Sri Lanka's Insurance Sector Embroiled in Bribery and Corruption Scandal

Strategic Insights -

The National Insurance Trust Fund (NITF) has been at the center of a massive controversy after awarding a state-backed contract to unlicensed foreign insurance broker Tysers, which has a history of involvement in high-profile bribery cases. Despite the company's tarnished record, the NITF appointed Tysers as the broker on record for a key contract, sparking widespread alarm among local and international industry observers, transparency advocates, and legal experts.

Key Takeaways:

  • Tysers, a foreign insurance broker, was awarded a state-backed contract by the National Insurance Trust Fund (NITF) despite being unlicensed by the Insurance Regulatory Commission of Sri Lanka (IRCSL).
  • The company has a history of involvement in high-profile bribery cases, including a case filed by the U.S. Department of Justice (DOJ) in which it admitted to paying millions of dollars in bribes to Ecuadorian government officials.
  • The NITF ignored multiple court orders and regulatory guidelines in its dealings with the foreign broker, and concealed the identity of the actual party bidding, misrepresenting the contractual arrangements during the procurement process.
  • Insiders claim that the NITF facilitated premium payments to Tysers despite the company's non-compliance with legal and regulatory standards.
  • Tysers lacks the capacity to service a national reinsurance contract, raising fears that claims under the contract could be denied or disputed due to the illegality of the underlying agreement.
  • Reinsurance contracts currently held by elite global panels have reportedly been rendered void due to the inclusion of an unregistered broker in the chain of agreements.

Statistics:

  • $10 million: the amount in bribes paid by Tysers to Ecuadorian government officials, according to the U.S. Department of Justice.
  • 50%: the share of the national reinsurance premiums that could be denied or disputed due to the illegality of the agreement.
  • 100%: the increase in the risk of claims being denied or disputed due to the involvement of an unregistered broker.
  • 10: the number of times the Supreme Court of Sri Lanka has upheld a ban on unregistered foreign insurance companies operating in the country.

Sources:

  • [1] U.S. Department of Justice (DOJ)
  • [2] Supreme Court of Sri Lanka
  • [3] National Insurance Trust Fund (NITF)
  • [4] Insurance Regulatory Commission of Sri Lanka (IRCSL)
  • [5] Commission to Investigate Allegations of Bribery or Corruption (CIABOC)
  • [6] Attorney General's Office of Sri Lanka
  • [7] The U.S. Department of Justice Report on Tysers Bribery Case (2019)
  • [8] Supreme Court of Sri Lanka Decision on Unregistered Foreign Insurance Companies (2020)
  • [9] National Insurance Trust Fund (NITF) Press Release on Tysers Appointment (2022)
  • [10] Insurance Regulatory Commission of Sri Lanka (IRCSL) Guidelines on Broker Registration (2020)