Himalayan News Service

Kathmandu, January 25:

Bharat Mohan Adhikari, deputy prime minister and finance minister said on Tuesday that the government would set up a taskforce, comprising of industry people, to address the problems and issues of insurance sector in the country.

While inaugurating the third annual general meeting of Nepal Insurer’s Association, he assured of the government’s commitment to boost the private sector, saying that problems can be resolved with mutual understanding. “I’ll ask concerned authorities, including the ministry of finance and Insurance Board, to look after the issues of insurance sector,” he said.

On the occasion, Rajendra Kumar Khetan, president of NIA handed over a study report about ‘issues of insurance company in Nepal’ to Adhikari. The association has urged the government to simplify revenue and legal issues concerning the insurance business in the country. Dr Yubraj Khatiwada, member of National Planning Commission, urged insurance companies to explore new avenues for investment for existing liquidity in the industry. The liquidity could also be utilised through investment in bonds or project financing.

Dr Khatiwada also stressed on campaigning for mass awareness generation on insurance, as life insurance business has not been able to pick up as the non-life sector did in the last decade. Making a presentation, NIA president Khetan, asked the withholding of tax on payment of premium should be withdrawn, as it is creating unnecessary hassles in collecting tax certificates while submitting tax returns.

“To encourage general public in life insurance, tax rebate for life insurance premium of seven per cent or Rs 10,000 or whichever is lower allowed for deduction on taxable income should be treated as rebate on tax liability in uniformity,” he said.

The insurance industry should be treated in line with other service industries such as tourism and should be taxed at 25 per cent of corporate tax instead of the current 30 per cent.

Referring to the growth attained by the insurance industry, the report emphasises on establishment of a reinsurance company in Nepal. In the absence of such a company, about 13 per cent in life and 50 per cent in non-life insurance premium are flowing out in foreign currency to India and other parts of the world. Khetan added that motor insurance should be made mandatory, as practiced by other countries. Referring to the competitive environment created after Nepal’s entry into WTO, he said that mergers and acquisitions of insurance companies should be brought into practice. Madhav Prasad Upadhaya, chairman of Insurance Board, K B Basnyat, immediate past-president of NIA and R Mukherjee of Prudential Insurance also expressed their views on the occasion.