The Beema Samiti (BS) has made it mandatory for insurance companies to reach out to rural areas and open branches in local administrative units, in line with the Nepal Rastra Bank’s instruction to the banks and financial institutions to compulsorily open their branches in the local units.
The insurance market regulator has a target of ensuring that a unit of each insurance company is established in each of the local units of the country within five years.
The Beema Samiti has made strict rules to ensure that they start extending branches to rural areas from the upcoming Fiscal Year 2018/19 itself.
“The board has made it compulsory for both life and non-life insurance companies to initiate branches in rural areas of the country,” said Raju Raman Paudel, director of the Beema Samiti at a talk program organized by the board in Pokhara on Friday.
“Within the next five years, each insurance company must have a branch in all 753 local units of the government.”
“It is important to extend the coverage of insurance across the country, and thus we have made it a compulsion for the companies to be present in all local units,” he added.
“In the rural areas, we can have agricultural insurance schemes and will also bring remittance to villages,” said Paudel, who added that as villagers are involved in financial activities such as trade, animal husbandry, and farming, the concept of insurance companies in rural areas was feasible.
It may also be made compulsory for insurance firms to open two branches in rural areas for each branch at the cities and also formulate policies so that the companies are not allowed to open new branches in the city if they do not do the same in the villages, according to Paudel.
Chiranjivi Chapagain, president of the Beema Samiti, also stated that the concept of insurance has not been able to flourish due to the lack of insurance companies in rural areas. According to Chapagain, only 10 percent of Nepali population has bought a life insurance policy.
Chapagain stated: “Due to lack of awareness about the concept of insurance in rural areas, people do not understand the importance of buying insurance policy for reducing the threat of unforeseen losses as awareness has not reached people of rural Nepal.”
Chapagain informed Republica that around 25 percent of the people who have bought insurance policy stop paying premium in the middle of the insurance period. The cold response of Nepali citizens towards insurance schemes is due to inadequate income, harsh geographical terrain and lack of awareness, according to Chapagain.
Due to the lack of awareness of agricultural insurance schemes, farmers have been at the receiving end. Likewise, insurance has only been made in the loan for large construction projects and not the entire investment, which is inadequate.
There are 18 life insurance companies, and 20 non-life insurance firms in the country at the moment, according to Beema Samiti.
Source: My Republica