COPE makes several recommendations to Sri Lanka Insurance Corporation

March 14, 2023 at 2:04 PM

The Committee on Public Enterprises (COPE) met under the chairmanship of MP (Prof.) Ranjith Bandara Wednesday (08) during which several recommendations were made to the Sri Lanka Insurance Corporation Limited, the Parliament of Sri Lanka said in a statement.

According to the Parliament, the meeting was convened to review the Auditor General’s reports and the current performance of the Sri Lanka Insurance Corporation Limited for the financial years 2019 and 2020.

The COPE Chair inquired about Sri Lanka Insurance Corporation Limited of having not submitted its corporate annual report for the year 2021 to Parliament and said that by delaying the annual reports, the institution is avoiding the Parliament. Accordingly, COPE members pointed out that due to the delay in the annual reports, the insurance corporation has failed to get a proper understanding of the annual financial situation of the affiliated institutions.

The Chief Executive Officer of the insurance corporation said that the relevant report has been submitted to the Ministry of Finance. Officials pointed out that the delay was due to translation and that measures have been taken regarding the matter. Accordingly, COPE recommended that all annual reports which are overdue be submitted within one month.

The Committee also drew attention to the failure to close the two branches established in the Maldives and Seychelles Islands under the Sri Lanka Insurance Corporation Limited, which have suffered huge financial losses. The chief financial officer of the corporation pointed out that since the respective branches are not functioning at the moment, money is not spent on them and the money currently available has been deposited in the Bank of Ceylon branches in the respective countries. He also mentioned that after the completion of the tax clearance work by the Inland Revenue Tax Authority of Maldives, the closure of the relevant institution can be completed. The chairman mentioned that COPE will take steps to send its observations to the Ministry of Foreign Affairs in order to complete the said work. 

The Committee also paid attention to the lease agreement related to the land and building currently used by the President’s Secretariat belonging to Sri Lanka Insurance Corporation Limited. It was revealed that the property with an estimated fair value of 798,000,000 rupees, which was given to the Presidential Secretariat on a tax basis, was given back to the corporation last year as agreed, but due to the Covid pandemic, it was revealed that the Presidential Secretariat took it again.

The Secretary to the Ministry of Finance stated that during the discussion between the two parties, the Presidential Secretariat agreed to pay the arrears of rent in instalments for the period of use of the land in question and to enter into a new agreement from January 2023. The COPE Chair informed the Secretary to the Ministry of Finance to submit a report in this regard within two weeks.

The COPE Committee further paid attention to the progress of investigations against fake brokers related to the Sri Lanka Insurance Corporation. Complaints were made to the Criminal Investigation Division about this in 2014 and the committee inquired about its progress and current status.

The Chief Executive Officer mentioned that this incident took place when the insurance corporation was privatized and it was not looked into because a complaint had been made to the Criminal Investigation Division. However, he informed that the situation can be investigated and reported. The COPE thus instructed the Chair of Sri Lanka Insurance Corporation to submit a report in this regard within two weeks.

Moreover, the COPE Committee inquired officials regarding not separating the long-term insurance business and the general insurance business into two separate companies within the Sri Lanka Insurance Corporation structure.

The Chair pointed out that according to a comparative analysis done by the Committee, though the life insurance market in Sri Lanka has grown by 21% in 2021, the life insurance market of the Sri Lanka Insurance Corporation has grown only by 14%. The Chair further stated that all other insurance companies in Sri Lanka run long-term insurance and general insurance separately.

The Chair of the Corporation stated that though it is not necessary to separate it as a government-owned institution, the Ministry has been requested to give a proper decision about it. The Committee discussed this at length and the Chair gave recommendations to the Secretary of the Ministry of Finance to give a decision on this immediately.

The COPE further focused its attention on the market share growth strategies of the Sri Lanka Insurance Corporation. Officials present mentioned that although there was some setback in their market share last year, they are currently working to increase it. Therefore, they pointed out that there has been significant growth in the life insurance market as of January this year compared to last year.

Pointing out that the total assets of the Sri Lanka Insurance Corporation are 184 billion rupees, the COPE chair recommended to the CEO of the corporation to submit a report on the future trade promotion strategic plans of the insurance corporation to the Committee as soon as possible.

COPE Members pointed out that the policyholders are inconvenienced due to the fact that the insurance companies do not properly inform the people while getting the insurance coverage. The Members also pointed out that the insurance holders are in a lot of trouble, especially when they fail to submit the original copy of the insurance bill. Accordingly, the Chair informed that steps should be taken to inform the policyholders properly.

The Committee also directed its attention towards the staff of Sri Lanka Insurance Corporation. The CEO mentioned that the corporation employs 2535 permanent staff and 232 employees on a contract basis. He further mentioned that steps have been taken to introduce a task factor index to evaluate the work performance levels of employees. COPE directed the chair of the insurance corporation to conduct a full human resource audit of the corporation and submit a report to the committee within six months.

The COPE Committee also questioned the top management of the insurance corporation about the necessity of setting up a body called the Management Service Insurance Company to decide the salary scales of the top management of the insurance corporation. It was disclosed that 700 million rupees will be spent to pay the salaries of 93 people in the top management of the institution.

Officials mentioned that since the insurance market is highly competitive, it is imperative to maintain the confidentiality of top management’s ratings. The COPE Chair suggested to the Corporation Chairman to convey a correct opinion on the running of this company within two weeks.

Pointing out that the corporation has not done a proper evaluation of the performance of the branches of the Sri Lanka Insurance Corporation, the COPE Chair directed that the correct information regarding the relevant branches be provided to the Auditor General.

The IT network used by the insurance corporation was also discussed at length, and COPE inquired about the information technology network proposed to be newly established and the selection of institutions for it.

In 2015, the Foreign Employment Bureau took steps to introduce an insurance system for foreign workers in Arab countries and it had also received cabinet approval to do it without calling for tenders. It was given to the insurance corporation and the committee questioned at length about the corporation calling for bids from a single party and giving them a bid value of $100. According to the audit conducted by the Auditor General, the Sri Lanka Insurance Corporation does not have any information about this transaction, which resulted in a loss of millions.

The CEO of the corporation informed that his corporation has not introduced an insurance system and only administrative work has been done and payment has been received only for that. Accordingly, the COPE chair informed that when the Foreign Employment Bureau is called before the committee again, steps will be taken to call the officials of the insurance corporation.

Furthermore, the COPE Committee recommended to the CEO of the corporation to investigate the information and submit a detailed report with documents within two weeks.

Apart from the stated, the COPE Chair informed the Auditor General to provide a special audit report related to the mega branch building on Borella Kinsey Road owned by the insurance corporation.

State Ministers Janaka Wakkumbura, Lohan Ratwatte, and Shantha Bandara, Members of Parliament Anura Priyadarshana Yapa, Mahindananda Aluthgamage, Rohitha Abeygunawardana, Jayantha Samaraweera, Sanjeeva Edirimanna, Jagath Kumara Sumithraarachchi, (Major) Sudarshana Denipitiya, Premnath C. Dolawatte, Upul Mahendra Rajapaksha, S. M. M. Muszhaaraff, (Ms.) Rajika Wickramasinghe, Madhura Withanage, and (Prof.) Charitha Herath were present at this meeting. (NewsWire)