Kathmandu. The insurance sector is the backbone of risk management of the economy. It contributes directly to economic growth, social security and disaster risk reduction. The ‘National Insurance Policy, 2080’ approved by the Government of Nepal has a far-sighted goal of expanding the reach of insurance in Nepal and bringing the poor and low-income classes under the ambit of economic security. <\/p>\n
The main objective of the policy is to align the insurance sector with the National Sustainable Development Goals (SDGs) and the poverty reduction strategy. In this context, an analytical review of the development and contribution of the insurance sector in the light of the Nepal Insurance Authority’s study on micro-insurance and existing policy initiatives is presented here. <\/p>\n
1) Analysis of National Insurance Policy, 2080 Point 10.7, Policy 9.70<\/span><\/strong><\/p>\n }<\/p>\n The policy 9.7 contained in point 10.7 of the National Insurance Policy 2080 has prepared the policy foundation to connect the insurance sector with the overall socio-economic transformation of the country. <\/p>\n (a) Helping to achieve the Sustainable Development Goals and reduce poverty: Insurance helps to break the vicious cycle of poverty. In the event of a disaster or accident, there is a risk that the poor family will again fall into the deep quagmire of poverty. Insurance directly helps in achieving the Sustainable Development Goals, decent employment and economic growth to end poverty by compensating for this economic loss. <\/p>\n b) Business Risk Reduction and Employment Generation of Small and Medium Enterprises: Micro, domestic and small industries are the backbone of the economy. Insurance provides an environment for small entrepreneurs to invest freely by freeing them from the fear of possible fire, theft or loss. It creates new employment opportunities along with the stability of the industry. <\/p>\n c) Linking climate change risk to insurance: Climate change has increased the risk of extreme rains, droughts, and unseasonal floods and landslides. Innovative tools such as weather index-based insurance help provide economic security to farmers and communities at risk of environmental risk. <\/p>\n d) Special insurance to reduce the risk arising out of natural disasters: Nepal is a country at high risk of natural disasters. The regeneration capacity of the community is enhanced by providing special catastrophe insurance or special type insurance plans to manage the effects of disasters such as earthquakes, floods, landslides. <\/p>\n e) Geographical and Social Diversification and Localization of Insurance Policies: In order to extend the city-centric insurance service to the villages, insurance services are localized by formulating insurance plans as per the geography and local needs, such as livestock insurance for the mountainous region, flood insurance for the Terai. <\/p>\n (f) Waiver of insurance premium and special facilities for citizens living below the poverty line: Equitable access is ensured by providing incentives such as government subsidy or waiver on insurance premiums to bring the economically weaker section under the ambit of insurance. <\/p>\n g) Expansion to vulnerable businessmen, small farmers, producer groups and cooperatives: Small farmers, agricultural cooperatives and small producer groups are at financial risk. To cover them, a strategy has been taken to expand the scope of insurance through cooperative and group insurance models. <\/p>\n h) Insurance arrangement of Nepalis living abroad: Social security of the migrant workers has been ensured by making temporary life insurance mandatory and simple for the security of millions of Nepalis working abroad and their families. <\/p>\n According to a study conducted by the Nepal Insurance Authority for the expansion and development of micro insurance, micro insurance is a reliable medium for the low-income class and rural economy. The main possibilities and challenges pointed out by the study are as follows<\/p>\n The market area for micro insurance is very large as a large population of Nepal, especially the rural and low-income groups, is still out of reach of insurance. <\/p>\n 2) Demand for Agriculture and Livestock Sector There is a high demand for agriculture and livestock micro insurance to protect the large population dependent on agriculture from climate risks and diseases. <\/p>\n 3. Financial inclusion and expansion of technology microfinance financial institutions, cooperatives and digital payment systems have made it easier to reach micro insurance to remote areas. <\/p>\n 4) Establishment of Specialized Micro Insurance Companies Separate micro insurance companies (Ishbh Balam Lyal) have been licensed to the micro insurance companies, which has