Subash Koirala

Insurance is a term that signifies a contract between two parties. These parties may be individuals, groups or organisations that have to perform under terms and conditions prescribed by the concerned companies with a certain premium.
After these people, groups or organisations enter into a contract, a written document called policy is issued for reference. The main aim of issuing a policy is to provide a legal entity between the parties involved so that uncertain risks can be addressed onwards for the period mentioned in the policy.

Core Businesses
There are 39 insurance companies (life-20 and non-life-19) and a single reinsurance company existing in the industry where most of the business falls. The main source of business lies in the premium collection from the products among the companies for at least 5 years to 65 years period. Each life insurance has different products that are costing us a premium amount and varies in cost due to discount methods.
The businesses are usually compared to each other by collecting FPI (first premium income) and RPI (renewal premium income) periodically. Yearly incomes are segregated for various funds to maintain future liabilities. Funds may be utilised for generating incomes to meet operating expenses and cover future liabilities.
Those funds can be invested whether in an interest account or in various sectors on a percentage basis as prescribed by the investment guidelines from Insurance Board and subject to a technical reserve. Depending upon the income, assets with liabilities and solvency ratios may determine the bonuses in products that last the opportunity for the business growth.
Non-life companies premium is guided by the Insurance Board which are called tariff rate (fixed) for the products that may be counted for 1 year or less. The next period business relies upon the relations, satisfaction of the customer.
Besides, tariff and non-tariff product services of the market may cause-effect the competition price of each product. In addition, various micro-insurance and agriculture products are launched to uplift the whole industry with segregation to cover the area. Hence, the contribution has upgraded day by day. Till today, 22 per cent penetration has been marked for life and non-life insurance business. If micro-insurance is added, the industry's total penetration stands at 27 per cent.

Gap Analysis
We are now gripped by the coronavirus pandemic and trying to defeat the pandemic by adopting various means. In the meantime, the government confiscated to issue COVID-19 policy through pool system and launched covid insurance with assuming fewer fatalities may occur.
The result outbreaks rapidly as we experienced since then. A large number of claims are still in progress that contrasted claimers for which they bought. Hence, trust has been decreased among the people and needs to regain after analysing weaknesses for future reference.
Remedy to the rising path: We jumped from 10% to 27% penetration by adding business companies in recent years but quality insurance is required to maintain the status. Since we have ample space for investment opportunities, we mostly rely upon fixed deposits only. Though, few of us invest in the share market and infrastructure to file more profit so that company goodwill remains either constant or rise.
For the life insurance business, at least Rs 50,000 premium per year can be granted to a rebate on tax. This will improve the penetration level. Besides, forceful saving per month 4000 is added for nation-building from a large number of people. Similarly, IB and concerned authority can play a crucial role to cover up a large area.
There are also opportunities to expand ourselves by taking insurance service business through local government level. Before a few years back, the government imposed to insure vehicle insurance as obligatory for at least a third party. That showed access to the vehicle owners throughout the country. In this context, comprehensive insurance is seen as compulsory during renewal as many loss of vehicles can be reduced. In addition, every vehicle can be tracked out under an insurance scheme and frauds can be minimized.

Role of Government
Since a few years back, when the government made a policy to insure the vehicle as compulsory for the third party, it was set like a vision for expansion. However, new opportunities have been risen for the insurance sector by revising the third party insurance to comprehensive insurance.
As put earlier, minimum Rs 50,000 tax rebate is required to improve change behaviour of saving from people. A new budget announcement is ahead and a proposal must be addressed to match the slogan of Happy Nepali and Prosperity Nepal.

Role of IB
Nowadays, micro-insurance products are selling through all local level by distributing working area.
IB needs to divide few districts and local level where life insurance services are inaccessible to the people. Though plenty of agents are approaching districts and local levels but without proper knowledge sharing and awareness, the manipulation had badly affected business.
Conclusion: Insurance is seen highly opportunity business in Nepal. Since most of the businesses are affected by pandemic but no such has been felled to the industry. However, the corona insurance hit the trust. Hence, in future, all the stakeholders and concern authorities should play a crucial role to uplift the industry by winning trust from the people.

(Koirala works at Rastriya Beema Sansthan)