Kathmandu: Life insurance companies have paid above 30 percent of their new business against the surrender value to their policyholders. According to the data unveiled by Nepal Insurance Authority, in the month of Paush of the current financial year 2079-80, life insurers have paid a total of Rs. 847.30 million to their policyholders against surrender value.
In the month of Paush alone, life insurance companies earned Rs. 2.90 billion. Life insurers faced the surrender of 6,782 policies in the month of Paush 2079 only.
Nepal Life Insurance (NLIC), the market leader in terms of business volume, has made a loss in real after the adjustment of the surrender value paid by it in the month of Paush only. Its surrender value payments account for 98 percent of its first insurance premiums income generated from new business. NLIC earned Rs. 3.5 million from the sales of foreign employment insurance(FEI). Similarly, the insurer collected Rs.1 lakh 72 thousand insurance premiums from micro-term plans. When deducting the FPI received from FEI and Micro Term from the total FPI, the insurer has a surplus of Rs.1 crore only from the sales of traditional plans.
The state-owned life insurer, Rastriya Beema Sansthan, faced the highest amount of policy surrenders in comparison to new business income. The insurers paid out Rs. 77.3 million against surrender value while its FPI was Rs. 36.4 million in the review period.
LIC Nepal paid Rs. 82.3 million against surrender value which amounts to 33 percent of its FPI in the month of Paush alone. Similarly, National Life Insurer paid Rs. 293 million surrender value in the same period. It accounts for 28 percent of its news business.
Met Life paid Rs 3.6 million against surrender value which equals to 29 percent of its FPI in the month of Paush 2079. Similarly, Asian Life Insurance paid 19 percent of its FPI in the same month.
During the month of Mangsir 2079, 47 percent of the FPI of life insurance companies was paid out against surrender value.
