Sri Lanka state-backed insurance plans under funded

June 17, 2011 (LBO) – Two Sri Lankan state-backed insurance schemes for state workers and agriculture have been topped up with taxes extracted from the people, as premium payments were not enough to cover claims, official data showed. ‘Agrahara’ a medical insurance plan for state workers with 650,000 holders had claims of 1,138 million rupees in 2010, while contributions were only 595 million rupees, a finance ministry report showed.

The Treasury had pumped in 443 million rupees of tax money collected from the people to plug the difference.

Agricultural and Agrarian Insurance Board, which runs a crop insurance scheme and pension scheme for farmers and fishermen had contributions of 264.2 million rupees but claims of 287.6 million rupees.

The Treasury had pumped in 132 million rupees to keep in afloat.

The finance ministry said there was a mis-match between the contribution and payments resulting in a deterioration of pension and insurance funds.

Sri Lanka’s rulers come up with pension plans for various sectors from time to time to win popularity which have not been well designed.

Designing and running pension funds requiring specialist technical knowledge in long term forecasting and valuation.