Microinsurance: Championing the Less Fortunate – Ivan Nicholas

Throughout his 37-year long career in the Insurance Industry, Ivan Nicholas has mastered his capabilities in understanding the customer, product and the people who deliver it. His strength lies in developing and motivating award-winning sales advisors and field management teams to achieve their individual business objectives nationally and internationally. 

“I began my career at Mercantile Credit Limited, which was a principal agent of the National Insurance Corporation, in 1983 as an Underwriting Executive. Subsequently, in 1989 I took over the position of an Executive in charge of the Kalutara branch. When Central Bank suspended the business operations of Mercantile Credit – Aitken Spence, Carson Cumberbatch PLC and Whittal Boustead, these 3 companies formed ACW Insurance (Pvt) Ltd to absorb the Mercantile Credit business and staff. In 1990, I was appointed as the Branch Manager of Kalutara, under the newly formed ACW Insurance (Pvt) Ltd.

ACW (Pvt) Limited was a composite Insurance company, where I was responsible for the Distribution of Life and General Business. In January 1995, I was appointed as the Regional Manager of Kalutara and was responsible for the entire Kalutara Region including 3 development officers.  In 1997, I joined Eagle Insurance Company Ltd as the Regional Manager of Kotte. In 2006, I was invited to take up the post of Assistant General Manager at Union Assurance PLC where I headed the Non-Life Business Corporate Unit and was responsible for the top and bottom line achievement. In 2007, I became the Chief Business Officer at HNB Assurance PLC. I was responsible for motivating the Distribution Management and there were 68 branches reporting to me through the Head of Distribution with 1700 sales advisors and field management team Island wide. I was also in charge of 189 bank assurance desks located in HNB Banks as well as the Alternate Business Development Unit and Budgetary Controls as I was responsible for the Triple Line achievement (Top Line, Bottom Line and Staff Retention). In 2019, I joined Sanasa Insurance Company PLC as a Chief Business Officer.”  

Describing the current status of Microinsurance in Sri Lanka, Ivan said, “The majority of households (HH) in Sri Lanka lack any type of formal social security.  Poor people are the least likely to benefit from coverage, yet they are the most vulnerable to risk and economic stress. Currently in the spotlight, Microinsurance (MI) is one of the many financial services that help manage the risks faced by poor and low-income communities.

Microinsurance in Sri Lanka initially began as a service to support low income earners, focusing on providing Insurance facilities for a minimum premium. Low income earners are exposed to high risks while dealing with their occupation and other day today activities, but they are not very interested in obtaining an Insurance cover due to poverty and lack of awareness. Microinsurance has the potential to make the poor less vulnerable to such risks, by offering them a convenient risk transfer mechanism at a lower affordable premium.”

Moving onto how the Microinsurance sector contributes to the country’s economy, Ivan explained, “Effective Microinsurance services complemented with other financial services like credit or savings are considered to offer more concrete protection compared to other social protection mechanisms such as the government’s income supplementation scheme or community based mutual association. Without Insurance, the poor may be inclined to engage in activities and invest in asset portfolios with low risk, but low returns may affect their long-term income and their ability to rise out of poverty. Furthermore, household shocks such as the illness or death of a family member may have long lasting effects. Productive assets may be destroyed or sold for survival purposes, health may be undermined or children may have to leave school. As such, reduced risks through effective Insurance services may not only induce investment in economic activities, but also reduce the welfare costs to society.

At Sanasa Life, we’ve noted that individuals from these low-income groups face more risks than others simply due to factors such as their occupation, social status and the environment they live in, making it hard to mitigate risks. 

For the higher income earning group, in the event of a death in the family, there are more affluent members who can provide support, but for the low-income groups this is not so. There is no support from the immediate or extended family. So, we feel that there is more need for Insurance for this group. We observe that these groups have no access to the conventional Insurance due to various reasons. Thus, from its very inception the company has been offering Microinsurance products.”

According to Ivan the primary challenges faced by the Microinsurance sector in Sri Lanka are –  

  • The lack of specialized regulations for Microinsurance
  • Familiarizing the concept of Insurance among the targeted market
  • Promoting financial literacy

When questioned about how these challenges can be overcome, Ivan replied, “The IRCSL must provide some guidelines and regulations for Microinsurance. Sanasa Insurance is currently implementing various programs with the support of micro finance institutes and Sanasa societies to raise awareness about Insurance among low income earners who are mostly Sanasa society members. Unlike in the past, most of the low-income earners are somewhat educated and it is easier than before to educate them with regards to Finance and Insurance.”

“Sanasa Life, as the Life Insurance provider of the Sanasa movement has been specializing in Microinsurance full time. Sanasa is built to serve the low-income earners in Sri Lanka. The journey began as the All Lanka Mutual Assurance Organization (ALMAO) and at present the Sanasa Life & Sanasa General Insurance Companies are handling Microinsurance with the support of internationally affiliated institutions like ICMIF, AOA, IFC, GIZ etc. Most of the targeted customers for Microinsurance are members of the Sanasa societies and the company executes many Microinsurance programs in partnership with the Sanasa societies”, stated the CBO on the role of Sanasa Insurance in the development of Microinsurance in the country. 

Speaking of how the ongoing pandemic has impacted the Microinsurance sector and Sanasa Insurance’s plan to move forward, Ivan disclosed, “The COVID-19 pandemic has severely impacted the Microinsurance sector. The country-wide lockdown directly affected the lives of the low-income earners and they ascertain the importance of Insurance in their lives. Most of the low-income earners lost their daily income during the lockdown period since they could not engage in their daily routines. Sanasa Life Insurance intends to utilize this opportunity to promote Life Insurance among this sector in order to enhance the quality of the lives of low-income earners and also to increase the business volume of the company.” 

%d bloggers like this: