The rating agency said intense price competition in motor has kept the combined ratio's of many insurers above 100 percent, indicating that before investment income indicating that expenses and claims were higher than earned premiums.
Sri Lankan insurers are expected to separate life and general businesses under regulatory changes.
"Fitch expects poor underwriting discipline to continue as insurers strive to gain critical mass in both the life and non-life segments before rules requiring the separation of these two businesses are implemented," the rating agency said.
"This will pressure the financial performance of the more aggressive players while challenging the market shares of others.
"
Though there were operational challenges and uncertainty, Fitch said regulatory changes in separating life and non-life businesses, implementing risk-based capital (RBC), increase in minimum capital and public listing as positive for the industry.
The agency said higher minimum capital and spl