Derisking your Ambition - How to select the right Life Insurance Partner

We all have dreams, ambitions or goals. This is a fact of life. For some it could be launching a business, for others, it could be building a house or something entirely different. Like most people, our goals too, tend to be varied and diverse. Nonetheless, they are things we all work towards in life.

Having a life insurance policy in place allows us to stay focused on these goals even amidst an unexpected event, since the financial loss or risk is borne by the return from the policy.

 Picture this: Sampath, a 25-year-old newly-wed plans to buy a new house. He’s been saving up for this for over 2 years. However, a sudden unfortunate accident leaves him unable to provide for his family. Ordinarily, Sampath would have had to utilize his savings to deal with his current situation, thereby putting a stop to his goal. However, if he had a life insurance policy, this financial burden would have been averted.

This means that setting up a life insurance policy is a strategy in de-risking your ambitions or goals. And just as there can be many goals or ambitions, similarly you will find an array of insurance partners and policies out there. This long term investment or partnership is one that must be carefully selected, ensuring the utmost guarantee to the safety of your ambitions or goals as diverse as they may be.

What makes a great Life Insurance Partner?

·      People-centric personality traits:

Trust & Confidence: They must instil trust in their services and the company as this is the foundation of any strong relationship. One with confidence in each other’s character, reliability and honesty.

Respect: Treating each other with respect, where no one’s thoughts and feelings are invalidated.

 Communication: Constant clear communication fosters strong relationships between policyholders and their insurance partners.

 Transparency: Regardless of whether it is in relation to strategy, processes, products or services, openness with a policyholder reassures their decision in choosing the right Life Insurance Partner.

Care: The unique proposition of an insurance provider must stem from a place of care or empathy that goes beyond business. Highlighting and acknowledging the emotional value of a policyholder’s ambition.

·      Ethics:

 Insurance partners should not make policyholders feel as if this is simply a transactional business. An insurance partner’s existence is to ensure financial protection for life. This life-long partnership must stem from a place of understanding, empathy and integrity felt throughout the partnership.

·      Business Acumen:

Whether is it understanding the policyholder’s ambitions/needs and developing policies that match those aspirations or assuring that they have a safety net for their goals, the business of life insurance is service-oriented. This means excellence in customer service, product development and process development, throughout all where innovation remains a central focus. This especially rings true when fulfilling different insurance needs for different segments of people in society. For instance, this could simply be a more digital approach, suitable for an urban segment and a personal approach more suitable for the rural segment. Understanding the pulse of the people, their needs and dreams, is key in developing products and processes in Sri Lanka.

·      Financial Strength:

 While Sri Lanka’s life insurance penetration is the lowest in the Asian region, the number of insurance partners are more than what’s necessary for a small developing country like ours. This means that many insurers are expected to consolidate by way of mergers and acquisitions in the long run. The sustainability of an insurance company/partner depends on its financial strength, and this is based on some indicators as stated below.

 a.  Gross Written Premium

b.  Earning Capacity (Profitability)

c.   Solvency and Capital Adequacy Ratio (CAR derived through Risk-based Capital framework in life insurance companies).

d.   Life Insurance Fund.

e.  The ability to pay claims.

f.    Products and Processes – How developed they are in terms of catering to the financial needs of the people and how they can scale up as a policyholder’s ambitions grow.

g.    Life Insurance specific ratios –

 i.  Claims and Benefit Ratio – Claims and other benefits paid as a percentage of Premium Income.

 ii.  Claims Ratio (without Maturity Value) – Claims paid as a percentage of the Premium Income.

 iii. Reinsurance Ratio – Percentage of the risk transferred to reinsurers.

 iv.  Acquisition ratio – Business Acquisition cost as a percentage of the Premium Income.

  v.  Capital Adequacy Ratio – Total Available Capital (TAC) as a percentage of Risk-Based Capital (RBC) Requirement.

h.   Payment of Dividends to shareholders and Share Price in the market.

i.    Company’s standing in the business domain in the Industry and the country.

j.   Great Place to Work – Remuneration and benefits to employees must be paid in line with market rates.

k.  Timely claim settlement and attractive benefits to policyholders.

l.    Engagement in social welfare and community development (CSR).

m.  Engagement in Economic Development –

Premiums collected from policyholders are accumulated in a Life Insurance Fund. This is invested in various private and public sectors such as in risk-free Government Bonds and Bills, deposits in banks, Debentures issued by private companies and Equity as well as real estate and infrastructure development projects. This is all to say that life insurance promotes the capital formation and the economic development of the country due to the long term nature of the business. From the support to capital markets, leading to social and environmental benefits such as better and new employment opportunities and a cleaner environment for all, this whole process gives equitable returns for the Company, which is then passed on to Policyholders in the form of claims and benefits while the balance is given to shareholders as profit.

·      Governance and Compliance:

 Ensuring that a Life Insurance Company/Partner complies with all the required laws and regulations in the country is of paramount importance. They enable the companies to operate within a sound corporate governance framework and violation of them may lead to the suspension of their insurance license. The life insurer is also regulated by the Insurance Regulatory Commission of Sri Lanka (URCSL). Other laws and regulations issued by the Central Bank of Sri Lanka, Department of Inland Revenue and Securities Exchange Commission (Listing Rules) have an impact on strategies and operations of a Life insurer as well.  

What makes Ceylinco Life a great Life Insurance Partner?

Built around the theme of a ‘Relationship for Life’, every effort of Ceylinco Life is one that resonates with the philosophy of what constitutes a great Life Insurance Partner, ingrained throughout the Company’s Vision, Mission and Core Values.

With a focus on Protection and Health needs to de-risk your ambitions, Ceylinco Life continuously strives to provide any and all Sri Lankans tailor-made covers to suit their diverse ambitions or goals. This also rings true through innovative products, processes and value additions like Family Savari and Pranama Scholarships, accessible to all policyholders.

Through Rs. 12 billion worth of customer benefits in 2020, a Life Insurance Fund worth over Rs. 100 billion, 64% of HTM financial assets in risk-free treasury bonds and the rest in quoted debentures, Ceylinco Life remains a prudent Life Insurance Partner. Coupled with a powerful branch network and sales force, who are ever prepared to commit to your ambitions and provide friendly customer service, even at your doorstep.

Author : Ranga Abeynayake