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Nepalis still blind to insurance pluses
KATHMANDU, JAN 18 - When an insurance agent approached Kamala Shrestha, an employee at the Maternity Hospital, Thapathali, thirteen years ago and requested her to buy a life insurance plan she had no idea what it exactly was.
Though undecided for six months, she finally bought it following a series of consultations with friends and relatives. Looking back, now, she thinks that was one of her wisest decisions. For Shrestha, already a widow, that she has a life insurance policy means a lot. It gives her some financial security and the confidence a single woman needs. "I am glad that I bought the plan," says Shrestha.
In the last thirteen years so much has changed in Nepal but so much also remains the same.
A journalist working in a national daily newspaper asked this scribe if insurance business was same as the Gold Quest, the infamous international scam.
No wonder that more than 90 percent of the insurable population is still out of the insurance net. And very few are aware of the future assurance and the financial security it provides. " Blame poor insurance orientation and inadequate number of agents for low insurance subscription," says Kamal Raj Gautam, Senior Branch Manager of Nepal Life Insurance Company (NLIC).
S K Sakhaju, managing director of Life Insurance Corporation-Nepal (LIC-N) also says that inadequate number of agents in life insurance business is partly responsible for the lackadaisical insurance business in Nepal.
Currently, the ratio of active number of insurance agents to population in Nepal is one of the lowest — It is around 1:1000. Again it is the low rate of insurance subscription that has discouraged many agents from holding the job for long. According to one survey, out of 10 people approached, only one buys a policy and the other two promises to buy it later. Thus the low subscription rate and fewer number of agents reinforce low pace of growth in the insurance business in Nepal.
Surprisingly, even the insured people seem to have little knowledge of the insurance plan they have purchased. This is evident from low level of insurance claim even after its maturation. Over 2 percent of total policyholders never claim their rightful sum (on maturity) or withdraw (after discontinuing it) said Khem Baral, Chief Manager of Rastriya Beema Sastan (RBS). The state owned and the oldest insurer has a reserve of over 2 billion rupees, a chunk of which is unclaimed amount by its clients.
"National Life and General Insurance Company operating since last 16 years has similar proportion of unclaimed reserve," said Prakash Khanal, Financial Analyser of the Insurance Board.
The low level of awareness and low purchasing capacity of the Nepalis however has not stopped new insurance companies from eyeing the Nepali market. Currently, there are four life insurance companies working in Nepal, two of them under joint venture with world’s established life insurers.
Perhaps they know that in front of them lies a vast untapped market. The growing competition has along with it brought diversity in insurance offers. There are over seven types of products offered by the life insurance companies in Nepal— Endowment life assurance (money returned after policy maturation), anticipated endowment (money paid back in three installments) and whole life assurance (money returned to inheritor only after death of policy holder) are among the major products. By paying additional one rupee per 1,000 of the sum insured, the policyholder can further acquire endowment assurance with double accident benefits.Posted on: 2004-01-19 04:10
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