multi sensory connectivity and ICT solution offerings help Sri Lankan enterprises improve their competitiveness and gain profitability through productivity and cost savings.

One stop insurance solution for corporate executives,
managers and directors

Alfinco Insurance Brokers, a member of the Alliance Group of Companies, together with HNB Assurance, announced the launch of a unique insurance solution tailor made to meet all needs of the busy corporate executive, manager and director and their families, including household staff /domestics and taking virtually every possible requirement and contingency into consideration.

Addressing the media at the launch, Deputy Chairman, Alliance Group, Romani de Silva and Managing Director HNB Assurance, Manjula de Silva, said that this was the first time that a single insurance package offering the policy holder and his / her household such a wide range of covers was being launched.

"This policy was innovated by Alfinco Insurance Brokers with the support of HNB Assurance. One of the distinct advantages of this policy is that it offers a customer a range of covers under a single policy with one premium payment and a single renewal date thus offering convenience, saving in premium and time for the busy corporate executive, manager and director," said Romani de Silva.

"This is the first time in Sri Lanka that such a wide array of insurance perils are being offered under a single policy and HNB Assurance is proud to be associated with Alfinco Insurance Brokers in launching this ground breaking initiative," said Manjula de Silva.

A total of three different packages are on offer, namely Alfinco Corporate Director, Alfinco Corporate Manager and Alfinco Corporate Executive.

"This range of products will offer a level of convenience hitherto not experienced in the local market and we believe that the busy customer to whom time is a luxury, will greatly appreciate the convenience offered through this range of products," said Manjula De Silva.

Describing the three covers on offer, CEO of Alfinco Insurance Brokers, Ralston Holdenbottle said the scope of the comprehensive cover includes:

         Standard perils under the fire policy for building and furniture, fixtures and fittings.

         Surgical and hospital benefits for the entire family which includes home nursing.

         Personal accident for insured and spouse.

         Life assurance and critical illness for insured and spouse.

         Travel insurance for the whole family

         Motor insurance with special benefits.

         Legal liability as a tenant, to domestics and visitors or any third party.

         Eight free covers and seven optional covers.

 "The free covers include accidental damage to mirrors, furniture, doors and windows, partitioning and sheet glass, damage to landscape, breakage and collapse of aerials, damage to door locks, temporary removal of fixed assets to a second location, removal of debris, alternate accommodation and loss of rent, and damage to parapet walls and gates. The optional covers include riot, strike and civil commotion, terrorism, burglary cover for jewellery, electrically operated gates, desktop computers, and laptop computers," said Ralston Holdenbottle.

"Our three policies enter the market as the result of a collaboration between two well established business entities in the country, namely HNB Assurance, who are the fastest growing insurer in the country and Alfinco Insurance Brokers, a member of the Alliance Group which is a diversified group of companies counting more than 50 years of successful business operations in the financial services sector, offering financial products ranging from leasing, hire purchase, savings, fixed deposits, hiring, Operating Lease (EZY Drive), insurance, Gold Loan and real estate" said Romani de Silva.

"HNB Assurance is pleased to be the sole underwriter of this unique insurance cover and we are convinced that this ground breaking initiative will fast gain acceptance amongst the public," added Manjula de Silva.

Asian Alliance announces the opening of a
training and knowledge management centre

Asian Alliance Insurance (AAI) commenced operations of their new Training & Knowledge Management Centre at Sirimavo Bandaranaike Mawatha, Mahara, Kadawatha earlier this month. This sophisticated management centre which is equipped with the latest technology has been formed with the objective of catering to the future development needs of the AAI sales force and its entire staff. The AAI Kiribathgoda Regional Distribution Office too will transact business from this new location for the convenience of AAI's customers.

CEO, Asian Alliance Insurance, Ramal G. Jasinghe was the chief guest at the opening of the new centre. The executive committee members along with the management and regional distribution staff were present to witness the opening which included a colourful pageant by traditional dancers.

The CEO in his speech shared his views on the prevailing conditions in the economic arena and the role of the AAI sales force to drive the company towards achieving its objectives in this challenging environment. Training and knowledge management, is an important initiative that has strategic importance to AAI.

Continuing a trend with the setting up of the IT Development Centre which began operations in early 2008, underscores AAI's commitment and focus on continuous development to sharpen the skills of its entire staff to reach the highest levels of professionalism through these well equipped centers.

Effective use of information technology and knowledge management, Jasinghe stressed would be the great differentiator to compete effectively in the prevailing difficult times.  He further expressed that maintaining high standards of professionalism and integrity were of utmost importance to thrive in this highly confidence based service to the client. This will be the key factor of success, it was pointed out.

General Manager - Sales and Marketing, Chula Hettiarachchi emphasised the thinking behind AAI forming its new Training & Knowledge Management Centre whilst sharing an overview on the growth of the company's sales performance.

