Sri Lanka’s insurance industry regulator, the Insurance Regulatory Commission of Sri Lanka (IRCSL) has been operating without a permanent actuary or an actuarial consultant since last year, posing risks to policyholders, an Industry professional alleged.
Writing to the President of Sri Lanka, an industry professional on the condition of anonymity expressed industry concerns to the President, urging swift actions to avert a disaster. According to International Actuarial Association (IAS), the primary roles of actuaries are to identify financial and underwriting risks, maintain appropriate pricing and perform reserve analyses of insurance portfolios which contribute to maintaining the financial soundness of the carrier in order to protect the financial viability of the insurance sector, including the interests of the general public.
The Sri Lankan law (Insurance Act) requires long term insurance companies in Sri Lanka to retain the services of an actuary on full-time basis.
“Even though insurance companies are required to retain an actuary, the institute regulating and overseeing these insurance companies is functioning without any actuary resources. The IRCSL has been operating without any actuarial resources for the last nine months. Is it allowed? Is it professional?” the professional questioned.
When Mirror Business contacted the IRCSL Director General (DG) Damayanthi Fernando, she refused to comment on the matter.
IRCSL had been planning to setup an Actuarial Unit with 4 permanent positions recognising the fact that it was paramount that several actuarial personnel are employed on a full time basis in the organisation, given the important role they hold in the insurance industry. The first newspaper advertisement in this regard was published in February 2017.
The professional claimed that although there were suitable applicants, the posts remain vacant.
According to industry sources, IRCSL had various actuarial consultants both local and foreign until October 2017. Since then the IRCSL has had operated without even an actuarial consultant. However, the IRCSL hired an actuary for a specific project.
According to the professional, IRCSL earlier at a forum few months back stated that it would get an actuary through The new Financial Sector Modernization Project (FSMP) under the World Bank (WB).
“It does not make sense that they are trying to appoint an actuary only through the WB project, as the in-house permanent actuary and the WB project actuary will have different roles.
But the IRCSL is not even appointing the actuary through WB project. Although, there are suitable qualified professionals, IRCSL is delaying appointing such a person. Why? Why are they delaying the appointment of suitable persons to both actuary roles? What about the Actuarial Unit? There are five positions to be filled,” he pointed out.
He warned that in case an insurance firm becomes insolvent, the innocent policyholders could end up paying the price.
Actuaries play an important task in the modern insurance industry in identifying the systemically relevant insurance companies and measuring their systemic relevancem which is vital for financial system stability.
IRCSL is presently headed by Mano Tittawella who was appointed along with other new members of IRCSL in 2018.
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