Kathmandu. Nepal’s insurance sector has emerged as an emerging giant industry in recent years. Although Nepal’s insurance access and contribution have been satisfactory compared to countries like Bangladesh, its internal structure has not been strengthened yet.
According to the latest statistics of the Nepal Insurance Authority, the last fiscal year 2081. According to Province 82, the penetration of insurance in Nepal has reached 48.33 percent. At first glance, it is very good, but it has a large share of foreign employment insurance and term life insurance.
If the mandatory insurance is removed, then the scope of voluntary life insurance will be reduced to only 17.70 percent. Even if the number of term life insurance mandated by microfinance to secure loans is also removed, then the real share will be limited to around 7 percent.
Currently, insurance penetration rate in Nepal is around 3.72 percent of GDP. This figure is higher than that of some of its neighbors in South Asia. The total insurance premium collection is Rs. The size of the market is reflected in the size of the market.
Despite all this, a large proportion of Nepal’s population is still outside the reach of real and sustainable insurance coverage. For this, structural and policy reforms are needed.
The micro insurance companies, which have been issued licenses to serve the sole purpose of spreading micro insurance, are stuck with big insurance companies to seek shares in foreign employment, loan protection and motor insurance. The research, development and practice of the insurance scheme suitable to the soil of Nepal and compatible with the purchasing power of the insured has not been carried out.
Nepal Insurance Authority (NEA) is now emphasizing on implementing risk-based supervision and financial reporting system as per international standards. While these regulatory reform initiatives are underway, there are still some serious challenges before the regulator.
Still, there are widespread complaints that the insured do not get the claim payment on time. The regulator has not been able to provide concrete incentives to take big city-centric businesses to the rural level. The main challenge of the NEA is to establish micro-insurance companies opened for the low-income group.
The weakest aspect of Nepal’s insurance market is its style and practice. In the case of insurance in Nepal, there is a saying that ‘insurance is not bought, but sold’. In this market with more than 4 lakh active agents, there is a tendency for agents to sell insurance policies by giving more priority to savings and returns than the safety aspect of insurance.
