Insurance companies’ business growth contract to single digit

As the country grapples with the economic slowdown, the insurance business has taken a beating in the current fiscal year. Both life and non-life insurance business grew in single digits in the first nine months of the current fiscal year. After a double- digit growth in previous years, the insurance business (life and non-life) grew by a meager 2.66 percent in the first nine months of the FY 2022/23 compared to a growth of 12.29 percent in the same period of the FY 2021/22. Nepal Insurance Authority(NIA)  statistics show  life and non-life companies collected insurance premiums totaling Rs 134.74bn in the first nine months of the FY 2022/23 which was Rs 131.24bn in the corresponding period of the FY 2021/22. The total insurance premiums increased by only Rs 3.50bn in this fiscal year.

According to NIA, life insurance companies collected premiums amounting to Rs 104.73bn in the first nine months of the current fiscal year, while it was Rs 30bn for non-life insurance companies.

The premium collection of life insurance companies during the same period of the last fiscal stood at Rs 102.54bn and non-life insurance companies at Rs 28.70bn. According to NIA Executive Director Raju Raman Poudel, the ongoing economic slowdown has affected the insurance business. “Insurance business is facing challenges due to the high-interest rates, liquidity crunch, and rising inflation. These factors have reduced the common people’s purchasing power,” he said. According to CEOs of insurance companies, insurance premiums of large amounts are generally paid by borrowing money from banks. As banks are struggling with a liquidity crunch, borrowing from them has become difficult in this fiscal year and customers have not been able to pay the premiums. “As a result, there has been a big decline in the growth rate of the insurance business,” they said. Insurers say that the rise in the non-renewal and surrendering of insurance policies is dragging the business down. “Currently, we are seeing surrender of life insurance policies in large numbers,” said the CEO of a leading insurance company. Among the life insurance companies, Nepal Life Insurance Company (NLIC) has collected the highest premium. The NLIC has collected insurance premiums worth Rs 27.26bn followed by LIC Nepal with Rs 12. 94bn and National Life Insurance with Rs 11.37bn. Similarly, Shikhar Insurance is in the leading position in the non-life sector. The company has collected insurance premiums worth Rs 4.15bn, followed by Sagarmatha Lumbini Insurance with Rs 3.48bn and Siddhartha Premier Insurance with Rs 3.35bn.