Krishna Bahadur Basnet/
Insurance sector and banking are the most important organ of the national economy. In international practice too, banking and the insurance sectors are taken as the important indicators. With the start of the insurance business in Nepal, a lot of discussion took place regarding the various aspects of insurance business. Similarly, insurance is the indicator of the national economy and the prosperity of the national economy. Prior to the enactment of the insurance act, 2049, the insurance companies were still operating in Nepal. But that business was not well managed and beneficial for the state however. The system to open up the new insurance company started with the enactment of the insurance act. After the enactment of the regulation, the system to permit the new insurance company to operate after definite time interval also got developed .With the decision to permit 4 insurance companies at a time, 12 new general insurance companies have been started. So, in aggregate, with the 4 preexisting companies, there are 16 insurance companies. But, now, to send 10 new insurance companies in market at a time doesn’t seems to be a scientific idea. To send the insurance companies in market in greater number than the operating one is sure to create some irregularities. New insurance companies should be operationalized but before that it is necessary to make the feasibility study as well as the market study. Of course, it will create a sort of competition among the insurance companies, there is not a logical basis to say that this competition will be healthy one and lead to the development. One the other hand, we do lack the skill human resources too. Although the skilled manpower can be generated, but the effect of the unhealthy competition among the insurance companies will have a long term negative over the insurance market .With the addition in new insurance companies, additional burden is sure to be added over the insurance board. Similarly, for the weak monitoring board, this has added additional challenge. The insurance board is not ready enough to face this challenge too.
On the other hand, it is a frequent complain that the regulating body of the insurance board is not much effecting. To some extent, this complain is reasonable too .But there is a need of the insurance companies too, to make the insurance board powerful and effective. It seems too, as if our insurance companies are not assisting the insurance board to be powerful as well as to make self-improvement within itself. Similarly, the insurance board doesn’t seem to take measures towards self-improvement and strengthening itself too. Lack of skilled manpower is the first problem of the insurance board. It seems as if the insurance board , which is in the direct supervision of the finance ministry , in present time is taking itself as dependent to the insurance companies , rather than being a regulatory body of the insurance companies . Similarly the insurance companies are not taking the responsibility to make their regulatory body powerful.
With the arrival of new insurance companies, it is believed that the market of the insurance companies is sure to expand. But rather than making the new customers, there may be the chance of pulling the existing customers from one company to another. It will have great hazard over the insurance companies. Life Insurance Company have to rely upon the insurance agents. That’s why, the insurance companies have to provide the training to the insurance agents too. They should also be given full chance of being commercialized.
Since the claim making in the airway insurance is larger in number Nepalese Insurance companies are taking a step back ward. In that, the possible reason is that our airways sector is weak in regard to the international standards .Nepalese insurance companies to take the insurance of the airways have to do a vast study.
So far the general insurance companies are concerned, although its access has increased by the commencement of the agricultural insurance by the government, but still both government and insurance companies are not giving attention towards its effectiveness. There are plenty of causes on why the general insurance is not expanding. The market of general insurance is smaller. Due to lack in proportionate increment in the revenue of the commoners with the increment in the company’s capital, the market of the insurance is not increasing. As per the simple rule of investment, the revenue should be thrice of the investment. But, has this standard been met by all of our insurance companies? Although the short term insurance scheme and agricultural scheme, publicized by the government seems to have attracted additional customers but it is quite essential for us to monitor whether it is being utilized positively in an unquestionable way. In India too, many agricultural insurance scheme have been unsuccessful. For this, both the insurance board and insurance companies should pay special attention. On the other hand, both the surveyor and the insurance agents should should be under the supervision and effort has to be laid towards making them commercial. It seems as if our insurance sector is still in the child and error stage.
The purpose of the insurance companies is never to trouble the insurance customers. Insurance companies are always focused towards expanding their market through the goodwill. Surveyors and Insurance agents, who are directly having face with the customer, should not only be focused towards immediate profit, but should be focused towards the entire insurance company.
With the arrival of a new insurance company, an additional burden is seen to be added on the insurance board. Likewise, the insurance board, with the weak supervision system, is facing some more challenge. The insurance companies should always be ready to face this challenge.
For the airline insurance too, the foreign insurance companies are not seen much interested. Since majority of the flight take place in the mountain area, the companies are not much interested. Similarly, due to less commission too, some problem seems to be there in this sector. For only 1-2% commission, the insurance companies generating the airline insurance policies. Since, the claim making in this sector is relatively higher, the Nepalese Insurance companies are moving backward from it. In addition to this, our airline sector is weak enough to meet the internationally defined standards. It is also another cause. For taking insurance policy of airlines on own, the Nepalese insurance companies have to do detailed study. From the annual accident rates, the status of the airplanes as well as the airports, the feasibility of the Insurance Company’s capital to mitigate the risk, etc. subjects have to be studied. Then only in consensus ad idem, the airline insurance policy can be taken. It would be beneficial for us to cover certain risk of the airline policy, rather than handling over the entire risk to the foreign companies.
Country has entered into the federal model. In this model, the insurance companies should be located being states centered. The problem of physical infrastructure has long been suffered by the general insurance companies. Provided that, there was good transportation access to the rural area, it would have been easier for the insurance companies too, to expand their services. Not only focusing in raising awareness regarding insurance, but focusing in the increment of revenue of the individuals would be beneficial for the insurance sector. The awareness of need to do insurance is not enough, but to purchase the policy, there is the need of the money too!
Based on the interview with Mr. Basnet, who has a working experience of nearly 53 years in the insurance sector. He is currently employed as an advisory in the Sagarmatha Insurance Company.