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Understanding the Value of Life Insurance in Nepal

Explore the growth and regulations of the life insurance sector in Nepal, its contribution to GDP, and key legal and economic environments. Learn about technological advancements, international influences, and socio-cultural factors affecting insurance practices.

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Understanding the Value of Life Insurance in Nepal

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  1. ‘ जीवन को मुल्य, बुझेकोछौ हामीले ’ JANANI INSURANCE दीर्घायु भव!

  2. Life Insurance: Preamble 18 life insurance companies Paid-up Capital: Rs 25.42 billion (Ashadh end, 2075) Avg. Growth in Gross Premium Collection (64/65 – 72/72): 28.73% p.a Employees: 3,388 (74/75 end) Insurance Agents: 3,86,977 (74/75 end) Contribution to GDP: 2.32% (73/74 end) Investment amount: Rs 177.814 billion (74/75 end) Penetration rate: 5% life, 12% (life, Non-life) of Population Source: Insurance Board (IB)

  3. Life Insurance: Preamble Source: Economic survey, 2074/75

  4. CONSTITUTIONAL & POLITICALENVIRONMENT C,P Part 4(51): Policies relating to basic needs of citizens; “to arrange for access to medical treatment while ensuring citizen’s health insurance.” Schedule 5, Clause (1) of Article 57,109: Insurance Polities, Jurisdiction of Federal Govt. (Federal Power) Remarkable growth in Post liberalization era 1992, 5 insurance companies  2018, 26 insurance companies Govt. Policies in Agriculture & Micro insurance Govt. subsidy: 50% on premiums of Crops, Livestock, poultry (FY 2070/71 onward)

  5. LEGAL & REGULATORYENVIRONMENT Insurance Act 2049: Sec 10, 12(A), 13, 19, 36, 41(B) Insurance Regulation 2049: Sec 4, 7, 11(A), 16, 31 ‘Insurance Bill 2075’: • Sec 3: Formation of ‘Nepal Insurance Authority’ • Suggest ‘National Insurance Policy’ to govt. • Sec 70: Insurer shouldn’t do • Sec 78: Licensing to Micro-Insurance Company • Sec 100: Supervision • Sec 116/117: Merger & Acquisition • Sec 133: Provincial insurance business operation • Sec 143: Penalty C,P,L,R

  6. LEGAL & REGULATORYENVIRONMENT ‘Insurance Bill 2075’: • Sec 156: Insurance Information Centre • Sec157: Formation of Insurance Institute • Securities Act 2063, Companies Act 2063, Labor Act 2049, Foreign Exchange act 2019, Insolvency Act, FITTA 2049, Industrial Enterprise Act 2049 • Insurance Board: Sec 3, 5 members, 4 years tenure, • Sec 8: Function, duties & power: Suggesting Govt. in framing policies , prescribe priority sectors of investment, arbitrate disputes, issue directives, protection of interest of insured • SEBON, Office of Company Registrar, MOF C,P,L,R

  7. ECONOMIC ENVIRONMENTEnvironment Insurance sector Contribution to GDP: 2.32% (73/74 end) Rs 10-12 billion p.a goes out of Nepal for Re-Insurance (72/73) Policy of Mandatory Insurance of Govt./Public property & Infrastructures Ratio of Insurance Premium to GDP: 72/73: 2.09%, 73/74: 2.05% Risk management practices are traditional Guided lending practices: • Life: min 75% investable fund • Non-life: min 65% of investable fund (Govt.Securities,TB,MF,A/B class Promoter shares, Debentures, Public shares (<= 5%)) C,P,L,R, Ec Source: Economic survey, 2073/74

  8. ECONOMIC ENVIRONMENTEnvironment C,P,L,R, Ec Source: Insurance Board (IB)

  9. technologicalEnvironment E-Insurance, 2016: www.ebeema.com , Compare/Purchase Insurance policies Insurance Integrated Software, under annual plan budget of IB for FY 2075/76 Bancaassurance, 2006: Capitalize resources of BAFIs Use of ICT in Insurance Service, No Online Payment services for Premium, lagging C,P,L,R, Ec, T

  10. INTERNATIONALEnvironment UNCTAD: promotes Insurance in LDC for ‘Transformational Energy Access’, LDC countries' Report, 2017 Nepal Insurance Board, Re-Insurance Company, 15 countries, not part of International Insurance Society, Global Insurance Forum Globalization: Enhanced Competition, wider choices in policies, Re-insurance, technology transfer, international practices of risk miti-gation C,P,L,R, Ec, T, I

  11. SOCIO-CULTURALEnvironment ‘Bhaihalcha Ni’ Mindset, Life dependent on God’s wish Forced Saving, Investment, Risk mitigation Earthquake of April 25th, 2015, helpful for ‘Acculturation’ Demographic Dividend, deadline 2047, Old aged population, cultural transformation towards ‘Risk mitigation’ measures C,P,L,R, Ec, T, I, S Source: UNICEF, “Study on Demographic Changes in Nepal: Trends and Policy Implications”

  12. environmentalEnvironment Earthquake of April 25th, 2015 People ‘Aware of Risk to Life’,catalyst Compulsory Reserve Fund/ Catastrophic Nepal: 10th most polluted, Avg. 28 road accident , 6 deaths every day in FY 2016/17 C,P,L,R, Ec,T,I,S,En

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