Deputy General Manager - Training and Knowledge Management, Leelaratne Piyasena reiterated the importance of knowledge management in nurturing the abilities of individuals which will drive them towards becoming successful professionals who add value to all stakeholders.

Ceylinco Life heralds another record year of leadership

Life insurance leader Ceylinco Life achieved yet another milestone when benefits paid out to policyholders exceeded Rs. 2000 million in the first 11 months of 2008, while the company's solvency margin remained at five times the margin stipulated by statute.

Announcing this performance landmark, the company said last week that premium income had reached Rs 7,434.7 million as at November 30, indicating a growth of 20.37 per cent over the preceding 12 months.

"These are particularly noteworthy indicators, given the challenging market conditions that prevailed throughout the year just concluded," Ceylinco Life Chief Executive Director Rajkumar Renganathan said. "Premium income figures for December 2008 are being finalised, but we already know that it was a record month."

The company's Life Fund which stood at Rs 20.4 billion as at September 30 had grown by Rs 800 million over the next two months to Rs 21.2 billion at the end of November 2008, Renganathan disclosed.

He said the benefits paid by the company during this period included maturity benefits, claims, surrender value settlements and bonuses. In addition to these, policyholders had also received numerous payments and benefits under the 'Life Rewards' scheme of Ceylinco Life.

"New business in the month of December 2008 alone clearly indicates that our momentum has not slowed and that public confidence remains as high as it ever was," Renganathan said, revealing that in terms of premium income, December 2008 would turn out to be the best month yet in the company's history.

"The figures show that Ceylinco Life will emphatically maintain its position as the largest life insurer in 2008, making it our fifth year at the top," he said.

The strong growth of the company's Life Fund reflects the prudent management of investments in a tough market environment, Renganathan added, disclosing that the bulk of the fund's investment was in government securities. The fund has also diversified its investments in to areas such as real estate, licensed commercial banks and other low risk sectors.

Ceylinco Life's market leadership has been confirmed by the sector's regulator, the Insurance Board of Sri Lanka (IBSL), according to whose 2007 Annual Report, Ceylinco Life's market share stood at 33.03 per cent on the basis of Gross Written Premium. According to figures published by the IBSL, Ceylinco Life's market share for 2004, 2005 and 2006 was 31.65 per cent, 32.36 per cent and 33.43 per cent respectively.

Ceylinco Life which has more than 750,000 lives covered by active policies is acknowledged as the benchmark for innovation in the local insurance industry for its work in product research and development, customer service and professional development.

In keeping with its vision of protecting every Sri Lankan family with insurance, the company has developed many products to make insurance affordable and appealing to diverse market segments, and today has the widest portfolio of products in the local market. This approach is supported by the company's physical presence, with an island-wide branch network that is the largest in the industry.

Own new building in Kalutara to celebrate 21st birthday

Ceylinco Life celebrated its 21st anniversary fittingly this month by inaugurating a showpiece own office for its operations in Kalutara, a town in which the company has had a presence since it commenced business.

The three-storey, 12,000 square foot office at 423 Galle Road, Kalutara was custom designed and built by Ceylinco Life at a cost of Rs 65 million as an operational nucleus and training centre for its branches in several towns in the vicinity.

One floor has been allocated for a training centre that can accommodate up to 150 people at a time, and provision made for an additional storey to be added on when the need for expansion arises.

Speaking at the inauguration of the new Kalutara branch, Ceylinco Life Chief Executive Director R. Renganathan recalled that Ceylon Insurance, the predecessor of Ceylinco Life, had opened a branch in Kalutara in November 1942. When Ceylinco Insurance began business in 1988 after the private sector was permitted re-entry into the field, Kalutara was one of the first places at which a branch was set up.

"Today, Ceylinco Life has more than 175 branches, and has achieved a growth of over 20 per cent in 2008, becoming the market leader for the fifth successive year," Renganathan said. Disclosing that the company's investments had been made largely in government securities and licensed commercial banks, he said Ceylinco Life's solvency margin had increased to five times that stipulated by statute.

Ceylinco Life's Deputy Chief Executive Director, Thushara Ranasinghe paid tribute to all those involved in the design and construction of the new building, pointing out that the foundation stone had been laid exactly once year ago, on the day the company celebrated its 20th anniversary.

All Ceylinco Life branches are fully IT enabled and are computer linked.

Lloyd's Chairman highlights global risk challenges for 2009

Lloyd's Chairman, Lord Levene, has called for insurers to contribute to the debate about the future of financial markets, citing better regulation as the key way forward.

Levene said, "What the current crisis proves is that we are all part of a global market. What we therefore need is closer cooperation across borders, more harmonisation of standards and greater mutual recognition between different territories."

