December 7: With the decline in economic activities, the business of insurance companies as well has started declining. Insurance business has been affected due to the decline in the lending of banks and financial institutions, and the decline in business as well as income of individuals.
According to Nepal Insurance Authority, the business of non-life insurance companies decreased by 4.57 percent in the first four months of the current fiscal year compared to the same period of the previous year. By mid-November of the last fiscal year, life insurance companies had collected a total of Rs 13.35 billion in insurance fees, but in the same period of the current fiscal year, the collection stood at Rs 12.74 billion.
The business of non-life insurance companies is continuously declining in the current fiscal year. The non-life insurance companies collected Rs 3.98 billion in insurance fees from the sale and renewal of new insurance policies in the first month of the current fiscal year, but they collected only Rs 2.29 billion in the fourth month.
Non-life insurance companies sold 894,000 insurance policies since mid-July including 200,000 insurance policies during last month. Compared to the previous year, the number of insurance policies sold during this period has also decreased.
A normal increase has been seen in the business of life insurance companies. Life insurance companies collected Rs 46 billion in insurance fees from the sale and renewal of insurance policies till mid-November of the last fiscal year, which now stands at Rs 49.44 billion this year.
However, compared to mid-July of the current financial year, the business of life insurance companies is also decreasing. In mid- July to mid-August, they collected Rs 19.60 billion in insurance fee from new insurance policies and renewal of old ones, which decreased to Rs 8.63 billion in mid-October to mid-November.
Along with the economic recession, the credit flow of banks and financial institutions decreased and the business activities of insurance companies were affected. Since insurance is mandatory for taking bank loans, the lack of loan investment has also affected the business of insurance companies. Similarly, when there is a decline in economic activities, the income of common people also decreases. The number of people taking insurance has decreased after the decrease in income. Instead, the number of people who 'surrender' insurance policies seems to be increasing.