January 26: Business expansion of non-life insurance companies in Nepal is extremely low compared to life insurance companies. Life insurance companies made brisk business even amid the coronavirus pandemic in the current fiscal year. However, non-life insurance companies could not match the pace of life insurance companies in business expansion.
In the first six months of the current fiscal year, the business of life insurance companies expanded by 32.12 percent whereas the business of non-life insurance companies grew by only 9.90 percent. The business of non-life insurance companies had expanded by 15 percent during the corresponding period of last fiscal year.
Currently, there are 20 non-life insurance companies in Nepal. Among them, 19 companies collected insurance premium of Rs 15.20 billion during the review period. The government-owned National Insurance Company’s details have not been included in this report because the company did not submit its financial report.
Non-life insurance is directly linked with the banking sector. They have to insure all those sectors where Banks and Financial Institutions (BFIs) have made investment. For instance, it is mandatory to insure houses built by taking loan from banks. However, of late, banks have not stepped up their investment in sectors likely to fall under the scope of insurance. That has also resulted in a slump in business of non-life insurance companies.
The sale of new vehicles has also declined in recent days. As a result, non-life insurance companies have not been able to make good business, says Sunil Ballav Panta, CEO of NLG Insurance Company.
He says insurance business might have suffered a setback due to increase in investment in the share market.
“The business of non-life insurance companies has definitely shrunk. But we must consider it satisfactory amid the current financial crisis induced by Covid-19,” says Panta.