Sri Lanka’s insurance regulator has released a decade-long plan for the sector following Cyclone Ditwah, which caused billions of dollars in damage and highlighted the limited share of losses covered by insurance. The Insurance Regulatory Commission of Sri Lanka (IRCSL) said the “Vision 2035” national insurance roadmap, prepared with industry bodies, was developed in the context of the financial impact of the November 2025 storm and the scale of uninsured losses absorbed by households, businesses, and the government.

Cyclone Ditwah highlights underinsurance and fiscal exposure

A World Bank Global Rapid Post-Disaster Damage Estimation (GRADE) assessment estimates that Cyclone Ditwah resulted in about US$4.1 billion in direct physical damage to buildings and contents, agriculture, and critical infrastructure, or roughly 4% of national GDP. All 25 districts were affected, with nearly 2 million people and 500,000 families impacted and essential services disrupted. The assessment estimates infrastructure losses, including damage to roads, bridges, railways, and water systems, at about US$1.735 billion, or 42% of the total.

Residential buildings and contents accounted for an estimated US$985 million, while agriculture damage was put at approximately US$814 million. Non-residential buildings, such as schools, health facilities, and industrial premises, represented a further US$562 million in estimated damage. According to the commission, total insurance claims related to the cyclone were about LKR 58.5 billion, compared with estimated physical damage of nearly LKR 986.46 billion, suggesting that only around 6% of losses were insured.

Roadmap sets out seven pillars to 2035

In this context, the IRCSL – working with the Insurance Association of Sri Lanka, the Sri Lanka Insurance Brokers Association, the Actuarial Association, and the Sri Lanka Insurance Institute – is advancing a 2026-2035 roadmap for the sector. The document uses the tagline “Insure Every Sri Lankan, Empower Every Household, and Finance National Growth” and organises planned measures under seven pillars. The first pillar – on coverage and product innovation – outlines standardized, lower-cost life, health, and property policies, including government-backed offerings and mandatory risk coverage for small and medium-sized enterprises. It also sets out sector-specific schemes for agriculture, fisheries, and micro-enterprises, together with financial literacy initiatives.

The second pillar addresses distribution and digital onboarding. It refers to providing “protection at your fingertips” through expanded use of digital and alternative channels to simplify access and extend reach across urban and rural areas. A third pillar on tax and regulatory clarity seeks closer alignment of local rules with international practice and notes potential tax incentives for protection and health premiums to support take-up. A fourth pillar, covering capital, solvency, and investment freedom, proposes strengthening the National Insurance Trust Fund as a main domestic reinsurer, maintaining sector solvency, and using pensions and life products to mobilize long-term savings for infrastructure and other national priorities.

Pillar five focuses on data, market conduct, and customer confidence, including plans for a consolidated data environment linked to government databases, standardized health coding to speed claims and reduce fraud, and higher professional standards for advisers. The sixth pillar emphasizes talent, employment, and financial literacy through expanded training, school-level education on insurance concepts and reinforced ethical standards in sales and distribution. The seventh pillar concerns execution, governance, and monitoring. It refers to dedicated taskforces, regular progress reviews, and key performance indicators, with stated outcomes that include lifting insurance penetration above 2% of GDP by 2035.

Employment, penetration, and premium targets

The IRCSL notes that insurers currently work with more than 49,000 agents and directly employ over 20,000 people. The roadmap states that the sector’s workforce could increase by about 25%, and cites a goal of creating “tens of thousands” of additional jobs nationwide. By 2035, the industry has set quantitative objectives: to double insurance penetration from around 1% to more than 2% of GDP and to build a premium pool of LKR 1 trillion to support protection and retirement-related products. The document links these targets to the role of long-term insurance savings in domestic capital formation.