Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s non-life insurance companies have reported a significant profit drop in the third quarter of fiscal year 2081/82 (2024/25), with net profits of 14 companies plummeting by 54.45%, or NPR 2.88 billion, to NPR 2.41 billion. This marks a steep decline from NPR 5.29 billion earned in the same period last year, according to financial statements released on Sunday.
Industry leaders attributed the downturn to the impact of natural disasters, particularly floods and landslides, which increased claims from policyholders. “Our primary responsibility is to compensate policyholders swiftly, but this has impacted expected profits,” senior executives stated. They highlighted that rapid claim settlements, while necessary, have strained profitability amid challenging conditions.
Only two companies, Sanima GIC Insurance and Shikhar Insurance, reported profit growth. Sanima GIC’s profit rose 16.21% to NPR 233.56 million, and Shikhar’s increased by 1.79% to NPR 357.05 million. However, most firms saw declines, with National Insurance and Oriental Insurance slipping into losses. National Insurance recorded a net loss of NPR 728.15 million, compared to a NPR 141.03 million profit last year, while Oriental Insurance reported a NPR 138.34 million loss, down from a NPR 461.73 million profit.
United Ajod Insurance faced the steepest decline, with profits dropping 57.65% to NPR 116.12 million from NPR 274.22 million. Other notable decreases include Prabhu Insurance (down 48.43% to NPR 200.29 million), Himalayan Everest Insurance (down 45.20% to NPR 332.38 million), and Sagarmatha Lumbini Insurance (down 47% to NPR 251.95 million). IGI Prudential Insurance’s profit fell 43.30% to NPR 265.11 million, Nepal Insurance’s by 39.43% to NPR 178.45 million, and Siddhartha Premier Insurance’s by 24.03% to NPR 453.60 million. Rastriya Beema Company, NLG Insurance, and Neco Insurance also saw reductions of 23.37%, 9.77%, and 2.16%, respectively.
Executives pointed to multiple factors for the sector’s struggles, including an unfavorable investment climate, lack of economic growth, rising competition, and increased operational costs due to inflation. A lack of insurance awareness, unstable economic and political conditions, and declining interest rates in the banking sector further eroded profits. “Without economic development, the insurance market cannot grow, directly impacting companies,” they noted.
The sector’s challenges highlight the need for broader economic stability and policy support to bolster the insurance industry, which has been hit hard by both external disasters and systemic issues.
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