Sujit Prasad Shah .
This is a general phenomenon that most of the people believe insurance business normally covers risk and its benefit is long term perspective. However, there is vast coverage area of insurance and it can be benefitted from various aspects. Nepal is having about 25 percent people are involved with insurance as a result rest of the people are out of the risk covering zone. The main reason to insurance market is lack of proper guidelines, illiteracy, less income level, fraud, lack of information and technology. In recent days insurance business is trending in Nepal and rising day by day. Unfortunately, most of the Nepalese are still unaware about insurance and its market is very specific under this sector rather than expanding. Mostly, insurer targeted groups are high class family, job holders, refer group, entrepreneur, bankers and so on. But these are not only the insurance market and still lot of sector need to be capture. Such as, unemployed people, foreign worker, labourer, child, women, non-resident Nepalese and many more.
Furthermore, market of insurance sector is broad in developed country. And people of there get insured most of the goods and property such as household items, watches, mobile phones, accessories, and so on. In addition, they insured their travel plan as well when they are travelling to abroad for holiday and they do insurance of their pet animals too. Sadly to say that these trends are far away in Nepal. Therefore, they are more secure and they have back up plan to cover their risk, even they face financial crisis in case they lose their job and unable to work because of various factors such as illness, accident and other unavoidable circumstances.
Nepalese economy is unstable and lots of area need to be improve for strong economy. In the sector of insurance, it is not focus on minor group. However, there is various benefit of insurance in economic sector, such as once people get insured they pay premium where insurance company cover their risk as a result insured people have double benefit, firstly they get chance to save certain amount of money which might be minimal at initial stage but once insurance matured insured person get accumulated amount with bonus. In addition, insured person also get opportunity to borrow a loan from insurance company from their policy at any time by meeting the certain requirement.
Furthermore, insurance company capitalise their fund through various way such as investing in long term project, bank deposit, hydropower and so on. In this circumstances, Nepalese economy boom because fund is maximum utilising through various channel. Like economics principle say; expend money rather than saving. Suppose, a farmer has 1,000 rupees and he need to buy a pair of shoes but he holds his money without buying shoes as a result income of shoe shopkeeper has blocked. Similarly, shoe shopkeeper needs to buy a cloth but he could not buy cloth because of farmer hold a thousand rupees. In the same situation, cloth man needs to buy a book but he could not buy because his cloth was not sold. So, under this situation money has not utilised and it just hold without any capital formulation. If rupees thousand was spend at first stage then it would give maximum return via many channels as a result economy would strong day by day. Based on this scenario, insurance sector utilises their fund and help economy in many aspects to become healthier in certain time frame.
Moreover, still lots of area needs to bring in insurance business to utilise and accumulate the fund. Especially, many of Nepalese foreign workers are away of insurance and it have double loss. Firstly, their risk has not covered by third party, in case they cannot earn money because of accident and incident and have to return back home. Then, their life becomes more complex. Also, if they are earning limited amount of money but they did not get chance to save their money for future perspective which will give them best returns. On the other hand, insurance zone fund has not accumulated from this channel. And there is various sector would not get chance to invest the collection. Therefore, insurance sector has direct influence on nation development for stronger economy. When economy is strong the following benefit can be gained:
- Employment opportunity for better life.
- Increment in literacy rate.
- Qualitative health system.
- Better transportation facility.
- Effective use of information and technology.
- Better safety and security provision.
- Good governance and better administration system.
- Global connection in tariff and trade.
- Utilisation of digital world.
- Cooperation and co-ordination between various sector.
- Effective use of skilled manpower.
Therefore, insurance field is having huge potentiality to bring in performance. In addition, government can help low income group to support with insurance service by providing some subsidies. Most of the worker who are going to work in middle east and gulf country still need to bring in agenda for mandatory insurance policy. Because risk of those workers are not covered from third parties and they don’t have any back support for any unavoidable circumstances. If, there is compulsory insurance policy for people who are going to work in abroad, then there is less chance to fall in employment fraud. Because most of the reputed company will be eligible to hire the Nepalese worker. Secondly, manpower company would not be able to misguide the worker. Thirdly, Nepalese insurance market will broadly grow and help to invest their fund in various project as a result Nepalese economy would be stronger day by day and Nepalese worker get job opportunity in such project.
However, many of the non-resident Nepalese are not target under insurance market in home country. There is no doubt, they are significantly earning higher amount compare to Nepal and having better life. But they are not insured in Nepalese insurance company. They can bring large sum premium in this sector. There are many positive vibes to cover this sector. Firstly, they will get more connected to Nepal. Secondly, insurance sector will be more focus to provide world class customer service in insurance industry. Thirdly, competition will increase day by in insurance market to gain better brand and goodwill image. Most importantly, Nepalese economy will bring huge amount of money through this strategy and it will help healthier economy in certain time frame. Also, non-resident Nepalese will gain double side profit such as their risk will covered and once they will get their maturity claim; this money will help to down payment of buying the house, help to buy land and pay university fee for their children in world class reputed university. On the other side most of the banks are not paying interest on deposit in abroad if they pay then it is very minimal. So, money would get invested in appropriate sector for higher return. Thus, this area has broad potentiality to help in Nepalese economy for stronger side and need to bring in to consideration by insurance industry.
