Despite Covid19, import of high priced motor supports Non-life Insurance

Kathmandu: Despite the sharp decline in the number of import of four-wheelers, the increase in the overall import price has made favourable impact on the the premium income of the non-life insurance sector.

The premium income of non-life insurance companies has been more than 22 percent in the last fiscal year 77/78. A large portion of the earnings of non-life insurance companies come from motor insurance.  Such earnings are more than 30 percent.

According to the Birgunj Customs Office, the main import point for vehicles, the import volume of double cab jeeps,bus, minibus, micro bus and off-road double cab jeeps has declined by 21 to 97 percent in the last fiscal year.  However, due to the increase in the overall import price, the collection of customs revenue from vehicles remained satisfactory. The revenue and the insurance premium both are based on the import price of vehicles.

According to the customs office, the import of bus, which are the most used in public transport, has dropped by 86 percent. A total of 39 buses worth Rs. 127.1 million have been imported in the last fiscal year 2077/78.  While in the previous fiscal year 76/77, 274 buses worth Rs. 729 million were imported.Bus body (external structure) imports have been declined by 97 percent. In the previous FY, 14,429 bus bodies worth Rs. 149 million were imported.  But in the last FY, 470 bus bodies worth Rs. 235.2 million have been imported.

Similarly, a total of 56 minibuses have been imported, which has declined by 63 percent. Mini buses worth Rs.96 million was imported last FY. The chassis (internal structure including engine) of the micro bus has declined by 53 percent.  37 micro bus chassis worth Rs 26.9 million has been imported.

The Covid19 pandemic has crippled public transport since last year.  Traders who have borrowed large sums of money from banks and cooperatives and invested in public transport including buses, minibuses and microbuses have been financially exhausted for a few years.

Overall imports of vehicles and spare parts increased:
Vehicles and spare parts worth Rs 31.61 billion have been imported from the Birgunj Customs alone.  In the previous year, Rs.  26.90 billion, according to data released by the Birgunj Customs Office.

Imports of jeeps, trucks and motorcycles increased:
According to the customs, there has been a modest increase in the import volume of jeep vans.  In the previous fiscal year 76/77, 6,284 imports were made, while in the last fiscal year 77/78, 6,294 Jeep cars and vans were imported.

Jeepcar vans worth Rs 6.55 billion were imported in the previous fiscal year, compared to Rs 6.93 billion in the last fiscal year. The third largest import truck in terms of price is the mini truck. The import of 1,780 trucks has resulted in the export of Rs 3.84 billion.  Truck imports have increased by 32 percent.

According to the data released by the Birgunj Customs Office, imports of motorcycles have skyrocketed by 77 percent to 1,60,905 units.  Rs. 9.29 billion has been spent on motorcycle imports alone.
Similarly, the import of tractors with a capacity of more than 1800 cc has increased by 133 percent in the last fiscal year. 12,716 tractors worth Rs 3.74 billion have been imported.

Third party insurance has been made mandatory before registering and renewing every vehicle including motorcycle, car, bus.Similarly, as most of the vehicles are purchased from banks and financial institutions for loan facility, the insurance of vehicles is also compulsory.  Therefore, even though the import volume has declined, the insurance premiums received by non-life insurance companies from motor insurance have not had much effect.

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