Annual Report 2010 - Ministry of Finance and Planning

3 | REFORM INITIATIVESTo facilitate development andliberalization of the financial market,a VAT exemption was extended inrelation to re-insurance claims andcommissions. This exemption cameinto effect from 1st January 2011 asannounced in the Budget 2011.Acknowledging that a transparentand advanced supervisory systemis a must to stabilize the insuranceindustry, the regulatory scope ofthe Board was broadened andstrengthened during the year 2010,the following significant changes havebeen introduced to the Regulationof Insurance Industry Act No. 43 of2000.• Amendments were made toenhance the regulatory scope ofthe Board through new provisionsto enable registration of persons asloss adjusters.• Companies carrying out bothclasses of Insurance business(Long term and General) wererequired to segregate theirbusinesses through two separatecompanies within a stipulatedperiod enabling the identificationof capital, assets and liabilitiesof each class separately, so thatlosses of one class would not beset-off against another to lookafter a narrow interest.• Every insurer was required to listtheir businesses in a stock exchangelicensed under the Securities andExchange Commission of Sri Lankawithin a stipulated period in orderto enhance the transparency and toimprove accountability of insurancecompanies.• The directors and specifiedofficers in insurance companieswere required to adherewith stipulated minimumqualifications/ criteria to ensuretheir suitability to be appointedand to continue in employment.• Similar minimum criteria wereintroduced for corporate bodiesto be registered as insuranceagents of insurance companies andinsurance brokering companies,since earlier this was limited toindividuals.• The IBSL was empowered toincrease the Capital requirementof registered Insurance Companiesand Brokering Companies evenafter registration, in terms of rulesmade in that behalf.• The National Insurance TrustFund (NITF) was brought underthe regulatory scope of theIBSL thereby ensuring moretransparency in insurance relatedactivities.• The IBSL was empowered tosettle disputes in relation togeneral insurance business toboost the confidence of thegeneral public.Procurement Related ReformsIn terms of Government Procurement Guidelines three levels of procurement related committees function as follows :Procurement CommitteesAuthority GOSL Funded Projects Foreign Funded ProjectsCabinet Appointed ProcurementCommittees (CAPCs)Ministry Procurement Committees(MPCs)(Works, Goods and Services)Departmental ProcurementCommittees (DPCs)Project Procurement Committee (PPC)(Works, Goods and Services)More than Rs. 150 Mn.Up to Rs. 150 Mn.Up to Rs. 50 Mn.More than Rs. 500 Mn.Up to Rs. 500 Mn.Up to Rs. 150 Mn.The ad hoc appointments ofSecretaries and other seniorofficials to Cabinet AppointedProcurement Committees resultedin many senior officials endingup having being appointed to anumber of CAPCs simultaneously,thereby making it impractical forsuch members to make an effectivecontribution.Addressing these issues, the Governmentappointed Standing Cabinet AppointedProcurement Committees with regard tothirteen Ministries that generally involvein a large volume of transactions.188