The process of formation of the SICL took place in 1989,when a NGO called 'Forum of Development' (FOD) conducted a survey to identifiy the more popular voluntary organizations in the area of Warakapola in the Kegalle district. IT was a project designed to promote development skill of voluntary oraganizations. The main findings to be covered in the study where how villagers were organized into voluntary oraganzations and how funds were built and administrated to help people in need. IT was revealed in the survey that Funeral Aid Societies (FAS) were most popular and active oraganizations at the village level with a high degree of participation due to thair need based approach of providing assistance, when there is a family calamity such as death of breadwinner or the caretaker of children and elderly persons. It was further revealed, that FAS were strong with well-built funds.
In the light of this information, representatives of FAS were motivated by FOD to design and implement an insurance scheme of their own. The insurance scheme designed by them was named "Ahethuka Wipath Awarnaya" (risk coverage against unfortunate perils). Benifits under the scheme included death cover and disability caused by road accidents, occupational hazards, falling from height and trees, poisoning , fire and lighting, floods and snakes bites, which where concidered as common perils faced by the poor.Premium charge for the above insurance scheme varied from Rs:5.00 to Rs:20.00 in propotion to the sum insured agreed upon by the insurer.
The scheme was inagurated in October 1991 with a praticipatory membership of 182 members of Sanasa Societies and Funeral Aid Societies (FAS). With the passage of time the number of participants of this scheme incr4eased so rapidly Sanasa decided to set up SICL and to abtain License tp operate life insurance business in 2003 and to operate General Insurance in 2005.