Sri Lankan general insurers underwriting profit will improve: Fitch Ratings

Profitability in motor insurance remains under pressure.

Sri Lankan non-life insurers are expected to see gradual improvements in underwriting profitability as they refine practices and focus on more profitable non-motor segments, according to a report by Fitch Ratings.

Insurers have been adjusting policy pricing, particularly for motor and medical insurance, to better address inflation and rising claim costs.

Profitability in motor insurance remains under pressure due to regulatory requirements mandating full premium remittance to the National Insurance Trust Fund Board. 

Additionally, prolonged import restrictions on motor vehicles have prompted insurers to diversify into non-motor segments, including health insurance. 

This shift contributed to an 11% increase in non-motor gross premiums in 2023.

Fitch also notes reduced investment and liquidity risks following the upgrade of Sri Lanka’s sovereign rating in December 2024. 

The introduction of IFRS 17 in January 2026 is expected to further enhance market transparency and comparability.