Speaking to over 100 professionals from the Boston insurance and financial community about global risk challenges for 2009, he cautioned that, even in light of the global economic challenges, businesses must not lose sight of other top risks, including liability risk, climate change, and terrorism and political risk, each of which may be further exacerbated by the current economic climate.

Levene said liability risks could be on the rise, pointing out that recession could create "the perfect breeding ground" for a new increase in litigation activity. He said it was important for businesses not to let litigation and the fear of it stifle innovation.

Insurers and intermediaries are well placed to help boards focus on these important areas, he said. "It is vital that companies carefully consider whether they have the right processes in place to manage liability risks."

Climate change is also a top concern right now, Levene said, with 2005 and 2008 racking up record losses of over $200 bn each.

"We know that weather-related catastrophes are costing the insurance industry more than ever before," said Levene. "It would be an environmental and business disaster to lose our strategic vision on climate change now."

Meanwhile, Levene said that home-grown terrorism is probably the greatest security threat the industry faces and there is an urgent need to get a better understanding of how to tackle it.

The United States is Lloyd's largest market, accounting for $12.3 bn worth of business in 2008; over a third of Lloyd's worldwide business.

Union Assurance shines at SAFA Awards

By Ashwin Hemmathagama 

Union Assurance PLC (UA) is a composite insurer transacting both Life and General business, in operation since 1987. It is well placed to provide a caring and efficient service to its clientele, which include many of the largest trading and industrial organisations in Sri Lanka as well as individuals from all walks of life, through an extensive network of 49 branches strategically located throughout the country.

UA was recently commended with the prestigious 'Overall Award For Best Presented Accounts' award at the recently held South Asian Federation of Accountants (SAFA) Awards in India. Union Assurance is the first and only insurer in Sri Lanka to win this 'Overall Award'.

Having bagged this award for the second consecutive year, UA Deputy Chief Executive, Dirk Pereira said: "We won this top award twice and also won the topmost award in the 'Insurance' sector, competing with some of the largest and well-established companies from the South Asian region. The South Asian Federation of Accountants takes into account the financial reports as well as disclosures related to corporate governance, performance management and Corporate Social Responsibility (CSR). One of the main things they look into is transparency and the extent to which we disclose our information - financial or otherwise."

"Being an insurance company, we deal with public money. In the case of life insurance, we have a Life Fund, where we collect life premiums from our customers. When managing such funds that belong to our customers, we have to act in utmost good faith; in their best interest.

We also have internal investment experts who regularly watch the market. They are well qualified, ensuring safe custodianship of policyholders' funds," he added.

"The annual report is a record of the company's activities over the year. As such, each and every employee has played a part in the annual report. We have an excellent team, which works very hard to collate all the information and present it in a readable manner. In addition, we also try to improve the reporting process and information content every year," he maintains.

SAFA is an apex body of the South Asian Association for Regional Cooperation (SAARC) and the Regional Grouping of International Federation of Accountants (IFAC), representing over 170,000 accountants who are members of national chartered accountancy and cost and management accountancy institutions in South Asia.

The SAFA Awards appraises companies on corporate performance, accounting policies and disclosures, governance and stakeholder information, timeliness in issuing accounts, holding Annual General Meetings and Annual Report presentation.

Int'l. Underwriting Association pledges electronic claims payment progress

The international insurance industry has been discussing plans by the International Underwriting Association for making claims payment a top priority for 2009. The IUA aims to double the number of new claims processed electronically by member companies by mid-year.

The organisation is the world's largest representative organisation for international and wholesale insurance and reinsurance companies. Its goal is to promote and enhance the business environment for such companies operating in or through London.

IUA Chief Executive Dave Matcham explained: "We have made so much progress with market reform that London is now becoming a leader when it comes to improving efficiency and other jurisdictions are copying our processes. But we must maintain the momentum. For instance, 40 percent of all new claims are currently handled electronically by IUA members via the market repository - we aim to see this number double by mid year."

In its 2009 business plan, the organisation also said it "plans to improve the electronic processing and delivery of premiums by speeding up payments to underwriters."

 Sue Langley, Lloyd's Director, Market Operations and North America announced the decision to award the task of setting up the system to IBM.

The IUA noted that the "Lloyd's Exchange will provide a messaging hub that will allow brokers and underwriters to place risks electronically using the common ACORD data standards, reducing the need for paperwork and re-keying information."

Lloyd's also noted that the IUA intends to enhance "lobbying on regulatory matters" as another focus this year. It's concerned with key issues, including Solvency II, reform of insurance contract law and international accounting standards.

Matcham said: "It is widely assumed that the reaction to recent crises in the financial system will be new and wide-ranging regulatory initiatives. We are concerned that some of them may place unnecessary burdens on IUA companies."

