By Dr. Tilak S. Fernando

Insurance generally encompasses a collection of funds from the insured individuals and units to pay for the losses. Therefore, every insurance entity becomes protected from risk factor for a fee. To guard against any possibility of any peril, various clauses are incorporated by insurance companies into the policy, which at times act favourably towards the insurance companies and protect them from the law. It is, therefore, extremely essential to read the conditions in the small print before one commits to an insurance policy. In insurance ultimate good faith and a bond of honesty bind the insured and the insurer.

History of insurance dates back to the second and third millennia BC, when the Chinese and Babylonian traders thought of minimizing risks to compensate their losses due to vessel capsizing while sailing through treacherous waterways. A few decades ago, when we were schoolchildren, mention of the word ‘insurance‘ had no meaning at all, except perhaps some discontentment and fears among the elders as so many ‘insurance agents’ used to barge into their friends’ houses in the evenings and force life or car insurance policies on them. Society viewed this operation simply as ‘salesmen’ trying to make a living out of moonlighting. There were only two types of insurance schemes at the time – the standard type being car insurance and the other on life insurance. Local and foreign insurance companies operated the insurance industry in Sri Lanka during this period.

National Insurance Corporation.

In 1961, Sri Lanka nationalized the entire insurance industry. In 1980 the National Insurance Corporation was established. However, in 1988 the government’s liberalization programme allowed the private sector to enter the industry. In 1993 the Insurance Corporation was transformed into a limited liability corporate entity, thus becoming a subsidiary of Distilleries Co. Plc. It has been the leading amalgamated insurance provider in Sri Lanka, which managed to gain the AA-Global rating from the Fitch Ratings in London.

Insurance has today spread its tentacles to multifaceted areas such as life, endowment policies linked to life, house and property, marine, auto, health and dental, casualty, professional liability, crime, flood, landlord, earthquake, aviation, builders’ risk, burial and pets. Media liability insurance is designed to cover professionals that engage in film and television production and print against risks such as defamation.

The idea behind one taking an insurance policy is basically as a protection against financial losses, which is risk management to circumvent uncertain losses. It involves an insurer and a person who is insured, as the policyholder. An insurance transaction thus becomes an assuming guarantee in exchange by the insurer in the event of a covered loss or damage.

Insured person

Usually when an insured person experiences a loss, it should be potentially covered by the insurance policy and any such claim is wetted by an expert employed for the benefit of the insurance company known as the ‘loss adjuster’, who goes through the claim with a fine tooth comb and attempts to chop the claim down as much as possible.

Insurance is an area, which can have numerous consequences and influence on society when the cost of damages and losses could tempt people to engage in insurance fraud. Insurance claims are processed based on its gravity and compensation is determined on the coverage available under which liabilities are covered by the policy.

In Western countries there are specific tailor-made policies with premiums according one’s choice to replace ‘old for new’. So, the moment a claim is submitted, the insurance company would like to know the model or the make of the damaged unit and the replacement cost of its newer model prior to approval without further questions. Of course, this is based on complete trust on both parties. Having said so, increasing number of fraudulent claims in recent years have made it an irritating affair to both the insurers and the insured, while the insurance companies keep on escalating their premiums whereas the genuine claimants get frustrated and irritated.

Domestic scene

Contrary to such provisions such policies do not exist in Sri Lanka, but even after officials take every unit into account during the insuring process (noting down serial numbers, taking individual photographs of the units), when a claim is made insurer makes the life of the insured a hell by wanting the insured to prove defects, burnt items supported by technical reports from a repairer confirming that the damaged unit is beyond repair. The most amazing factor is, even after submission of such reports, sometimes technical officers visit the insured’s home to inspect and further establish the damaged unit where he might want to see any physical signs of burnt marks or the damaged area, which only procrastinates the settlement.

Rackets

The biggest racket in insurance in Sri Lanka appears to be with policies sold to customers connected with investment programmes. Here the promises are made offering 8 per cent of interest out of the invested money per year. If one does not read the small print, one is in for a shock to learn that the “investor’s money is on a lien and he has to mark time for a minimum period of three years prior to deliberating of any withdrawal“.

Health policies covering hospital charges is another major swindle, with the cost of private healthcare in private hospitals in Sri Lanka as it costs an arm and a leg by the time a patient comes out of a private hospital. This is due to umpteen number of tests done “compulsorily” and persuasively by the hospital staff, whether it is “necessary or related” to the patient’s complaint, without the honest approval of the patient as the medical men find it fit, which is a common allegation “only to grab money“.

Gospel truth

It is a very sad affair in this country that medical doctors are treated as semi-gods by the public, which in turn some of the doctors behave as if they are of a superior breed and appear to be on cloud nine. Patients are not allowed to question them and the majority being very meek accept whatever they say as gospel truth, when they should be subjected to unnecessary tests and loaded with drugs, which only benefit the private hospitals. In the UK, for instance, the majority of modern young doctors does not even wear a tie and come in casual clothes (jeans) that sometimes people are unable to recognise them as doctors if they do not wrap their stethoscopes round their neck!

Equally, they maintain a degree of human touch and speak to their patients in a friendly manner while spending time with their patients in explaining everything in detail before they take any action. After all, patients are also human beings and should not they have every right ask questions, which they think might affect their bodies with unnecessary tests and overdose of “unwanted” drugs for the complaint they consult the so-called “the learned”.

Private medical insurance

With this kind of a backdrop those who can afford in Sri Lanka go for private medical insurance policies, to protect against exorbitant hospital bills, when they are aware of being pushed to the wall once they visit a private hospital. Despite such protective policies, they soon will be in for a worst shock when the small print in the policy states that one has to spend a minimum of three days in a hospital to get any financial relief from such policies. Even with dental insurance, sometimes the insurer cannot make a claim this side of six months of the policy coming into effect.

Insurance has its good and gloomy areas but it all depends and boils down to insurance agents who should properly explain true facts to their prospective clients before they sell a policy, rather than selling a policy by hook or by crook and to collect their commissions thereof, rather than coming out of lame excuse such as  ‘South Eastern Asian Insurance Schemes cannot be compared with the developed West, as people in South Asia cannot afford high premiums” !

tilakfernando@gmail.com