Kathmandu. The number of policy surrender in Union Life Insurance is sky rocketing. Due to poor underwriting and wrong selling, the company is facing highest policy surrender in the life insurance industry.
As per the unaudited financial report of the fourth quarter of FY 2077/78, above 11 thousand insurance policies have been surrendered by it’s policy holders. Its an alarming number. The poor bonus rate of the FY 2075/76 is also a reason behind the policy surrender.
The claim payment has also increased by 105 percent as the number of insurance policy surrender has increased. The company has paid a claim of Rs.1.87 billion.
Recently, the Insurance Board has made an arrangement not to allow for policy surrender until the completion of three years of policy commencement. The new directives will favor companies like Union Life Insurance, which have poor bonus rate.
The company’s bonus rate has become weaker among the life insurance companies as it had tried to attract the insured by introducing an insurance plan that gets a refund of 5 percent every year. The company has increased its premium income by 45 percent in the last fiscal year but its profit has declined by 21.48 percent.
The policy bonus rate issued by the company for the fiscal year 2075/76 has a minimum of Rs 20 per thousand. While the bonus rate issued for the fiscal year 2074/75 has a minimum of Rs. 40 bonus rate.