Sri Lanka’s general insurers are expected to experience gradual improvements in underwriting profitability as they refine practices and target more profitable non-motor insurance sectors, according to a report by Fitch Ratings.
The sector has been actively adjusting policy pricing, particularly in motor and medical insurance, in response to inflationary pressures and rising claim costs. However, profitability in the motor insurance segment remains under strain, mainly due to regulatory requirements that mandate full premium remittance to the National Insurance Trust Fund Board.
In addition, ongoing import restrictions on motor vehicles have encouraged insurers to diversify into non-motor segments, such as health insurance. This strategic shift led to an 11% rise in non-motor gross premiums in 2023.
Fitch Ratings also highlighted a reduction in investment and liquidity risks following the upgrade of Sri Lanka’s sovereign rating in December 2024. Furthermore, the implementation of IFRS 17 in January 2026 is expected to improve market transparency and comparability, potentially benefiting the sector in the long term.
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