The steady rise in life insurance coverage in Nepal, which now stands at 47.39 percent of the population, is an impressive achievement. The Nepal Insurance Authority (NIA) claimed the new milestone means that more people are now covered against unexpected risks. A deeper analysis hints that the increase in coverage has actually been driven by three major components: the growth of microinsurance, the introduction of new products tailored to suit local needs, and a larger awareness campaign. Many rural households now have access to insurance that was once unavailable or expensive. These new clients brought into the insurance net are often low-income groups, who may be plunged into poverty, as a result of a single disaster. The government's quest for microinsurance, as well as the availability of insurance to Nepali migrant workers working abroad, has had a positive impact. However, the data also show an existing level of inequality: if microinsurance and foreign work insurance are eliminated, just 16.77 percent of the population is covered by regular or ordinary life insurance. This imbalance shows how much of the present development is based on specific strategies rather than the policies aimed at long-term stability. Many of these plans are designed for a specific duration and risk profile, which might not support long-term financial stability.
Another depressing reminder, however, is that the expansion of coverage coincided with a sharp rise in policy surrenders (more than 80,000 in a single year), indicating a fundamental problem in the nation's insurance market. Many people have cancelled their insurance policies before they have matured due to economic difficulties that have been made worse by inflation and declining household incomes. A lack of faith in insurance companies and a misunderstanding of how insurance policies work has also contributed to this problem. Many consumers are still unsure about terms and conditions, coverage duration, and payment methods. Consumers have often expressed dissatisfaction with agent behavior and inadequate follow-up services. Individuals who desire to purchase insurance may eventually abandon it if they do not receive clear advice and excellent service. While private businesses have expanded their offerings and adapted to new markets, the government's involvement remains limited. To boost the current rate of coverage, the authorities will do well if they take insurance literacy campaigns to every household and insurance literacy in the education curriculum to explain benefits of policy to people from a young age.
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Such campaigns must start at the local level. Municipalities can include insurance awareness and education in community events. These initiatives can be supported through necessary funding and governance by provincial and federal governments. Adequate regulation will also aid in addressing the issue of agent misbehavior and dispute resolution. The recent expansion of insurance coverage represents a step forward but more must be done to maintain this momentum. The figures may appear to be fine on paper right now, but they might be meaningless if policyholders continue to cancel their insurance policies before they mature. Similarly, long-term financial and regulatory stability must be the basis for insurance policies. Finally, insurance companies or insurers, too, require government support, honest, suitable regulations, and well-planned programs. If all three levels of government consider insurance to be part of a larger social safety system, coverage may increase in both quantity and substance. Only then can insurance become an important part of the state’s serious efforts to safeguard its people's future.
