Microinsurance Sector Study: Sri Lanka

This study, commissioned by German Technical Cooperation (GTZ) - now GIZ -, assesses the microinsurance sector in Sri Lanka and provides information about the environment for microinsurance, the existing supply and demand, as well as the role of donor assistance in this field.

The goals of this sector study are to:

• Analyze the status quo for low income people in the insurance sector, and to give an inventory of all relevant bodies including government, private insurance companies, non-government organizations, and MFIs;
• Present the activities of donors in the insurance sector;
• Identify entry points for German Development Cooperation.

The key findings of the study are:

• Microinsurance demand exists in Sri Lanka;
• A favorable framework exists for microinsurance development;
• Most large commercial insurers are disinterested in serving low-income segments;
• Social mobilization programs, with heavily subsidized insurance components, are often unsustainable;
• Few smaller, private insurers have interest and potential to cater to the microinsurance needs of the low-income segment;
• Donors have interest but limited know-how in microinsurance;
• GTZ has a strong presence in Sri Lankan rural and financial sector development.

Finally, the study makes a few recommendations for GTZ's role in microinsurance in Sri Lanka:

• Play a leading role in microinsurance;
• Consider possible future support to microinsurance in areas such as policy, regulation, and linkage with microfinance;
• Analyze potential partners and strategies for supporting microinsurance development;
• Contribute to the policy dialogue on regulation of microfinance and microinsurance;
• Provide feed-back to government and other institutions to clarify its stance and contribute to the discussion on microinsurance.