KATHMANDU, June 8: The Nepal Insurance Authority (NIA) has reported a record-high life insurance penetration rate of 47.39 percent of the country’s population as of mid-May, despite a growing number of policy surrenders.
According to a report recently published by the NIA, the insurance coverage rate saw a notable increase of 2.75 percentage points in just one month, rising from 44.64 percent in mid-April. This surge marks a significant rebound after a period of declining coverage, which had dropped to as low as 42.70 percent by the end of the last fiscal year.
By the end of fiscal year 2022/23, access to life insurance in Nepal stood at 44.38 percent. However, the following months witnessed a downward trend, primarily due to the country’s economic slowdown and an increase in policy surrenders, as households struggled with financial uncertainty.
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The NIA credits the recent uptick in insurance penetration to several key factors: the launch of new insurance products, growing awareness among the general population, and a significant expansion of micro insurance schemes across rural and underserved areas. The authority emphasized that enhanced outreach and regulatory support have played an important role in expanding access.
Insurance expert Rabindra Ghimire pointed out that economic conditions are the primary driver behind the surrender of life insurance policies. He further noted that knowledge gaps among policyholders, social influences, dissatisfaction with insurance companies, and issues related to insurance agents also contribute to this growing trend.
The NIA clarified that a large portion of the coverage comes from specialized insurance types such as micro insurance, temporary insurance, and foreign employment insurance. When these categories are excluded, the actual penetration of traditional life insurance policies drops to 16.77 percent. Among them, foreign employment insurance alone accounts for 8.08 percent of the total insured population.
The number of active life insurance policyholders currently exceeds 15.36 million. However, this figure includes instances where individuals hold multiple policies from different companies. To ensure accuracy, the NIA adjusts for such overlaps when calculating the actual penetration rate.
Micro insurance has become increasingly prominent, thanks in part to regulatory support aimed at expanding these services to local communities. At the same time, the growing number of Nepalis traveling abroad for employment has significantly contributed to the expansion of foreign employment insurance.
In terms of premium collection, life insurance companies gathered Rs 140.35 billion in premiums during the first 10 months of the current fiscal year, marking a 15.55 percent increase compared to Rs 121.46 billion collected in the same period last year.
At present, 14 large life insurance companies and three micro insurance providers are operating in Nepal. The number of life insurance institutions has risen steadily over the past decade, up from just eight companies in 2008, reflecting growing interest and investment in the sector.