The cases of insured individuals surrendering their life insurance policies surged 8.67 percent in the fiscal year 2023/24 compared to the figure in the previous fiscal year.
The records with the Nepal Insurance Authority (NIA) show that a total of Rs 113,976 insurance policies worth Rs 14.50 billion were surrendered in the last fiscal year. In the FY 2022/23, a total of 96,938 insurance policies worth Rs 13.34 billion were surrendered.
The data shows that insured individuals gave up 15,840 units of insurance policies just in one month during mid-June and mid-July. In terms of money value, the policies worth Rs 2.59 billion were withdrawn in the last one month of FY 2023/24.
According to the NIA, withdrawal of both the number of policies and insured amount increased in the review period. The ongoing economic slowdown has been attributed to the surge in cases of surrendering of insurance policies.
“Likewise, the obligation to settle the tax liabilities by the fiscal year end might have led the insured to give up a large volume of insurance policies in the last month of FY,” said a NIA official.
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Nepal Life Insurance Company had the largest amount of its policy withdrawal. The insurers’ policies worth more than Rs 4.41 billion out of 28,627 units were canceled. Life Insurance Corporation stood in second place, witnessing withdrawal of its 30,309 policies worth over Rs 4.30 billion.
The NIA has maintained the rule barring the buyers of life insurance policies from surrendering before settling the premium payments for three years. Previously, insured were allowed to give up insurance policies even after one year of their issuance.
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The regulator has directed insurers not to issue general life-insurance policies for less than five years of maturity. Similarly, the insured who withdraw insurance policies can receive back up to 90 percent of the amount paid in premium.
Non-life insurers yet to pay hefty amount of insurance claims to their clients
Nepali non-life insurance companies are left to clear insurance claims of 89.10 percent of the premium that they collected in the last fiscal year.
The records maintained by the Nepal Insurance Authority (NIA) show that 14 out of 20 non-life insurers collected premiums worth over Rs 21.55 billion from their clients in the fiscal year 2023/24. The companies received 77,611 claims worth over Rs 19.20 billion.
Shikhar Insurance was left to clear 15 percent of the claim amounts, the lowest of all. Rastriya Beema Company with 95 percent of its premium collection worth Rs 1.59 billion was the highest in having liabilities to settle its insurance claims.