Moreover, medium and small class entrepreneurs also need to be targeted to cover in insurance sector in Nepal. Such as grocery shop, clothes shop, stationary, readymade shop, restaurant, street shop and seller and so on. As they are still unaware about insurance. Though some of them are involved but still many has to bring under this umbrella. Suppose, these sectors have covered and brought in insurance sector then it will also help to collect premium, which can be invested in infrastructure. Suppose the fund has invested in road sector then linkage of Nepal will connect from one to another place. So, apple of Humala- Jumla can easily delivered to Nepalese market. Similarly, basic needs food item such as; rice, oil, salt, wheat can be supply to Humala-Jumala and local people of this place will have better life and fulfil their basic requirements. This is the only example but still many things are need to be cover under this circumstance. More importantly, local people of this zone can be brought in to insurance platform too.
Same as Nepalese farmer are far away from insurance, most of them even unaware about insurance so this area also needs to be taken into consideration. Because, Nepalese farmer are providing direct effort in food supply even though their hard work are not well paid. They are frustrating day by day and this is one of the reason for foreign employment of Nepalese youngster. It is clear that they are not able to afford insurance premium easily. But still, Nepal government can help to insure them by bringing suitable plan and strategy. Such as buying their goods in reasonable price and encouraging them to get insured by paying their certain percentage of premium. Then Nepalese farmer will be more encouraged to involved in agriculture sector. On the other side youngster will change their mind to going in middle east to face lots of challenges for employment. They will prefer to work in home country and staying with their beloved family and friends. Similarly, insurance business would get opportunity to capitalise fund and invest money in specific project suppose in transport sector. As a result, Nepalese people will get better transport facility and it will help to speed of daily work in many fields. Finally, there is no doubt, export would increase and import of Nepal would decrease because agriculture sector productivity will certainly grow through this channel. Nepal is having about 12:1 import export ratio or import is twelve times higher than export in Nepal which is huge loss and Nepalese currency is utilising in foreign trade rather than domestic market.
On the other side, private sector education and health are rapidly increasing day by day in Nepal. Where most of the work are not well paid to employee. Despite facing those problem, such worker does not have any option to utilise their skills in better place and they are more frustrated because Nepalese job market are not in better situation where people can easily get any opportunity. There is huge gap between graduate and job opportunity in the recruitment sector in Nepal. This is the one reason most of the adult are opt to abroad study to face many challenges and hassle. This have also huge loss impact of Nepalese economy. International students are paying higher amount of fee in foreign institution. As a result, large sum of money transferred day by day from Nepalese banking sector into abroad higher institution.
Suppose, Nepal government brought legislation to mandatory insurance policy of private sector worker by employer then employee will be more secure and some extent they will be motivated towards their job and no doubt productivity would be effective. On the other side, fund collected through this channel could be invest in better education and health sector as a result this two sectors would get chance to deliver better service where lots of employment would be generated. Nepalese youngster will attract to study in Nepal rather than going abroad for higher education. And this fund will capitalise and utilise in Nepalese economy for development phase. On the other side, education and health industry will be able to deliver world class service in domestic market. Nepalese patient will not have to go other country for their treatment and they have to spend large sum of money. They will feel more secure to receive treatment in homely environment rather than feeling unsecure about health consultation. Even though some time they cheated while buying health service from this sector.
To conclude, there is no doubt still lot of things need to bring in insurance market where various potentiality and opportunities are available which will directly help to growth of Nepalese economy. Though, its not easy to brought all aspect at beginning phase but still stage by stage this can be brought into implementation. Such as appropriate business strategy, suitable plan, expert ideas, involvement of regulatory authority, local government, central government and so on. This all group can work together to promote insurance business to grow Nepalese economy. Moreover, after focusing on above mention area such as, non-resident Nepalese, foreign worker, entrepreneur, street seller, farmer and many more. Premium collection from this all sector will be huge budget which can be invested in various field. Hence, many more people will directly and indirectly benefitted and Nepalese economy will be healthier day by day. On the other side, people life style would change during specific time frame. Nepal can be business hub and transit point of the world. Globalisation system would be connected for various purposes such as tariff and trade, flight business transaction, utilisation of local resources and worker.
Therefore, at last we can easily determine there is huge potentiality of insurance industry in Nepal and this will directly help Nepalese financial sector. Then Nepal will not be only proud of tallest mountain of the world like “Mt. Everest” but also for world class business hub. As a result, more tourist will attract to see Nepal not only for sightseeing and natural resources aspect but also to gain business experience. Though, it cannot be done in short period of time and certainly it will take longer duration. But to reach this stage, Nepal government and insurance industry need to make a suitable strategy and consulting expert of this sector. After that, bringing the agenda in implementation and involving people through various channel certainly it will give positive result. Most important fact is that, Nepal is having enough skills labour, talented manpower, sufficient supply of worker, unfortunately Nepal is not in the position to benefit from this all group. Unfortunate to say manpower resources wasting without utilisation and once we compare with monetary value of this resources then our nation is losing huge amount of money from this sector. Thus, it is clear that Nepalese economy can be strong by taking the advantages from various sector and utilising them in effective way.
‘Shah is MBA graduate one of the reputed university of United Kingdom and currently working as an Assistant Manager at Rastriya Beema Sansthan’