Insurance Scope Shrinks, Business Surpasses Rs 1 Trillion

Kathmandu – Despite government efforts to expand insurance coverage, the scope of life insurance in Nepal has narrowed, with only 16.81% of the population covered as of end of the Poush month in the current fiscal year. This marks a slight decline from 17.08% during the same period last fiscal year. Including term, short-term, and foreign employment life insurance policies, the coverage extends to 43.62% of the population, down from 43.5% last year.

While the scope has shrunk, the size of the insurance business has grown significantly, surpassing Rs 1 trillion, with total premiums reaching Rs 102.48 billion by the month of Poush. First insurance premium collections have increased by 28.73%, rising from Rs 13.82 billion last fiscal year to Rs 17.79 billion this year. Renewed life insurance premiums also saw a 4.94% growth, contributing to a 9.37% overall increase in life insurance premiums. Similarly, non-life insurance premiums rose by 9.42%.

The number of active life insurance policies has grown by 2.08%, totaling 14.04 million, while active non-life insurance policies increased by 8.1% to 1.56 million. However, policy surrenders have surged, with over 54,000 life insurance policies canceled by the month of Poush, leading to a withdrawal of Rs 7.47 billion from insurance funds.

Currently, Nepal has 14 life, 14 non-life, 4 non-life microinsurance, and 3 life microinsurance companies. The branch network has expanded by 4.67% in the past year, with over 3,000 branch offices now operating nationwide. Life insurance companies account for 1,844 branches, a 2.88% increase, while non-life companies have 1,158 branches, reflecting an 11.35% rise.

The number of employees in the insurance sector has also grown by 3.5%, totaling 11,901, with 5,926 working in life insurance and 5,975 in non-life insurance.

Despite the sector’s growth in business volume, the narrowing scope highlights challenges in expanding insurance coverage amid economic slowdowns and increased policy cancellations.