News of Insurance — The Nepal Insurance Authority (NIA) has reported that life insurance coverage in the country has reached a record-high penetration rate of 47.39 percent of the population as of mid-May, marking a significant rebound despite a continued rise in policy surrenders.

According to the latest NIA report, this figure represents a 2.75 percentage point increase from mid-April, when the penetration rate stood at 44.64 percent. The growth comes after a period of decline, with coverage having dropped to 42.70 percent by the end of the previous fiscal year.

As of the end of fiscal year 2022/23, life insurance coverage was at 44.38 percent. However, the ensuing months saw a downward trend, attributed primarily to economic challenges that prompted many households to surrender their policies amid financial uncertainty.

The NIA attributes the recent surge in insurance penetration to the introduction of new insurance products, increased public awareness, and the expansion of micro insurance programs in rural and underserved areas. Regulatory support and targeted outreach initiatives have also been instrumental in driving the growth, the Authority noted.

Insurance analyst Rabindra Ghimire explained that worsening economic conditions are the key reason behind the uptick in policy surrenders. He also cited limited financial literacy, social perceptions, dissatisfaction with insurers, and the conduct of insurance agents as contributing factors.

The NIA clarified that the headline penetration figure includes non-traditional forms of insurance such as micro insurance, temporary policies, and foreign employment insurance. When these are excluded, traditional life insurance coverage stands at 16.77 percent. Notably, foreign employment insurance alone accounts for 8.08 percent of total coverage.

Currently, more than 15.36 million active life insurance policies are held in the country. However, the NIA adjusts this number for duplicate policies held by individuals across different companies to determine the actual coverage rate.

Micro insurance continues to gain traction, supported by regulatory efforts to broaden access to marginalized communities. Meanwhile, the increasing number of Nepali citizens seeking employment abroad has driven the growth of foreign employment insurance.

Life insurance companies collected Rs 140.35 billion in premiums during the first 10 months of the current fiscal year, up 15.55 percent from Rs 121.46 billion during the same period last year.

Nepal is currently home to 14 large life insurance companies and three micro insurance providers. The number of life insurers has steadily increased over the past decade, growing from just eight in 2008, reflecting rising investor interest and sectoral growth.