brought special attention and innovation in this area. <\/p>\n 1) Lack of financial literacy and awareness Lack of awareness about insurance among the target group is a major challenge. <\/p>\n 2) High operating costs: Administrative and operating expenses of insurance companies are high due to small policy amounts and scattered customers. <\/p>\n 3) Complexity in claim payment process It is becoming difficult to maintain the trust of the general public in insurance due to the cumbersome claim process and not getting payment on time. <\/p>\n 4) Dependence and Sustainability on Subsidies There is a risk that the market will be affected due to the lack of continuous subsidies due to the high dependence on government subsidies in agriculture and livestock insurance. <\/p>\n 5) Limitations of distribution network and technology: The lack of insurance agents or networks in remote areas and the complete use of technology is another major obstacle. <\/p>\n Various important efforts have been made by the government and the regulatory agency Insurance Authority for the development and improvement of the insurance sector in<\/p>\n Nepal.<\/p>\n The implementation of the Insurance Act, 2079 has been made stricter and systematic by further empowering the Nepal Insurance Authority, the regulatory body. Micro Insurance Regulations and Directives, 2079. 2080 A legal framework has been prepared by issuing a separate micro insurance directive to increase the access of micro insurance. Establishment of specialized micro insurance companies Separate small life and small life insurance companies have been licensed to provide micro insurance services. <\/p>\n The government has decided to provide up to 80 per cent subsidy on the insurance premium of agriculture, livestock and medicinal herbs. <\/p>\n Climate Risk and Innovative Insurance: Efforts have been made to manage natural risk by operating index-based insurance schemes such as parametric insurance and seasonal index insurance as a master plan. <\/p>\n Increasing access to insurance: The penetration of insurance (including term insurance) has reached 40 percent of the total population due to policy efforts of the government and the NRA. <\/p>\n Protection of rural economy: Through agriculture and livestock insurance, the capital of small farmers and livestock entrepreneurs has been secured and it has become easier to get loans from banks and financial institutions. Social security of migrant workers: Thousands of families have got financial relief from untimely losses due to making temporary life insurance mandatory for migrant workers. <\/p>\n The idea of linking insurance with sustainable development and poverty reduction introduced by the National Insurance Policy 2080 is a milestone for the sustainability of the economy. Maximum use of technology, financial literacy campaigns, simple claim payment processes and coordination with the local level are essential to effectively advance micro insurance. If policy governance can be maintained by minimizing the challenges, the insurance sector can play a decisive role in achieving the goals of poverty alleviation and sustainable development in Nepal.<\/p>\n","protected":false},"excerpt":{"rendered":" Kathmandu. The insurance sector is the backbone of risk management of the economy. It contributes directly to economic growth, social security and disaster risk reduction. The ‘National Insurance Policy, 2080’ approved by the Government of Nepal has a far-sighted goal of expanding the reach of insurance in Nepal and bringing the poor and low-income classes […]<\/p>\n","protected":false},"author":5,"featured_media":320511,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45067,45159,45156],"tags":[],"class_list":["post-320568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-important-en","category-news-en","category-blog-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=320568"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320568\/revisions"}],"predecessor-version":[{"id":320569,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320568\/revisions\/320569"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/320511"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=320568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=320568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=320568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} 2) Possibilities and Challenges of Micro Insurance<\/span><\/h4>\n<\/p>\n
Possibilities<\/span><\/h4>\n<\/p>\n
Challenges<\/span><\/h4>\n<\/p>\n
3) Policy Initiatives and Achievements of Nepal Insurance Authority and Government of Nepal <\/span><\/h4>\n<\/p>\n
Policy and Institutional Efforts: <\/span><\/h4>\n<\/p>\n
Achievements{<\/span><\/h4>\n<\/p>\n
Abko Bato: <\/span><\/h4>\n<\/p>\n