Life Insurance Policy Surrenders Cross Rs. 13.5 Billion in 11 Months

Kathmandu – Nepal’s life insurance sector is witnessing a worrying rise in policy surrenders, with more than Rs. 13.5 billion withdrawn from life insurance companies in just the first 11 months of the current fiscal year. According to data released by the Nepal Insurance Authority, life insurance policies worth Rs. 13.54 billion have been surrendered during this period.

This figure marks a 10.97 percent increase compared to the same period last fiscal year, when policy surrenders had amounted to Rs. 12.20 billion. Industry experts say this growing trend is driven largely by policyholders being unable to maintain premium payments, often due to inadequate guidance from agents or purchasing policies beyond their financial means.

The Authority reported that 98,041 policies were surrendered over the past 11 months, slightly less than the 100,012 policies surrendered in the same period a year earlier. However, while the number of surrendered policies shows a 1.97 percent decline, the corresponding rise in surrendered amounts suggests that higher-value policies are being withdrawn, pointing to a deeper structural concern within the industry.

Insiders believe that the steady increase in policy surrenders, despite a growth in new business, is adversely affecting the overall financial health of life insurers. Although companies are adding new customers, the simultaneous rise in surrendered amounts is seen as a major setback, as it reflects underlying issues in customer retention and satisfaction.

Another critical challenge facing the sector is the growing number of lapsed policies. According to the Authority, 1,243,769 policyholders had failed to renew their life insurance coverage by the end of the 11 months, which is an 8.77 percent increase compared to the same period last fiscal year, when 1,143,478 policies remained unrenewed.

Moreover, the total value of policies that have lapsed or been surrendered has soared by 10.54 percent, reaching a staggering Rs. 36.5 billion by the end of Jestha.