March 13, 2008 (LBO) – General insurance premiums must be settled within 60 days so that the insured have the ability to claim and for insurers to avoid solvency difficulties, Sri Lankan insurance companies and the regulator said. They said the regulator, the Insurance Board of Sri Lanka (IBSL), has instructed insurance firms to attach a ‘premium payment warranty’ on all general insurance policies, including renewal certificates, when they give credit to policyholders.
The warranty implies that premium is payable to the insurer within 60 days from the date of inception or renewal of policy and the insurer is not liable to settle claims if the payment is defaulted.
This means that those who fail to pay the premium are not entitled to protection.
Following the liberalization of the insurance trade, it was made illegal for insurance companies to give credit.
“In most countries, the premium has to be paid before applying for cover but due to competition, insurance companies started giving credit,” Jagath Alwis president Insurance Association of Sri Lanka (IASL) told reporters Thursday.
Around 70 percent of the total general insurance policies are subject to credit but policies that have been cancelled are min