Ceylinco Life's Family Savari winners chosen

A tap on a mouse pad, the whir of a hard disk, a blur of numbers on the screen and the lives of more than 2400 Sri Lankans became brighter in the new year thanks to Ceylinco Life.

Using sophisticated software, the life insurance leader conducted the grand draw of its 'Family Savari' promotion in Colombo last week, selecting 20 people from five families for an all-expenses-paid dream cruise on a luxury liner, and 2400 from 600 families for a full-day's outing at the Leisure World theme park.

A data base of about two million numbers, representing nearly 400,000 policyholders who qualified for the mega promotion was searched within seconds and the winners chosen by a random number generator, bringing a potentially life-changing experience closer to five families from Uragasmanhandiya (Galle District), Matale, Kandana, Homagama and Kegalle, who will fly to Singapore in February for their luxury cruise.

The 600 families that won an all-expenses-paid outing at Leisure World including transport to and from the theme park, were selected ensuring that at least two families from every town and village covered by Ceylinco Life's 150 plus branches would be among the winners. The outing at Leisure World is scheduled to take place in March this year.

"The Ceylinco Life Family Savari promotion is logistically one of the largest activities entailing direct interaction with customers ever undertaken by a corporate entity in Sri Lanka," said Rajkumar Renganathan, Chief Executive Director of Ceylinco Life. "It gets bigger, more ambitious and reaches a wider group each year, and is a unique example of our affinity with our huge policyholder community."

Covering policyholders whose policies were active as at December 31, 2008, new policyholders who purchased life insurance between August 1 and December 31, 2008 and persons who have or who opened Ceylinco Retirement Accounts (CRA) during the five months of the promotion, the Family Savari is intended to generate greater awareness of and interest in life insurance in market segments as yet unprotected through insurance, reward existing policyholders for keeping their policies active and provide an incentive to others to revive and maintain their policies.

In previous Family Savari events, Ceylinco Life provided an all-expenses paid holiday for 258 people in Singapore, a day's outing at Leisure World for 1,600 people, a three-day camping adventure with helicopter rides thrown in for 200 people, and an excursion to the Elephant Orphanage at Pinnawela.

For the purpose of the promotion, a winning family is defined as the policyholder, spouse and two children. If the policyholder is unmarried, he or she can nominate three other immediate family members.

Ceylinco Life has more than 750,000 lives covered by active policies and is acknowledged as the benchmark for innovation in the local insurance industry for its work in product research and development, customer service and professional development. In keeping with its vision of protecting every Sri Lankan family with insurance, the company has developed many products to make insurance affordable and appealing to diverse market segments, and today has the widest portfolio of products in the local market.

This approach is supported by the company's physical presence, with a truly island-wide branch network that is the largest in the industry.

Fraud and recession in 2009

Risk specialists expect a steep rise in business fraud this year as the world economy continues to deteriorate.

The number of insurance claim notifications relating to fraud will grow in 2009, according to Dean White, a Managing Director in the financial and professional practice at Lloyd broker Marsh. But the number of companies buying fraud will also rise with it, he expects.

White suggest that business fraud increases when times are hard, with people under more pressure to make ends meet and companies struggling to stay afloat.

In such circumstances, unlawful practices which otherwise would have been viewed as unacceptable, such as the manipulation of accounts, false revenue booking, insider fraud and the selling of information to organised crime, may appear to be a lucrative option.

As a result, many of our clients are increasing their levels of fraud insurance protection and expanding their coverage to include computer and data-related fraud, he notes.

White thinks that insurance claims notifications will continue to grow through 2009.

Financial institutions will probably head the league table of victims in terms of overall monetary value, but the scale and frequency of corporate, non-financial institution fraud and theft will show the sharpest increase, he believes.

Not surprisingly, non-financial institutions increasingly view fraud insurance as a key element of their corporate insurance programme.

Lloyd's is a significant supplier of both technical insurance expertise and capacity in the area of fraud insurance for non-financial institutions and for financial institutions, White says.

Commercial crime generally covers both fraud by employees and fraud by third parties.

Computer related fraud, coverage for fraud resulting from identity theft and other extensions are available making this an extremely modular and flexible product capable of significant customisation and tailoring to an individual company's risk concerns, White explains.

Such cover is affordable, he says, adding that premiums have followed the market cycle generally but have been less affected by peaks and troughs: 'Supply is generally increasing and there is a competitive market for good quality large clients and for the SME sector,' White says.

According to the latest Global Fraud Report from US security specialist Kroll, the average company loss to fraud has increased by 22%.

Companies lost an average of $8.2 million to fraud in the past three years, compared to the 2008 survey figure which stood at $7.6 million.

Kroll's survey of 890 senior executives worldwide showed that the fastest growing types of fraud were information theft (27%: up from 22%) and regulatory and compliance breaches (25%: up from 19%), both up by more than five percentage points from the 2007 survey.