Why policy Surrender? What will be the Effect on the Insurance Sector if the Surrender Rate Increases ?

Rina Khatry

Kathmandu : The policy surrender rate is increasing in the Nepali Insurance market. According to the Insurance Regulatory Authority, 9,779 policies worth 1.28 billion rupees were surrendered in the first month of the current financial year.

The policy surrender rate is increasing in the Nepali insurance market. According to the Insurance regulatory Authority, 9,779 policies worth 1.28 billion rupees were surrendered in the first month of the current financial year.

The committee has been saying that the number of policy surrenders has increased due to failure of the insurance agent to properly explain the policy to the insured while the selling the policy. And, According to the authority, initiatives are being taken to stop such a rate.

The trend of surrendering the insurance policy is not only in Nepal but all over the world. Sharma says that if you buy an insurance policy that that suits you by looking at your income and income before buying the policy, then there will be no problem of surrender.

The trend of surrendering the insurance policy is not only in Nepal but all over the world. Sharma says that if you buy an insurance policy that suits you by looking at your income and income before buying the policy, then there will be no problem of surrender.

He argues that the rate of surrender increases when the insurance is more if the insurance policy is purchased in such a way that the financial status is not affected before insurance, the amount of surrender will be reduced.

He says that since there is a provision in the law to surrender the policy, it will not affect the insurance market much, he says that the main reason for surrendering the insurance policy is financial crisis, the rate of policy surrender has also increase due to miss selling. He says that since there is a provision in the law to surrender. ”You can’t talk about surrendering the policy because there is an economic crisis, ”he said.

The law has provided for the right to surrender. However, he says that if the rate if surrender us the high, it should be studied.

If the policy has been surrendered. Insurers say that due to the slowdown in the economy, insurers are surrendering policies.

It is understood by the insurance workers that even if the insurance policy has been abandoned during the slowdown in the market, the policyholders still want to spend their money.

”Do small amount but do it often” He suggested that while insuring, you should limit your income and purchase insurance by understanding how much your financial income is, How much you need to insure with that income, etc.

Person who own does not put whole of the own income how much would device to insurance. According to income insurance should be purchased, Sharma said.

according to insurer insurance writing if purchased day of tomorrow will give continue are his expression pre-purchased the insurance writing base of the own income generation to purchase the insurance, insurance surrender will decreases
He claims that if the insured does such a study before insurance, he will know how to pay the premium if his income goes down. He believes that if the insured is aware of such matters before purchasing the policy, he will not surrender.

In the life insurance business, the agent is considered as the main character. The agent acts as an intermediary between the insurance company and the insured. According to Sharma, There is a practice of surrendering even if the agents do not properly inform the insured about the insurance before selling the insurance.

He believes that insurance agents will play an important role in stopping the rate of surrender. He says that the agent should sell the policy according to the financial condition of the insured and the needs of the insured.

”Purchasing an insurance policy without considering the income will lead to a financial crisis to pay the premium, that’s why it is not good to surrender. Insurance should be done for a small amout but often,” he said.

According to Sharma the increase in the number of surrenders in companies means that the company’s growth is negative. He argues that increasing the rate of policy surrender will have a nagative implact on the business of companies.

We have been strict: Insurance Authority

The authority has also determined the surrender value of the insurance policy and arranged that it can be surrendered after three years. According to this, maximum 90% of the total insurance premium paid at the time of surrendering the insurance policy must be paid to the insured.

In addition, the authority has made arrangements to add the accrued bonus amount up to that period. Rajuraman Paudel, executive director of the authority, said that the number of insurance policy surrenderers is higher than before this system was implemented.

He says that the number of people surrendering insurance policies has increased recently due to the slowdown in the economy.

He said, ”Because of the slowness of the economy, people have no purchasing power. when money is needed, some seem to abandon the policy.” In addition, there is a tendency for the agents to surrender on one side and get insurance on the other. Executive Director Paudel said that although the three-year system has stopped such a trend, it has not been able to stop it completely, so the figures have increased.

He said, ”Because of the slowness of the economy, people have no purchasing power. When money is needed, some seem to abandon the policy.” In addition, there is a tendency for the agents to surrender on the other. Executive director paudel said. that although the three year has stopped such a such a trend, It has not able to stopped to it completely, So, the feagure have increased.
He said, ”The provision of three years has stopped such a trend to some extent. But it is not completely stopped.” He also said that surrender cannot be stopped completely. However, he says, something can be done to reduce it. He emphasized that companies should also be aware to reduce insurance policy surrender.

Economic recession of impact of all sector are seeming. So, those of impact will long lasting make it effect have been seeming said authority executive director Rajuraman paudel.

Less of caution being a seeming to problems in renew to insurance.

Bhojraj Sharma, an insurance expert, says that when the policy is surrendered, both the insured and the insurance company incur losses. Looking at the facts, there is a rush to bring in new business, but this problem has also been seen due to the declining interest of insurance agents in renewing old insurance. Recently, both insurance agents and new insurance businesses are decreasing in the life insurance sector.

There is still a tendency for insurance agents to keep the policyholders under surveillance due to the greed of getting good commissions and the early years and neglecting them as the insurance plan gets old. There is another reason why auto insurance is not included in the list of renewals as the insurers rely entirely on the agent.

If the priority of the agent is reduced in the renewal, even if there is no problem for the time being, it can have a complex effect in the long run, according to insurance officials.

In the life insurance business, surrender and earning of first insurance premiumes are of particular importance.

If the surrender amount increases more than the first insurance fee, the growth rate of the life insurance fund may decrease. the reason is that the bonus rate that the insured will get in the future may also be affected due to the interrelationship between the first premium earned and the surrender.

In the current situation, due to the effect of the economic recession, the number of people who are interested in surendering insurance plicies has increased rapidly.

Insurance companies have advised not to surrender the policy as much as possible. They provide loans by keeping the insurance as collateral until they meet. Some companies suggest to continue the policy even after reducing the sum assured according the features in the policy.

On the one hand, lack of finances, on the other hand, due to the mandatory situation of having to pay the renewal insurance fee, some of the insured are really in the trouble.