June 4: The government has set an ambitious target of extending access to life insurance to one-third of Nepalis or 33.33 percent of the population in the upcoming fiscal year. However, the government has remained silent about bringing programmes to support the insurance companies to achieve that goal.
Last Saturday, Finance Minister Bishnu Prasad Poudel, while presenting the budget for the upcoming fiscal year, announced that the government aims to increase access to insurance to one-third of the people. However, insurance companies express their concern that the budget has remained silent about bringing the necessary programmes to help achieve that goal.
According to a survey made public by Minister Poudel for the current fiscal year, access to insurance has reached 23.4 percent of the population by mid-February.
The Insurance Board has said that access to insurance will reach 27 percent of population by the end of next year. In the upcoming fiscal year, an additional 6.33 percent or 1.92 million Nepalis must have access to insurance to meet the target, which is very challenging, the companies say.
In the seven decades since the start of the insurance business, access to insurance has reached 23.4 percent of the total population. However, insurance companies say that it will be difficult to achieve the goal to increase access to 33.33 percent within a short span of time.
Nirmal Kaji Shrestha, president of Life Insurers Association Nepal and chief executive officer (CEO) of Mate Life Insurance, said that the new budget has missed out on addressing the issues of life insurance. “The budget aims to reach life insurance to one-third of the population. However, no programme is on the cards to help achieve that goal,” he said, adding, “We have seen that it will be very difficult to achieve that goal without any incentive.”
The insurance companies were expecting the government to increase the income tax exemption limit for life insurance in the budget. They have been demanding such exemption since years. At present, insured people get a rebate of up to Rs 25,000 in income tax. The Insurance Board demanded that the limit should be increased to Rs 50,000. They also demanded the introduction of other incentives.
However, Shrestha said that the budget has remained silent on the issue of overall life insurance. “In most South Asian countries, insurers are exempted from income tax up to millions of rupees. However, in our case, the limit has not been raised yet,” he said.
Shrestha said that now a tripartite strategy should be formulated between the Insurance Board, the Ministry of Finance, and the insurance companies.
Ramesh Kumar Bhattarai, CEO of Mahalakshmi Life Insurance, also said that the current budget has disappointed the life insurance sector. “The insurance sector was not already a priority in the budget. That trend has continued this year,” he said.
According to Bhattarai, the budget should give priority to this sector as the contribution of the insurance sector to the GDP is increasing. "It has been revealed in the budget that the access to insurance will be increased to two-thirds of population. However, the government has remained silent on what kind of assistance is needed to achieve that target,” he said.
Chairman of the Insurance Board Surya Prasad Silwal said that the concerns raised by the insurance companies will be addressed by the annual budget of the board.
"Our budget will come in the next few months. From the same budget, we will bring necessary programmes to increase access to insurance,” he said adding, “We are positive about how to work to achieve the target set by the government to increase access to life insurance.”