Kathmandu: In the last fiscal year, the insurance claim of the four old life insurance companies has increased by 59 percent while the reinsurance commission has declined by 29 percent.
As per the fourth quarter report of the last FY, the commission on reinsurance of Nepal Life, LIC Nepal, National Life and Mate Life Insurance has decreased by 29 percent and has been limited to a total of Rs.187.849 million. These four companies had earned a total commission income of Rs. 267.17 million in the previous fiscal year.
Met Life(American Life Insurance), which paid Rs. 3.51 billion in net insurance claims last FY, has the highest commission-earning income. Met Life has earned a reinsurance commission of Rs. 114.86 million in the last FY. In the previous FY, it had earned Rs.104.31 million. Last year, Met Life’s claim payments surged by 38 percent.
Compared to the previous FY, the revenue from commissioning has declined in the reinsurance of all three companies except Met Life.
Source: Unaudited 4th quarter report
National Life Insurance has the second highest reinsurance commission income. National Life has earned commission income of Rs. 32.64 million in reinsurance. Compared to FY 2076/77(2019-20), the commission income of National Life has declined by 26 percent. Insurance claims have increased by 43 percent. National Life has paid Rs. 3.95 billion in the last FY(2020-21).
Reinsurance commission of Nepal Life Insurance, which ranks third in terms of commission income, has declined by 69 percent. It had Rs.86.778 million reinsurance commission in the previous FY while the commission remained only Rs. 262.74 million during the last FY. Nepal Life had paid Rs. 8.78 billion claim in 2077/78(2020-21). Compared to the previous FY, Nepal Life’s claim payment has increased by about 47 percent.
Similarly, LIC Nepal, which paid net claim of Rs 7.35 billion last FY, has earned Rs. 14.55 million in reinsurance commission. LIC Nepal had earned commission income of Rs. 314.23 million in the previous FY.
Life or non-life insurance companies have been transferring their risk burden to the reinsurance companies. In this way, the insurers pay the reinsurance fee to the reinsurance company in advance on the basis of the nature of the insurance product and their business during last year.
In reinsurance, the company distributes the profit on the basis of the difference between the amount reimbursed for the year and the amount paid to the insurer for the insurance claim.