The Board, in order to be more effective, commenced the Risk Based Supervisory system, which is continued to date. This is the system that the world is moving towards. This method assesses the risk that an organization is facing and how well the management is dealing with those risks. In this system supervisory attention is focused in assessing the quality of the Boards and senior management in managing the risk they face in running the organization. This method will make the regulator move away from detailed rules based supervision to a greater extent.

The insurance industry is now operating in a completely tariff free market and therefore measures are required to be taken to ensure their stability. The tariff regimes in respect of Motor Insurance, Fire Insurance and Workmen's Compensation Insurance were deregulated with effect from 1st January 2002, 1st January 2005 and 1st January 2007 respectively.

The Board under section 98 of the RII Act is empowered to settle disputes relating to settlement of claims on policies of long term insurance business by which the sum assured does not exceed such sum determined by the Board. The Board has determined such amount to be Rupees Hundred Million. The Board initiates investigations into complaints received by it and makes orders in that respect. The Board observes that issues regarding claims have arisen mainly due to unethical practices of insurance agents and ambiguous policy wordings. These matters have been brought to the attention of the respective companies.

Insurance Ombudsman Scheme was set up in 2005 by the Insurance Association of Sri Lanka with the approval and concurrence of Insurance Board of Sri Lanka. The objective of the Ombudsman Scheme is to enable the Ombudsman to deal with reference in relation to complaints and claims arising out of policies of Insurance effected in Sri Lanka by Policy Holders against their Insurance Companies. According to the MOU entered between the IASL and the Ombudsman, decision made by the Ombudsman is binding upon the insurer if the award in relation to a resolution of any complaint/dispute is up to Rs.500,000/-.

Booklet on the Insurance Industry (Sinhala) authored by Mr. Nimal Perera, a prominent insurance professional was translated to Tamil language. The booklet is published and available at the Board for general public. Two brochures, one outlining the constitution of the Board, Mission, Functions, and Activities etc. and the other brochure explaining the facts to be considered when buying an insurance policy, insurance agent, insurance broker, and resolving complaints etc. are available at the Board for public use. Additionally, two booklets; one is an introductory guide to help understand the insurance titled "Know more about insurance" and the other "Life Insurance", which emphasizes the need and importance of having a life assurance product, are also available at the Board. Further, the board published two more brochures with a view to educating the public regarding the facts to be considered when buying life and general insurance policies.

The Board conducted discussions with the academics of the Uva Wellassa University of Sri Lanka and National Institute of Business Management (NIBM) with a view to disseminating the basic technical knowledge needed by the practitioners in the insurance industry. These discussions were based on methods to enhance knowledge within the insurance industry for the mutual benefit of university students & academics, and the insurance practitioners. During the discussions, the importance of having long-term and short-term strategies to develop the insurance education in the country was discussed. The Uva Wellassa University of Sri Lanka and National Institute of Business Management (NIBM) have initiated a Postgraduate Diploma in Actuarial Science and a Diploma in Insurance respectively, with the intention of giving basic technical knowledge in actuarial science and the subject of insurance to the insurance industry practitioners.

The Insurance Association with the concurrence of insurance companies drafted a code of Best Practice. The document has been circulated amongst all insurance companies for voluntary adoption. The Board will be monitoring compliance with the code during its on-site supervision. This document is titled "Code of Ethics for Insurance Companies".

In terms of Section 79 of the RII Act, it is mandatory that all registered insurance brokers and all applicants seeking registration are members of the Sri Lanka Insurance Brokers' Association. The members of the Association are subjected to a "Code of Conduct" formulated by the Association. The Code was first introduced in 1988 and is required to be complied by all members of the Association.

The International Association of Insurance Supervisors (IAIS) in its Insurance Core Principle six (6) "Licensing" and the Insurance Core Principle seven (7) "Suitability of Persons" has addressed the importance of possessing "fit and proper" guidelines/ provisions in the insurance law and compliance of same. These Insurance Core Principles issued by the IAIS provide a globally accepted framework for the regulation and supervision of the insurance sector. Section 32 of the RII Act specify qualifications of the "Specified Officer" of an insurer and Section 94 requires the Board to determine the qualifications of the "Principal Officer" of an insurer and insurance broker at the time of appointment. However, "fit and proper" provisions are not stipulated in the RII Act. In view of the importance of having persons with competency and integrity to conduct insurance business, the Board drafted provisions relating to fit and proper persons to be included in the RII Act.

The insurance companies maintain an updated database on a continuous basis on a separate web page in individual websites of the companies giving agent’s information with access to the IBSL. This arrangement is in compliance with a provision of the RII Act, where it requires agent’s information to be filed with the regulator.