August 17: The impact of the four-month long lockdown enforced by the government to control the coronavirus pandemic has also been seen on the insurance sector. The growth rate and the profit of life insurance companies have decreased in the Fiscal Year 2076/77.

The profits of life insurance companies had increased by 16 per cent in the FY 2075/76 whereas the average profit of the life insurance companies was only about 5 per cent in the last fiscal year.

Eighteen out of the nineteen private life insurance companies have published their fourth quarterly report on Sunday.

According to the published financial statements, the eighteen life insurance companies had earned a net profit of rupees 3.19 billion in the FY 2075/76.

But the profits of four companies have decreased in the last fiscal year, according to the report. The financial statements of Met Life shows that its profit has decreased by 41.24 per cent. Similarly, the profit of Prime Life has decreased by 4.63 per cent, LIC by 25.88 per cent and Sanima Life by 4.26 per cent.

Nepal Life Insurance seems to be ahead when it comes to earning profit in the last fiscal year. The company has earned a profit of rupees 530.3 million in the last fiscal year.

The growth rate of insurance premium collection has also declined. The rate of premium collection increased by 21.28 per cent in the FY 2076/77 when it had increased by 46 per cent in the FY 2075/76.

Met Life’s insurance premium has declined by 1.68 per cent while the rest of the companies have increased their premium collection. Met Life collected a total premium of Rs 4.21 billion in the previous fiscal year. However, their premium collection decreased to rupees 4.14 billion in the last fiscal year.

Nepal Life is in the frontline in terms of collection of premium too. In the year under review, the company had collected a premium of Rs 27.62 billion.

The government had enforced a lockdown from March 24 to July 22. The businesses of the life insurance companies had increased highly in this period of time.  Raju Raman Poudel, the director of the Insurance Board said that the impact of coronavirus as shown in the financial statements of the life insurance companies was less than they had anticipated.

“The businesses of life insurance was booming before the lockdown. We had predicted that the businesses would be largely affected in the three-month lockdown,” he said, “However, that didn’t happen.”

Similarly, Shivanath Pandey, the chairman of Nepal Insurers’ Association, stated that the life insurance companies have not been highly impacted despite of the decline in their profits. “There have been impacts. We were not able to maintain the growth rates of the previous fiscal years because of the lockdown,” he said.

He expressed that the life insurance companies were not affected very badly because of their long-term investments. However, the companies believed that the upcoming days would be more challenging for the life insurance sector.

Insurance agents have to physically visit the customers’ residences. Poudel, the executive director of the board, expressed that this was also the reason why it was very challenging to conduct the businesses of life insurance during the pandemic.

“Insurance agents have to go from residence to residence to get clients,” he said, “But it is not possible to do this because of the virus. This has affected the business.”

Pandey, the chairman of the association, also agreed that the upcoming days would be challenging. “Our main source of income is the interest from banks. We have invested approximately rupees 300 billion in banks. The banks have reduced their interest rates right now,” he said, “It will be very challenging for us to earn profits in the future due to this situation.”