Kathmandu. The Insurance Authority of Nepal (NIA) has put pressure on the Insurance Regulations 2081 to impose a provision regarding the expenditure limit for the incentive per agent. The authority has warned the insurers not to distribute incentives against the provisions of the regulation and warned that the expenditure on the date after the implementation of the regulation will be invalid. <\/p>\n
Sub-rule (2) of Rule 44 of the Insurance Rules provides that in addition to the amount of commission as determined by the Authority, the incentive amount may be provided on the first insurance premium of life insurance not exceeding the limit fixed by the Agent Authority. Prior to the implementation of this provision, the life insurer was distributing an expense equal to 18 per cent of the total collected first insurance premium in addition to the commission for agent expenses. <\/p>\n
Life insurers have been limiting the annual total first insurance premium income within the limit of 18 percent of the annual incentive amount for the year. However, the regulation provides that the amount of incentive provided to each agent individually should not exceed 18 percent of the first insurance premium collected by him personally. <\/p>\n
The insurer argues that it is necessary to provide incentives to experienced agents as they enter the insurance profession. There are very few people who want to join the agent profession, in such a situation, it is not easy to recruit an agent. The role of experienced agents is necessary in such work. Who go door-to-door to identify potential people, motivate them, train them for licensing, and join the profession. <\/p>\n
Chief Executive Officer of Citizen Life Insurance Poshan Raj Poudel, who is also the outgoing president of the Life Insurance Association, said that the provisions of the regulation try to bypass the three-tier structure of agent-leadership. “This provision of the regulation is completely impractical,” he told Insurance Khabar, “It is unimaginable in the current situation that the scope of insurance will expand and life insurance will be sold without the network of three layers of agents in the Nepali market.” \u2019<\/p>\n
Sushil Dev Subedi, executive director of the Insurance Authority, said that the insurers should fully comply with the provisions of the regulation regarding agent incentives. “Insurers complain that the provisions of the regulation are impractical and make business difficult,” Subedi told Insurance Khabar, “Unless the regulation is amended, nothing can be done immediately (on the part of the authority) in this regard.” \u2019<\/p>\n
According to the insurer, when analyzing the continuity of agents in the life insurance sector, 60 to 70 percent of the new business is contributed by new agents. Even if they work actively for the first few years, at a certain point, the old agents reach saturation or gradually start becoming inactive and new ones start occupying the space. To continue this cycle, it is necessary to recruit more and more new agents. <\/p>\n
The alternative distribution system of life insurance distribution is not well developed. The ‘bancassurance’ service (the bank selling insurance policies like an insurance agent) that is being practiced all over the world is banned in Nepal. The Nepal Rastra Bank has banned it on the conclusion that the employees of the bank have misbehaved. The share of term insurance sold directly through digital means is very low. <\/p>\n
In the life insurance market of Nepal, the contribution of term insurance and foreign employment term insurance is only Rs 3 billion each. The contribution of this type of insurance to the new business is only 5.7 percent. Of this, foreign employment term insurance is sold directly (online) as compulsory insurance. Microfinance and cooperatives have contributed to the distribution of term insurance as institutional agents. <\/p>\n
The insurer complains that the insurance authority is still not clear in policy on whether to encourage or discourage individual agents in expanding the reach of insurance. What should be done to encourage or shrink the role of the agent, develop other distribution systems in parallel with the agent? The insurer has commented that there is a policy confusion on the issue of promoting alternative distribution system. <\/p>\n
“No one comes to buy life insurance voluntarily like those who come to deposit deposits in banks,” said Poudel, the outgoing president of the association, adding, “If there is an impression that an agent is not good to work, then the expenses of the company will increase in the long run.” \u2019<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The Insurance Authority of Nepal (NIA) has put pressure on the Insurance Regulations 2081 to impose a provision regarding the expenditure limit for the incentive per agent. The authority has warned the insurers not to distribute incentives against the provisions of the regulation and warned that the expenditure on the date after the implementation […]<\/p>\n","protected":false},"author":5,"featured_media":316238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45057,45031,45152,45159],"tags":[],"class_list":["post-316254","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-abhikarta-en","category-banner-news-en","category-life-insurance-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/316254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=316254"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/316254\/revisions"}],"predecessor-version":[{"id":316255,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/316254\/revisions\/316255"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/316238"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=316254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=316254"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=316254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}