Renewal Premium May Be The Last Resort for Life Insurers

Kathmandu:  Life insurance companies are targeting renewal premium income to sustain during the ongoing pandemic.New business has been contracted due to zero mobility of agency network across the country.

The second wave of Covid19 has limited the operation of life insurance companies.

Though the first wave of Covid19 didn’t made significant human casualties in life insurance service sector,the second wave is proving tough this time. More than one dozen of life has been lost including staff and agency.

The local administration in Kathmandu valley has not allow to run branch offices of insurance companies. Similarly, out of the valley too very few branch offices are operational with limited service delivery.

Due to inability to sell new insurance policies, most of the companies have started focusing on collecting renewal premiums for old policies.

Older life insurance companies have the largest share of renewal premiums.  Even though they have not been able to bring new business in the current situation, they have started urging the existing insured for renewal premium payment.

Bringing a new business is best for the company but not possible now.  Despite the Covid-19 infection, insurance companies are encouraging agents to bring new businesses.

Now all the companies have started requesting for renewal premium through their SMS, email and mobilising employees and agents through different means of communication.

To attract renewal premiums, some insurance companies have come up with interest waiver against late payment. Some other companies too are preparing to waive interest.  The chief executive officer of an insurance company informed that work is being done in coordination with various payment service providers for the payment of premiums.  Insurance companies make good profits from renewal premiums.  Issuing a new policy costs a lot.  Agent commission and other expenses are high.  It is also an easy way for an insurance company to reduce costs during the current ban.

The digital payment service providers like Esewa, Fonepay, IME pay, Prabhu wallet, Khalti, connectips are proving effective to collect renewal premium.

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