KATHMANDU: The number of insured individuals surrendering their life insurance policies in Nepal increased by 8.67% in the fiscal year 2023/24 compared to the previous year. According to the Nepal Insurance Authority (NIA), a total of 113,976 insurance policies, valued at Rs 14.50 billion, were surrendered during the last fiscal year. This is up from 96,938 policies worth Rs 13.34 billion in the fiscal year 2022/23.
A significant number of policy surrenders occurred between mid-June and mid-July 2024, with 15,840 policies valued at Rs 2.59 billion being given up in just one month. The NIA attributes the increase in policy surrenders to the ongoing economic slowdown and the obligation to settle tax liabilities by the fiscal year end, which might have pressured insured individuals to surrender their policies.
Nepal Life Insurance Company experienced the largest amount of policy withdrawals, with over 28,627 units worth more than Rs 4.41 billion canceled. Life Insurance Corporation followed, with 30,309 policies worth over Rs 4.30 billion surrendered. The NIA has introduced rules requiring policyholders to settle premium payments for three years before surrendering their policies. Previously, policies could be surrendered after one year. Insurers have been instructed not to issue general life insurance policies with less than five years of maturity, and those who surrender can receive up to 90% of their paid premiums back.
In the non-life insurance sector, Nepali companies have yet to settle a substantial amount of insurance claims. According to NIA records, 14 out of 20 non-life insurers collected premiums worth over Rs 21.55 billion in the fiscal year 2023/24 but are still required to clear 89.10% of these claims, totaling over Rs 19.20 billion from 77,611 claims.
Among non-life insurers, Shikhar Insurance had the lowest percentage of pending claim amounts at 15%, while Rastriya Beema Company had the highest, with liabilities amounting to 95% of its premium collection, totaling Rs 1.59 billion. The high percentage of unsettled claims indicates a significant liability for non-life insurers in Nepal, highlighting the need for these companies to address claim settlements more efficiently.
