Overview of Current Status of Insurance Sector in Nepal
January 22, 2025 | Investopaper
With the overall economy in turmoil in the past couple of years, the insurance sector in Nepal has also witnessed sluggish growth. However, in the last fiscal fiscal year 2080/81, the insurance industry saw improvements with notable trends emerging in both life and non-life insurance segments.
In terms of gross premium collection, life insurance saw a substantial increase from Rs. 142.57 billion in FY 2079/80 to Rs. 156.5 billion in FY 2080/81, marking a growth of approximately 9.78%. Non-life insurance premiums also rose, albeit modestly, from Rs. 40.34 billion to Rs. 41.47 billion, reflecting an increase of about 2.8%. Overall, the total gross premium collection for both segments combined grew from Rs. 182.91 billion to Rs. 197.97 billion, showing an overall increase of about 8.23%.
Despite the growth in premium collection, the population coverage by life insurance experienced a decline. Excluding foreign employment (FE) policies, life insurance coverage decreased from 39.03% to 36.53% of the population. Including FE policies, coverage dropped from 44.38% to 43.27%.
However, insurance penetration as a percentage of GDP showed a slight improvement. The total insurance penetration increased from 3.42% to 3.47%, with life insurance penetration rising from 2.67% to 2.74%. Conversely, non-life insurance penetration decreased from 0.75% to 0.73%.
In terms of claims and investments, the sector observed mixed results. Life insurance claims saw an increase in both the number of claims paid and the amount paid, with the latter rising by 14.79% from Rs. 58.01 billion to Rs. 66.59 billion. In contrast, non-life insurance claims increased in number but decreased in amount paid, dropping by 13.57% from Rs. 20.71 billion to Rs. 17.9 billion. On the investment front, total investments by insurance companies grew significantly, from Rs. 628.95 billion to Rs. 752.37 billion, marking an increase of about 19.62%.
The sector also experienced growth in employment and capital. Direct employment increased modestly by about 3.96%, rising from 11,496 to 11,951. The number of insurance agents saw a substantial increase of 18.71%, from 277,626 to 329,572. Additionally, the total paid-up capital of insurance companies increased from Rs. 80.34 billion to Rs. 87.88 billion, reflecting a growth of about 9.39%.
Insurance Staus in Nepal
| Indicator | Sub Indicators | F.Y. 2079/80 | F.Y. 2080/81 | Changes % |
| Gross Premium Collection (in Rs. Billion) | Life Insurance | 142.57 | 156.5 | 9.77 |
| Non Life Insurance | 40.34 | 41.47 | 2.8 | |
| Total | Rs 182.91 | Rs 197.97 | 8.23 | |
| Population % Covered By Life Insurance | Excluding FE Policies | 39.03 | 36.53 | -6.41 |
| Including FE Policies | 44.38 | 43.27 | -2.5 | |
| Total | – | – | – | |
| Insurance Penetration (Percentage of Gross Premium to GDP) | Life Insurance | 2.67 | 2.74 | 2.62 |
| Non Life Insurance | 0.75 | 0.73 | -2.67 | |
| Total | 3.42 | 3.47 | 1.46 | |
| Insurance Density (Rs. Per Capita) | Life Insurance | 4683.26 | 5094.99 | 8.79 |
| Non Life Insurance | 1325.01 | 0 | -100 | |
| Total | Rs. 6008.27 | Rs 5,094.99 | -15.2 | |
| Total Investment (in Rs. Billion) | Life Insurance | 569.16 | 683.84 | 20.15 |
| Non Life Insurance | 59.79 | 68.53 | 14.62 | |
| Total | Rs 628.95 | Rs 752.37 | 19.62 | |
| Life Insurance Claim (Amt. in Rs. Billion) | Nos. of Gross Claim Paid | 260701 | 280151 | 7.46 |
| Amt. of Gross Claim Paid | 58.01 | 66.59 | 14.79 | |
| Total | Rs 260,759.01 | Rs 280,217.59 | 7.46 | |
| Non-Life Insurance Claim (Amt. in Rs. Billion) | Nos. of Gross Claim Paid | 139495 | 151884 | 8.88 |
| Amt. of Gross Claim Paid | 20.71 | 17.9 | -13.57 | |
| Total | Rs 139,515.71 | Rs 151,901.90 | 8.88 | |
| Direct Employment (in Nos.) | Direct Employment | 11496 | 11951 | 3.96 |
| Total | Rs 11,496.00 | Rs 11,951.00 | 3.96 | |
| Insurance Agents (in Nos.) | Insurance Agents | 277626 | 329572 | 18.71 |
| Total | Rs 277,626.00 | Rs 329,572.00 | 18.71 | |
| Surveyors (in Nos.) | Surveyors | 1217 | 1249 | 2.63 |
| Total | Rs 1,217.00 | Rs 1,249.00 | 2.63 | |
| Paid Up Capital (in Rs. Billion) | Life Insurance | 53.5 | 60.08 | 12.3 |
| Non Life Insurance | 26.84 | 27.8 | 3.58 | |
| Total | Rs 80.34 | Rs 87.88 | 9.39 |
Source: Nepal Insurance Authority
