Kathmandu. The Nepal Insurance Authority (NEA) has prepared its strategic plan only twice in its 57-year history. The preparation of the strategic plan first began in 2018. The authority unveiled its strategic plan for 2023 to 2027 in 2024.
In the Background and Introduction section of the second strategic plan, the NRA summarizes the regulatory role of the authority in the promotion of the insurance sector and its future plans. Against this backdrop, NEA has pointed out unhealthy competition among insurance companies, lack of skilled manpower, low insurance awareness and weak purchasing power as the main challenges.
A brief summary of the background details of this document, written in English, is presented here for the information of the reader.
Nepal Insurance Authority (NEA) is a founding member of the International Association of Insurance Supervisors (IASIS). The association adopts the insurance fundamentals as the guiding principles for the insurance sector. The Authority follows policy, legal and institutional reform strategies. insurance service delivery in line with international practice and standards; Strengthen the supervision and development of the insurance sector as a pillar of social security to make insurance services effective and competitive and protect the interests of the insured.
NEA is moving ahead with an objective to contribute to sustainable economic development of the country by maintaining corporate governance in insurance sector, minimizing risk of general public, protecting the rights and interests of the insured and increasing public participation in insurance.
Nepal’s insurance market is limited due to many challenges. Some of the major challenges include low and irregular incomes, Kazmore level of insurance awareness, small market size, unhealthy competition among insurers, lack of skilled human resources, limited risk retention capacity of insurers due to low capital base, limited access to reinsurance market, weak legal and regulatory framework, among other familiar challenges.
A large proportion of Nepal’s population has low purchasing power. Many lower- and middle-class Nepalis are neither familiar with the culture of insurance, nor is their income enough to buy insurance articles. Thus, insurers are facing the challenge of bringing potential customers closer to the benefits of insurance growth in the insurance market.
Due to the small size of the insurance market, unhealthy competition among insurers is a serious challenge for the insurance market in Nepal. The practice of price reduction is also prevalent and the experience of de-tariff practice is also not very promising. Almost all the insurers, especially the non-life insurance companies, have concentrated their business only in urban areas.
In the insurance market, it is important to train insurance authority staff as well as companies and intermediaries more effectively. The lack of qualified human resources has proved to be another challenge for the insurance sector in Nepal.
