Tough time for Life Insurers at FY closure

Kathmandu.: At the end of the current financial year, the branch managers of insurance companies are very anxious to achieve the annual business target. The tightened rules imposed by the regulatory authority, Beema Samiti, has left very narrow space for the insurer mainly life insurers to acquire business through ill practice. Last year, most of the life insurers enjoyed the business growth based on the single premium insurance policy. But this time the regulator has not left any space to issue policy loan immediately after issuing the policy.

How are they managing the source of money?

Branch managers, however, are under pressure from top management to meet their business target. Managers say that every possible effort is being made to achieve the target. They admitted that they are trying to sell life insurance policies by contacting potential insured and promising agents even till late at night. Branch managers and agents are obliged to manage the source of money for issuing insurance policies even on loan.

The current financial year 2077/78 will end on 31 Asar 2078(15 July 2021) . Nepali financial year runs between mid-July to mid-June. Unlike last year, the regulatory authority has strictly directed insurers not to issue any policy against a cheque unless the payment is realized. Earlier there was practice to continue to issue policy before realizing the cheque and even after the end of the FY. Till the 10th of first month of next FY the insurers used to issue the policy on back date. This practice was rampant to among life insurers till last FY.

The branch managers have shared that they are making arrangement of fund by taking loan facility from their employer under the employee loan, pouring the amount of personal savings, borrowing money from others, taking loan against the policy document of their own name. Even if the actual insured do not pay the required amount for the first premium, the agent or the branch manager will pay the premium on the basis of mutual trust. In doing so, they will receive regular commissions for selling insurance policies as well as additional benefits.

But this time, the second phase of the Covid19 pandemic has hit the business sector hard and hit the public’s remittance income, regular income and savings. According to the agents, it is difficult for the public to pay insurance premium for a large sum assured as they are unemployed for a long time or their source of extra income has ended up.

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