Alongside government bonds and bank savings, life insurance ranks as one of the safest and most respectable of investments. All three have been investment options for centuries. However, life insurance stands apart as a financial product for the protection it offers against the unexpected risks dependents face if things go wrong. For an industry that’s been around for centuries, many decades old in Sri Lanka, the last quarter-century has produced a marked transformation. Janashakthi, a financial services group which launched separate organizations for life and nonlife insurance in 1994 and 1995, has a unique position in the Sri Lankan market, coming of age and challenging for leadership within this short period.

Janashakthi Insurance turned conventional wisdom upside down in its rise from a startup to one of the largest insurance companies within a quarter-century. At its completion of a decade in business, annual premium income surpassed Rs.3 billion, the only insurer to have hit that milestone in ten years. Being a greenfield operation had its advantages; enabling the firm to build comprehensive systems, being nimble about expansion, and more importantly, being pioneering. Chandra Schaffter, its founder, set the pace with his entrepreneurial vigour, innovative spirit, and his expertise and commitment to building a best in class distribution system.

Chandra Schaffter’s eldest son Prakash Schaffter, joined Janashakthi’s non-life venture, established a year after the life insurance business. “He was 65 at that time,” reminisces Prakash about his father. “He was working hard and giving leadership. He was determined to make the business a success.” “We had a senior leadership team that was very committed, united and blended well,” says Prakash who is also widely credited, alongside his father, for growing the non-life insurance business.

“The intention was to be a leader in both life and general insurance independently,” Prakash says about the early ambition. For an upstart to aim for leadership in a market where disposable incomes are limited, was audacious. It meant being innovative and dynamic enough to grab market share. Janashakthi excelled at this organic growth. Before the nineteen nineties, it was easier than now, for insurance firms. They sourced underwriters and employed accountants, technical staff and marketing and advertising professionals. Sales was handled by independent insurance agents and brokers as well as fulltime permanent sales staff. Chandra Schaffter had an outstanding track record leading one such successful insurance brokerage. His seeking a license to start an insurance company was viewed as a threat by the industry. It took Chandra Schaffter, who around a decade earlier campaigned successfully for allowing private sector investment in insurance, almost four years to obtain a license.


“To get the license we had a baptism of fire”, Prakash Schaffter says. “Even after we got the license, we went through a hard time the first year, but that really prepared us for the battles ahead and made us all the more determined.” If Chandra Schaffter gets the credit for going through the ring of fire in founding the business, Prakash Schaffter, appointed Managing Director in 2006 and now Janashakthi Life’s Executive Chairman, is the one who scaled the business.

“My father let go of the reins long before he stepped down,” says Prakash. He credits his father’s letting the next generation lead the business early on, with making the transformative growth possible. “This made a huge difference because as the next generation, we had the freedom to run the business. My taking over as MD didn’t really change anything because it was a natural evolution from what I was already doing.”

Janashakthi’s vision to consolidate early when none in the industry was considering that as a path to growth, proved decisive. In 1999, Janashakthi’s life and non-life businesses were merged. Then after a lengthy bidding process, in 2001, the merged Janashakthi acquired National Insurance Corporation (NIC), one of two state-owned insurance companies. Prakash recalled this was a watershed for several reasons. First, it gave the company scale, propelling it to the third spot in non-life. Second, successfully integrating the 700 strong team at NIC with Janashakthi’s 300 employees proved pivotal, and it was only successful due to the depth of leadership Janashakthi possessed. Third, it also demonstrated the young company had not just vision but a capability to execute successfully.

It was always like my eldest child,” says Prakash about Janashakthi’s non-life business which in early 2018 was sold to German insurance giant Allianz SE for $107 million (around Rs16.4 billion at the time). Naturally for someone so pivotal having to let it go would be challenging. Due to regulatory requirements, all insurance companies split their life businesses from non-life. In Janashakthi’s case, the life business Janashakthi Insurance PLC owned the non-life subsidiary Janashakthi General Insurance Limited after the split.

“Ultimately the family left it to me to make the decision, because I had been the one leading the business,” says Prakash about the events leading up to the sale. Prakash has three siblings, two of whom are on the board of Janashakthi Life, which was retained within and remains the flagship company of the Janashakthi Group. The Schaffters had sought a foreign partner for a minority stake, when Allianz offered to buy the nonlife business. Ahead of the sale, they were chasing market leadership in the non-life business, but the market was becoming extremely competitive. It was apparent the non-life insurance businesses were also going to require more capital, and margins were under pressure. “We felt we can get to leadership via acquisitions, but this is a costly affair and has its own attendant challenges.” “So we eventually took the decision. We decided that we would sell.”

