It was formed by nationalizing the insurance industry which was run by various local and foreign private companies.

In 1988, the insurance field was liberalized by permitting private companies to enter the industry.

It was subsequently sold to the "Distilleries-Spence Consortium" under the Government Privatization Plan in April 2003.

[5] In 2007, a case was filed in the Supreme Court challenging the privatization of Sri Lanka Insurance Corporation citing the revelations of this report.

The treasury was ordered to pay the purchase consideration back to Distilleries Consortium.