Enhancing services

Insurance companies in Nepal are underperforming despite managing to record an impressive premium growth rate each year. That is partly because the average citizen does not know what insurance is all about. For example, many people who could readily afford and invest in a variety of schemes have no functional idea as to what an insurance ‘policy’ is, or how buying it will help them. The laws governing different aspects of insurance are hazy, complicated and quaint, because of which clients are forced to wait for the result with great patience. Add to it the complications of two different policies — general insurance and life insurance — under one legal masthead and the extent of services the insurance companies can offer is automatically affected. Moreover, the juxtaposition of laws only adds to what is already a harrowing process of procuring insurance services.

The necessity for a change in the statutes governing insurance companies was long there. All that luckily seems to have registered now as a new draft for ensuring a stronger, competitive and vibrant insurance sector is on the anvil. It will also outline different functional etiquettes for life and general insurance policies. Auto tariff, third party insurance and surveyors’ category are also under consideration. Should that happen, it will be a major fillip to the sector as the legal jumble has been a hurdle in penetrating the market. Success of the sector, however, will be limited unless other reforms accompany the ensuing amendments. Litigation, bureaucratic tangle and endless cycle of delays have been a regular element of the sector. While it is true there is no shortage of those trying to claim compensation by adopting malpractice and fraud, the needy, however, must not be subjected to unwarranted delays and prejudices.

Another significant move has been to debar major loan defaulters from resorting to insurance coverage. That is a good way of saying the defaulters are a liability even for the insurers. Beyond that, the sector cannot always dominate the deal: clients can rarely look forward to insurance service at a short notice. The amendments will have to plug these loopholes so that the insurance sector emerges stronger while the public gets to benefit from a range of appropriate policies. The sector will also have to float several insurance policies aimed at the corporate world, the middle class that can afford new policies and the grass roots which has rarely been considered as a viable insurance base in Nepal. Looking at what the common man in India has by way of insurance will prove that those at the subliminal levels are not insignificant. Working out a feasible way will prove beneficial for the exchequer, as well as the insurance sector and the clients.