Access to Insurance Among the Population Declines

KATHMANDU, August 15: Despite the government's policy aimed at increasing the population of insured, the proportion of insured individuals decreased in the last fiscal year (FY 2023/24) compared to the previous year. Stakeholders attribute this decline to the overall reduction in economic activities in the country, which has affected access to insurance.

According to the Nepal Insurance Authority (NIA), as of mid-July 2024, 43.27 percent of the population was covered by general insurance, including term insurance, short-term insurance, and foreign employment life insurance. This marks a decrease from the previous year, where 44.38 percent of the population had insurance coverage.

Sushil Dev Subedi, spokesperson for the NIA, explained that the decrease in economic activities has directly impacted the expansion of insurance.

"The recession in economic activities has also affected the expansion of insurance," he noted. "While the number of insurance policies has decreased, the collection of insurance premiums has increased."

In FY 2023/24, the number of insurance policies dropped by 1.81 percent, totaling 13.88 million. However, insurance premium collection by companies saw a 9.82 percent increase.

In FY 2022/23, life insurance companies collected Rs 142.35 billion in premiums, which rose to Rs 156.33 billion in FY 2023/24. Subedi suggested that although the number of policies decreased, it indicates that people are insuring larger amounts.

The President of the Life Insurance Association, Nepal, and Chief Executive Officer of Citizen Life Insurance, Poshakraj Paudel, in an interview with New Business Age, mentioned that the recession's impact on the economy has also affected insurance companies' business. He stated that increased economic activity would lead to higher incomes for the general public, which in turn would expand the insurance market.

Over the last year, there has been a slight increase in the business of non-life insurance companies. In FY 2023/24, non-life insurance companies collected Rs 41.46 billion in premiums from the sale of 2.977 million insurance policies, marking a 3.11 percent increase compared to the previous year. In FY 2022/23, these companies collected Rs 40.21 billion from 2.792 million policies. According to the NIA, the number of insurance offices increased by 6.53 percent to 2,948, and the number of employees grew by 4.28 percent to 11,685.