The country has adopted a federal structure, but the model of insurance under such a structure is yet to be determined. The Insurance Board, the insurance regulator, is planning to expand services to all the seven provinces. Currently it only has a central office in Kathmandu. It had established regional offices in Birgunj, Biratnagar and Butwal back in 1998, but they could not function effectively and had to be closed within five years.
According to Schedule 5 of the constitution, formulation of insurance policy falls under the jurisdiction of the federal government. Running and managing the insurance business, however, is under the joint authority of the federal and provincial governments, according to Schedule 7. But specific laws and guidelines on insurance are as yet missing. Only when that void is filled will the model of insurance under the federal structure be ascertained.
Chairperson of the Insurance Board Chiranjivi Chapagain says that the central office will remain in Kathmandu, but the provincial offices will have the authority to issue license to insurance agents and surveyors, provide training to them, renew their licenses, collect insurance data at the provincial level and monitor the local level branch offices. The central office will have the authority to formulate policies and examine insurance claims.
Chapagain adds that his office is not in a hurry to establish provincial offices as the country does not yet have permanent provincial capitals. “We are studying the matter; it’s still unclear what authority and how many staff the provincial offices will have. But it’s important for insurance companies to expand. Only if they reach all 753 local units can ordinary citizens benefit from insurance services.”
But Bibek Jha, CEO of Nepal Life Insurance, disagrees. “Establishing offices everywhere will be costly. We go where there is a big population density. Our company, for instance, has offices in all but four districts of the country. And we have already reached 120 local units. Our target is to reach 150 local units by the end of the year,” says Jha.
Currently, the 35 insurance companies in the country are concentrated in a handful of major towns. As such a large section of the population is deprived of insurance services.
Nanda Prasad Tiwari, chairman of Nepal Professional Insurance Agent Union, says there is a healthy market for insurance. “Nine percent of the total population has insured themselves. That percentage will go up to 25 or 30 under a federal model,” says Tiwari.
There are 400,000 insurance agents in the country. The minimum qualification required to be one is SEE (Grade X). Tiwari argues they are facing problems for a couple of reasons. “One, insurance companies are not able to pay what they promise. Two, even banks provide insurance services. Banks should not have the right to sell insurance,” he says.
By Tulasi Subedi | Kathmandu
