Sri Lanka’s HNB Assurance launches new core platform

When HNB Assurance, an insurance company in Sri Lanka, switched on its new digital core system in February, the move marked more than just a technical upgrade. For CEO Lasitha Wimalaratne, it was the culmination of a years-long transformation that he believes could help double the size of the country’s insurance industry and position Sri Lanka as a regional service hub.

The launch, which followed a complex migration from a 15-year-old legacy platform, is the latest milestone in a digital overhaul that began as a survival strategy during the Covid pandemic and has since become central to HNB Assurance’s vision for the future.

“We went live in February this year with all our data,” Wimalaratne told a recent conference in Hong Kong. “It was a nightmare to migrate, but it’s the only way forward. If we don’t keep investing in digital, we’ll be overtaken.”

Migrating two decades’ worth of legacy data to the new core involved standardization issues, data quality problems, and resistance from staff and advisors accustomed to manual processes.

To manage risk, HNB Assurance rolled out the new platform in phases, starting with group life and credit life products, then moving to more complex offerings. The company also invested heavily in training, shifting staff to leaner, more agile ways of working. Communicating the strategy to staff throughout was important.

Covid catalyst

But the biggest reason the transformation worked was because Covid made it impossible to do otherwise.

Sri Lanka’s insurance market, with penetration at just 1 percent of GDP, has long been seen as underdeveloped despite the presence of global players like AIA and Allianz. For decades, the industry relied heavily on paper-based processes and face-to-face sales. Covid-19 forced a dramatic rethink.

“We weren’t ready for Covid,” Wimalaratne said. “We had to sell and collect premiums online, almost overnight.”

Pushing forward on both front-office digitization while revamping core architecture felt like a gambit. But the insurer was able to equip its agents with tablets and onboarding apps, rapidly shifting to a nearly 100 percent digital model for customer acquisition.

The digital pivot didn’t just help the company weather the pandemic. It enabled HNB to keep growing even as Sri Lanka plunged into recession and political turmoil, culminating in the country’s bankruptcy in 2022.

“In 2022, when I took over as CEO, we grew 29 percent that year,” Wimalaratne said. “Because we had adapted the tech to remain competitive.”

Reaping rewards

Over the past four years, HNB Assurance has posted a compound annual growth rate (CAGR) of revenues of 27 percent, which Wimalaratne attributes primarily to digitalization.

The company’s digital-first strategy has enabled it to double market share in four years, and it now targets 40% growth in 2025.

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The February system launch was the centerpiece of a three-year transformation plan aimed at making HNB Assurance a “cloud-first, mobile-first” insurer. The company invested Rs1 billion (about $3 million) in technology and data, with a focus on flexibility, security, and scalability. The new platform, sourced from an Indian vendor whose name has not been disclosed in public filings or media reports, replaces a patchwork of more than 60 peripheral systems that had grown up around the old core.

The upgrade enables HNB Assurance to automate up to 90 percent of underwriting and 75 percent of claims payouts by 2026, according to Wimalaratne.

“We’re already at about 80 percent automated processing, and we’re piloting AI-driven claims settlement that can pay out health claims within an hour of hospital discharge,” he said.

The company’s onboarding process is now fully digital, and 85 percent of premium collections are cashless, routed through digital wallets, online gateways, and partner bank apps.

Survival of the digiest

For HNB Assurance, digitalization is not just about efficiency. It’s about staying competitive in a market where customers increasingly expect lower prices and seamless service.

“Reducing cost is the key challenge,” Wimalaratne said. “Companies can then reduce prices and remain competitive. We need sustainable margin to remain in business while servicing our customers. The only way is digital.”

The company’s business is split roughly 40 percent through bancassurance (leveraging its parent bank’s network) and 60 percent through agents. AI is used to generate hot leads and predict claims, with the goal of settling most health claims automatically.

The transformation also extends to customer engagement. HNB Assurance now serves Sri Lankans living abroad entirely through digital channels, aiming to build loyalty with a fully paperless, omnichannel approach. “Our goal is a 100 percent digital customer journey,” he said.

“If you’re already behind the competition and don’t use AI, you’ll be kicked out,” Wimalaratne said.

From company to industry

HNB Assurance’s experience offers a case study in how digital transformation can unlock growth in emerging markets. Sri Lanka’s insurance industry, with its low penetration and fragmented structure (50 insurers serve a population of just over 20 million), is ripe for disruption. Digitalization can help overcome structural barriers, such as low per-capita income and limited financial literacy, by making insurance more accessible, affordable, and transparent.

Government policy is also supportive, with new data protection rules and risk-based capital frameworks encouraging insurers to invest in secure, compliant digital infrastructure.

The hope is that, as Sri Lanka’s per-capita income rises, the industry will be well-positioned to double in size over the next three years. Today’s income per capita is $4,000 and Wimalaratne reckons it needs to reach $6,000 to accommodate such an expansion.

With a highly literate workforce and a growing, English-speaking diaspora, Wimalaratne believes Sri Lanka can become a service hub for the region, much like Hong Kong or Singapore.

“Sri Lanka is a small market but we’re getting ready for big things,” he said.