Nepal | January 26, 2021

Govt policies help life insurance sector growth

Himalayan News Service
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Kathmandu, July 7

The life insurance market in Nepal has been growing not through the marketing efforts of insurance companies or the growing awareness among the general public to get themselves insured but due to some of the government policies that automatically help the market expand.

The foreign employee insurance policy, which is a temporary policy purchased by migrant workers, covered around 50 per cent of the total number of life insurance policies issued by eight life insurance companies of the country, according to the Insurance Board.

Data from the Insurance Board, the regulatory authority of the domestic insurance market, reveals that most of the life insurance policies being purchased are not due to public awareness but as a result of the compulsory rules that the government has introduced for outbound workers.

According to the regulatory authority, the eight life insurance firms in operation in the country issued over 2.3 million life insurance policies in fiscal year 2015-16, of which the share of foreign employee policies stood at over 1.1 million, which is 49.35 per cent of the total policies sold.

According to IB, in fiscal year 2014-15, a total of over two million life insurance policies were issued by the eight life insurance companies. Back then as well the share of foreign employee policies stood at 45 per cent of the total policies sold, which translates to altogether 912,219 policies.

In fiscal year 2015-16, a little over 1.4 million non-life policies were issued by 17 non-life insurance companies in the country, whereas the number of total non-life policies issued in the previous fiscal was one million.

Insurance specialist Rabindra Ghimire said that this trend is not a good sign for the development of the life insurance market in the country. “For the life insurance market to thrive in the country the number of term policies should increase and not just temporary policies,” he added.

The government has introduced a compulsory provision of life insurance for people who wish to go abroad for foreign employment.

A version of this article appears in print on July 08, 2017 of The Himalayan Times.

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