The insurance market in the nineteen nineties was dominated by State firms that behaved as they did during the socialist era, waiting for new customers to come to them rather than seeking them out. Sri Lanka’s non-life insurance market collected 55% of the Rs.181 billion premium income in 2018. The two businesses, life and non-life (also referred to as general insurance) are vastly different. Life insurers usually guarantee customers a fixed rate of return on their policies. Shareholder returns are generated only to the extent that investment yields exceed those fixed returns on policies and costs of running the business. Life companies’ liabilities to policyholders also have a longer duration than their assets. As a result, insurers must manage guarantees given years ago, with assets which are maturing and have to be reinvested. In nonlife insurance, customers only have the risk covered. They do not receive
their capital back or interest. Insurers keep the non-life premium investment returns.

Anyone obtaining a life policy may sign up for a longer term commitment spanning 20 – 40 years, whereas with a motor policy, should a client make a claim and then find the renewal premium too high, the client is able to move to a different insurer, as there are many players in the market who can offer competitive pricing and benefits.

“In this business, managing our assets and liabilities to avoid a mismatch is critical,” Janashakthi Life’s Chief Executive Officer Jude Fernando points out. Jude joined Janashakthi in 2013 and has risen up the ranks in the Group, which has been professionalizing its management as the Schaffter family withdrew from executive positions. Since 2014, the company has been led by a non-family member. Jude, who was first Deputy Chief Executive, took over the business as Chief Executive Officer in 2014. He overlooked the non-life business since 2017, after the two were split in 2015 due to regulatory requirements for the industry. Stuart Chapman, another outsider, had stepped in then to lead the life business.

Jude has wide-ranging experience and has been infusing Janashakthi with a diversity of talent from various industries. Insurance is still a distribution driven industry, he argues. “It needs to go through the stages. If the organisations and industry allow that, we will see the next wave of innovation, like we did in FMCG,” he says, about the consumer goods industry which he has worked in. The top FMCG companies have moved from being challenged by distribution or supply-chain to being innovation- led. “It’s about ensuring the customer needs are fulfilled and not just about how its packaged.”


Like everywhere else, technology is driving change in insurance, pushing companies into unfamiliar territory.

An insurer’s financial strength is one of the most critical determinants for customers and for regulators. In future, though, consumer marketing skills and its ability to separate good risks from bad may matter more. Elsewhere in the world, insurers are moving towards becoming distributors and packagers of risk rather than bearers of risk. Insurers then will concentrate on packaging these risks and selling to investors keen on long term investment products. As captive pools of funds wanting to match their long term liabilities, like pensions, grow, this model may emerge in Sri Lanka.

Whether these are packaged and sold or not, insurers need high-quality business, which in life insurance means customers who will be with the company over the long term and continue on to update their coverage. So far the industry faces the challenge of having to improve the quality, particularly in the life business.

Similarly, Jude Fernando points out that writing quality business is critical to ensuring long-term value addition to the customers, as well as the insurer. “Life insurance brings about a longer-term benefit; during this time, there may be many reasons that cause policyholders to allow policies to lapse. This can also happen if they do not have a clear enough idea about the role of life insurance as a savings mechanism and a risk management product. Reducing lap-sation by raising awareness of the risk transfer benefits of life insurance can be a crucial factor in the success of the industry.”

“Gaining market share is important to business growth, and this can be achieved by ensuring the quality of our business. That is how both the customer and the insurer can grow as partners in the business of protection. Getting our distribution model right is critical. A proper distribution model helps us to expand our reach and reach higher quality business”

He adds that some of the strategies to achieve this will take time to implement and show results. “To achieve a high quality life insurance business is a two-fold approach. We have invested in training and development, as well as building models of continuous customer engagement. It is about creating a sense of confidence by acting as a trusted advisor to the customer, and nurturing a relationship that will be beneficial for both the customer and the business. This is a journey that may not be achieved overnight, but we have to allow the required time to ensure that our efforts result in a profitable and sustainable business.”

On the other hand, the challenge posed by disruptive technology is immediate and two-fold. The immediate disruption is now happening in non-life, where the distribution depended on salespeople and agents is being taken over by e-commerce sites offering multiple quotes. Potentially insurance sales will be faster and more efficient. However, it may take years before the technology is widely used. Life business is less susceptible to e-commerce disruption because the products are not as simple as non-life products such as motor insurance is. However more innovative insurers are trying to take life sales online, as Janashakthi recently did with its Live Life digital product launch.

The essential product of insurance— protection from risk—has few apparent substitutes. Insurers have built substantial customer bases and in Sri Lanka where investment revenue has been decent, it has provided reliable profits. In an industry where further growth and innovation is gradual, but inevitable, Janashakthi has paved its way, rising from a small independent player to a position of challenging the leaders in less than a quarter-century.

With a renewed focus on the life business, Janashakthi is aiming to set itself up for the next milestone by charting a new strategy for growth.