Cases of surrendering insurance policies on the rise

Over 6,000 policies were canceled during mid-October and mid-November

KATHMANDU: More than 6,000 insured individuals surrendered their life insurance policies amounting Rs 1.11 billion during mid-October and mid-November.

According to the Nepal Insurance Authority (NIA), a total of 19 insurance companies had their sold out 6,746 insurance policies withdrawn in one month. Of the insurers, 987 policies of Life Insurance Corporation Nepal were surrendered. The canceled insured amount of the company is worth Rs 390.9 million, the largest of all.

Since last year, the sector’s regulator has barred buyers of life insurance policies from surrendering before settling the premium payments for three years. In the new rule, insurers cannot issue general life-insurance policies for less than five years of maturity.

Shekhar Golchha, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the insurance sector is among the sectors largely affected by the ongoing economic slump. According to him, the insured individuals have been affected by the high inflation rate and the exorbitant interest rates charged by the banks.

Amid the ongoing economic slowdown, soaring prices of consumer goods have taken down people’s purchasing power and aggregate demand has fallen heavily. This has taken a serious toll on the country’s productive sector, shows a survey recently conducted by the FNCCI.

According to the umbrella organization of the private sector, insurance business has been down by 30 percent, mainly due to a fall in income triggered by a downfall in transactions of the productive sector.

The government records show that a total of 41 percent of the population has got access to insurance. However, the case of surrendering the policies is also on the rise.

Last year, more than 9,000 insured individuals canceled their insurance policies before they matured, according to the NIA. The increase in the number of withdrawals has also been attributed to the insurance agents failing to provide proper information to the individuals to whom the policies are sold.

Fiscal Nepal |
Friday December 16, 2022, 10:00:35 AM |

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