SLIC: From Strength to Strength
By Anjali Caldera
Fitch Ratings Sri Lanka recently affirmed Sri Lanka Insurance’s (SLIC) national Insurer Financial Strength (IFS) rating of ‘AAA(lka)’ with a Stable outlook.
Fitch stated that it assessed SLIC’s business profile as ‘favourable’ compared with other Sri Lankan insurance companies due to its leading business franchise, diversified participation and stable business lines across life and non-life insurance sectors, and its large domestic operating scale.
Ceylon FT had the opportunity to interview SLIC CEO, Chandana L. Aluthgama to know more about this achievement, its driving force and also to talk about the company’s current progress.
Aluthgama started his career in insurance in 1992 and was appointed to his current position in 2018.
Following are excerpts from the interview:
SLIC recently achieved AAA(lka) Fitch rating for its financial stability for the second consecutive time. What is the main reason behind this achievement?
A: The recent COVID-19 outbreak redefined the way of work for everyone. In mid-March the entire country and the entire world came to a standstill. During this period, our priority was to provide the basic services to our clients, and to take care of our other stakeholders to keep the business alive.
But, during this period when the country’s corporate ratings were downgraded, we managed to secure the AAA(lka) Fitch rating based on a few factors.
This attributes to our financial strength and fiduciary management practices, our customers and our people.
Financial stability should be one of the most critical concerns of customers today. Our strong financial performance, largest asset base and the largest life fund in the insurance industry and our strong capitalisation affirms our stable financial position in the insurance industry. Further, we have well diversified investments spanning across many fields such as banking, health care, travel, power & energy, construction and engineering.
Another factor is our own people; we have the best team in the industry with vast technical expertise, and they have evolved with the organisation to provide an incomparable service to our customers.
Our customers who continued to have their trust with SLIC are the main reason for this victory. The significance of this organisation is we have customers from all around the country. As a State insurer with 58 years of experience, we are the pioneer of the industry, and despite any negativity in the sector, the company has stood tall and managed to build trust among its customers.
Due to all these factors we were able to retain our Fitch rating position for the second consecutive year.
What does this achievement mean to the customers?
A: From the customers’ point of view, what they buy from us is a promise; if something happens to them we will be beside them. As the national insurer, how can we be beside our customers? That depends on the efficiency of our management and on our financial stability. The relationship between a customer and insurer is a long-term one, spanning 5-30 years and it is crucial for customers to understand the strengths and the ability of the insurer to pay returns and benefits at the point of delivery.
When an independent third party as Fitch affirms SLIC with a Stable outlook in financial strength, it provides an assurance for the customers on our promise. Therefore, customers should be confident that their insurer will be able to take care of them and live up to that promise.
What is the impact of COVID-19 on the insurance industry in Sri Lanka? What are the relief measures taken by SLIC to support customers during these difficult times?
A: It can be too early to take count of the impact due to COVID-19. But as per the relief measures, we did not shut down operations and continued to provide essential services. Though it was a stressful and a hard time, our employees worked from home and provided the necessary services to the customers – mainly for exports, we had to provide immediate policies; for vehicles we did an automatic renewal; and three-month moratorium facilities were also given to pay premiums.
We had to provide relief measures even for our own staff. We have taken necessary actions to ensure that all our employees receive their usual benefits amidst these challenging times.
Even the field sales team was looked after by providing financial support; hence we managed to serve all our key stakeholders during this hardship to ensure their protection and wellbeing.
What is the contribution made by SLIC to support the Government initiatives in controlling the spread of COVID-19?
A: As the national insurer, it is our responsibility to be in the forefront when it comes to a national emergency or a natural calamity. Since mid-March, SLIC pledged to support the Government initiatives in preventing the spread of COVID-19. We have donated funds to the COVID-19 Health and Social Security Fund.
We have donated hand sanitisers, face masks, surface disinfectants to Municipal Councils, Provincial Councils, Town Councils and necessary Government entities.
We also embarked on the unique project ‘Viru Abhiman’, a Rs 1.5 million-worth free life cover provided to all State sector employees directly involved in eradicating COVID-19 from the country; in case something happens to them, to look after their families, their children’s education, etc.
What else affirms your success in the insurance arena and what is the impact of those on SLIC?
A: Other than the AAA(lka) Fitch rating, SLIC was also awarded the ‘Most Valuable General Insurance Brand, the ‘Most Loved Insurance Brand’ and the ‘3rd Most Loved Brand’ in Sri Lanka, competing with popular multinational retail brands.
SLIC achieving the ‘Most Loved Insurance Brand’ in the country bears testament to the trust and confidence we won from the general public over generations. We are armed in both ways – from the organisational perspective, we have certified and assured for financial performance and stability gaining trust from investors, and from the customer perspective, we have achieved peoples’ acceptance as a trusted brand.
These achievements are definitely an encouragement for the staff; a motivation. Last year when we got AAA(lka) our motivation was to retain it in the future years. Further, this is also a peace of mind to customers to confidently transfer risks to SLIC.
As a pioneer in the industry what makes you stand out from the rest?
A: The unparalleled strengths of the company comprised with the largest assets base of Rs 211 billion, largest life fund in the insurance industry of Rs 116 billion, strong Government ownership together with our history of claim payment and prudent practices can attest to our superiority in the industry.
SLIC paid a claim of Rs 39.5 billion, which is considered to be the highest in the sector and we settle Rs 1.5 billion worth life and general insurance claims monthly. For motor insurance, we pay monthly Rs 650-700 million as compensations for around 9,000 claims. When it comes to life insurance, we have provided beyond the promise, and have paid Rs 7.6 billion in bonuses for life policyholders.
We were able to take the organisation to great heights, making it the industry benchmarking leader, and set an example for competitors on what to reach, and for customers on what to expect from a stable insurance service provider.
SLIC re-obtained ‘Suraksha insurance’. What do you have to add on this?
A: We got it for a period on contract. Currently we are handling it more as a service to our children of the nation. We are obliged to pay claims to the customers with what the Government provides us. We already made provisions in this regard.
We originated Suraksha; so we believe the required expertise is there with us.
In a volatile economic condition, what is the way forward for an insurer? How are you capitalising on the opportunities?
A: We know the past three months caused an impact on consumer lifestyles, spending patterns, buying behaviour, needs and wants. Thus, we formulated a short-term six-month strategy with several key areas, as in growth, profit, smart spend and process improvement.
As an insurer, we are facing a decisive time, yet we are resilient with our prudent practices and we are ready to offer innovative insurance solutions to cater to different needs.
We have identified that our strength is our people who are on a mission to take the message of the importance of insurance to every corner of the country. Under our new six-month strategy, we developed special incentives to motivate people; we have taken drastic measures to cut down certain costs; doing businesses in a different way. We brought forward our strategies, competitions, business drivers, service standards, achievements and claim settlements to accelerate growth.
For example, for motor insurance, we have introduced an operating system, to provide a fully-fledged insurance service for customers through embracing technology.
How do you wish to use the technology in company operations in the future?
A: Well, it comes under a huge wish list. We had all the payment gateways with banks, mobile payment gateways, mobile apps and customer portal and it was beneficial and convenient for customers during the last couple of months.
We wish to move forward on how to infuse technology more into some of our processors; bringing convenience to both our staff and the customers. So far, we have launched three applications for intermediaries, management and customers and our processes will be streamlined to ensure utmost convenience to our customers as well as other stakeholders.