The profits of non-life insurance companies in Nepal have been significantly impacted in the first quarter of the current fiscal year due to over Rs 10 billion in claims stemming from floods and landslides that occurred in late September. According to financial statements released by 14 non-life insurance companies, their total profit plummeted by 86% this year.
In the first quarter of the previous fiscal year, these companies collectively earned Rs 1.19 billion in profit. However, during the same period this year, their total profit dropped to just Rs 166.5 million. Among the 14 companies, the Oriental Insurance, National Insurance, Sagarmatha Lumbini Insurance, and United Ajod Insurance reported losses. Meanwhile, the profits of Neco Insurance, Siddhartha Premier Insurance, NLG Insurance, and Nepal Insurance have also declined.
Nepal Insurance experienced the sharpest drop in profit, declining by 92.88%, followed by Siddhartha Premier Insurance with a 54.30% reduction. The profits of Neco Insurance and NLG Insurance saw marginal declines. Conversely, companies such as National Insurance Company, Shikhar Insurance, Himalayan Everest Insurance, IGI Prudential Insurance, Prabhu Insurance, and Sanima GIC Insurance reported profit growth.
"The profits of all non-life insurance companies have been adversely affected by the substantial claims related to flood damages," said Sunil Ballav Pant, CEO of NLG Insurance Company, in an interview with New Business Age. He emphasized that this was the primary factor behind the sharp decline in profits.
According to the Nepal Insurance Authority's data up to November 5, claims amounting to over Rs 10.53 billion were filed due to damages caused by floods, landslides, and other natural disasters. However, as of November 6, insurance companies disbursed only Rs 471 million in claim payments. "Even though the claims settled so far are relatively low compared to the total claims filed, we are required to make provisions for these claims, which has impacted profitability," explained Pant. He further noted that the large volume of sudden claims has strained the financial performance of insurers.
The National Disaster Risk Reduction and Management Authority's recent report estimates economic losses of Rs 46.68 billion from the September landslides alone. Pant warned that the increasing frequency of natural disasters, exacerbated by climate change, poses a growing risk to the insurance sector. "In the context of climate change, the risk of natural disasters is rising in Nepal, leading to a higher probability of significant insurance claims in the future," he stated.
