Sri Lanka’s motor insurance sector will begin transitioning to a cash-before-cover model from 1 May, with credit periods cut from up to 90 days to 30 days initially and phased out over time, the industry body said.
Insurance Association of Sri Lanka (IASL) President and HNB Assurance PLC Chief Executive Officer Lasitha Wimalaratne announced the revised credit guidelines for motor insurance, saying the change was intended to bring greater discipline to the sector.
“We are introducing revised credit guidelines for motor insurance. The current 30 to 90-day credit period will be reduced to 30 days from 1 May and will be phased out over time,” Wimalaratne said.
He noted that insurance in more developed markets is typically issued on a cash-before-cover basis. “In developed markets, it is typically cash before cover. We are moving towards that model as part of strengthening discipline in the industry,” he said.
The move forms part of a broader effort to improve operational standards across the insurance industry alongside an ongoing digitalisation push.
For vehicle owners, the practical impact is that premiums will need to be paid upfront before coverage takes effect, rather than on an instalment or deferred basis. The change is likely to reshape how brokers, fleet operators and corporate clients manage motor insurance cash flows from the second quarter of 2026 onward, and aligns Sri Lanka’s practice with frameworks already adopted in most mature markets.
The Insurance Regulatory Commission of Sri Lanka (IRCS) has since issued a formal circular confirming the 1 May effective date, Newswire reported on April 28. Vehicle owners had been allowed credit windows of 60 to 90 days to settle their insurance payments under the previous regime. The Commission said steps will be taken to abolish the credit period entirely in the future.
