Kathmandu: The ongoing liquidity crunch in the financial market has resulted high number of policy surrender in recent months. The life insurance companies have been facing increasing number of policy surrender amid the ongoing economic recession and the liquidity crunch among bank and financial institutions (BFIs).
Bank and financial institutions have limited funds to offer as loan, so people are exploring every possible means to get cash and life insurance policy surrender has been chosen as one of those limited options.
According to the Nepal Insurance Authority, life insurance companies have paid Rs.1.11 billion surrender value against Rs.2.02 billion first premium income (FPI) in the month of Kartik 2079. The amount of surrender value paid accounts 55.39 percent to the FPI. In the month of Ashoj 2079, the share of money paid against surrender value was 48 percent of FPI. In the month of Kartik, 6,646 policies have been surrendered.
In the month of Kartik, the surrender value paid is higher than the FPI of three life insurers including LIC Nepal, Asian Life and Guransh Life Insurance. LIC Nepal has earned Rs.152.8 million FPI against the payment of Rs. 390.9 million surrender value.
Similarly, Asian Life Insurance has earned FPI Rs. 84.4 million against payment of Rs.116.65 million surrender value in Kartik. Guransh Life has also earned a FPI of Rs.15.2 million against the surrender value payment of Rs.19 million. The surrender value payment of Guransh Life Insurance has surpassed the FPI in the month of Kartik.
Even the state-owned only life insurer, Rastriya Beema Sansthan too is not away from the pressure of policy surrender. While Sansthan has earned FPI Rs.41.7 million against Rs. 39.2 million surrender value payment.
The surrender value payment in comparison of the FPI is 97 percent for Surya Life Insurance. Surya Life has FPI Rs. 125.66 million in Kartik against the payment of surrender value Rs.122.71 million. Nepal Life has paid the second highest amount against surrender value. It has paid Rs. 282.4 million in the same period.
