Kathmandu. The Office of the Auditor General has said that the funds of insurance companies and Nepal Insurance Authority have not been invested in productive sectors.
In its 62nd annual report submitted to the President, the Auditor General has stated that interest cannot be charged by depositing more than a certain percentage of the insurance premium in the term accounts of commercial banks.
According to the Investment Guidelines 2079 issued by the Nepal Insurance Authority, life insurers can keep deposits up to 45 percent of the total investment in A, B and C category banks and financial institutions. Apart from this, non-life insurers and micro insurers are not allowed to keep more than a certain percentage of the total investment in fixed deposits, but most of the insurers have focused 80 percent of the total investment on fixed deposits.
The Auditor General has written in the report that the amount in the insurance fund has not been invested in the productive sector. By mobilizing this amount for development construction and physical infrastructure development, insurance companies should increase their income and increase their employment.
Other issues pointed out by the Auditor General’s report regarding the insurance sector:
Large portion yet to be associated with insurance:
In Nepal, the coverage of term insurance is 17.2 percent, the coverage of term insurance is 18.7 percent and foreign employment insurance is 7 percent. According to this, 57.1 percent of the citizens are yet to join insurance.
Low contribution to the national economy:
Although the insurance sector is an important part of the financial sector, its contribution in Nepal is not significant. The insurance sector contributes about 3 per cent to the GDP.
Durg still has limited access to insurance:
The insurers themselves have not reached the remote areas as the offices have to be opened at the local level to provide insurance services and the operating cost will increase. Although there is a provision of government subsidy in agricultural insurance, the attraction of farmers towards it is low. Due to climate change, the risk of the agricultural sector increases and the insurance fee is also more to bear it, so the insurer does not seem to be very enthusiastic about it.
Limited Teaching:
There is a shortage of skilled manpower including actuaries in the insurance business. Insurance or actuarial issues have not been given priority in the curriculum of domestic universities.
