Life Insurance Companies have been raising voice for increasing their sectors of investments. Liability of the companies being long term, but, investments being of short term, they have been requesting the board to search for alternative sectors of investments.
As per insurance act, insurers are obliged to invest the invest the investable sum in particular sectors of investment as defined by the board. As per the Insurance Company’s Investment Guidelines, companies can invest only particular percent of investment in particular sectors. As per the guideline, companies can make the investment in the debentures of Nepal Government and Nepal Rastra Bank not minimum to 25% in “A” class. They can invest up to 35% in the fixed deposit of commercial banks. Similarly, in the fixed deposit of development bank 15% of investment and in Citizen Investment Trust Unit Citizen Investment Scheme, 5% investment can be made.
Likewise, insurers can make 10/10% of investment in preference shares of commercial banks, development banks, finance companies; in the fixed deposit of finance companies and in the equity shares of public limited companies. Similarly, in the productive sectors and in the sectors of national interest 5 % of investment can be made as well as in the shares of investment companies, 2% of investment can be made.
Even though various sectors have been specified by the board for the investment, Life Insurance Companies have been complaining about not finding sectors for long-term investment. The liability of life insurance companies being long term, but the sectors for investment is short term, the companies have been complaining about not being able to get the appreciative results. So, the government should observe the international practice and separate new sectors of investments for life insurance companies, says the chief executive officer of Surya Life insurance Company, Shivanath Pandey.
In the financial year 2071/72, companies invested 93 billion, 8 hundred 80 million rupees. Similarly, in the financial year 2070/71, 79 billion, 1 hundred 20 million investment and in the financial year 2069/70, 64 billion, 3 hundred 40 million of investment was invested.
Now, maximum companies have been investing in the fixed deposit of bank and finance institutions. If tomorrow, finance institutions get some trouble, then insurance companies will totally get ruined, said chief executive officer of Surya Life, Pandey.
“The request of life insurance companies is reasonable, said the chairman of insurance board, Chiranjeevi Chapagain. Even though, claim can be made on Insurance companies at any time, insurance companies should be ready for it as well,” he said. “Standing in favor of insurance companies, we shall go further to other alternatives, by discussion if needed,” he said.
Within 5 years, two times increment in investment
In past 5 year’s period, the investment of Life insurance companies has increased by 2 times. As per the statistics of Insurance Board, up to financial year 2072/73, the investment of life insurance companies has reached 1 hundred 18 billion. Only in financial year 2068/69, companies had invested 54 billion, 5 hundred million rupees.
In the Past 5 years period, Nepal life Asian Life, Surya life, Gurans Life, and Prime Life has increased by more than 3 times. The investment of Rastriay Bima Sansthan has however decreased by 19%. Likewise, the investment of Met Life Insurance has increased by nearly two times and the investment of Life Insurance Corporation has increased 2 times. Similarly, the investment of National Life Insurance has increased by more than 2 times.
As per the statistics of Board, in the financial year 2071/72, Companies have invested 93 billion, 8 hundred 80 million rupees. Similarly, in the financial year 2070/71, 79 billion, 1 hundred 20 million rupees and in financial year 2069/70, 64 billion, 3 hundred 40 million of investment was done by the companies.