KATHMANDU, Sept 24: Premium income of life insurance companies went up by 26.8 percent in the last fiscal year, as rural markets continued to generate new business for life insurers.
A total of nine life insurance companies generated a premium income of Rs 13.25 billion in the one year period through July 15, as against Rs 10.45 billion raised by these companies in the same period the previous fiscal year, the latest Insurance Board report says.
Of the amount, the insurance companies generated Rs 4.75 billion by selling new policies and Rs 8.50 billion by renewing old policies.
“The primary driver of the life insurance business has been the rural market. This is the market from where life insurance companies generate most of the revenue,” Resta Jha, CEO of Prime Life Insurance, told Republica, informing, his company generates almost 70 percent of the business from rural markets alone.
The main reason for this is the high inflow of remittance income in these markets as most of the families in these areas have someone working abroad. This has raised their disposable income, and, in turn, given them leverage to purchase insurance policies, which is now considered safe investment that gives relatively good returns.
Of the policies introduced by nine companies, traditional endowment policies continued to remain the most popular life insurance product in the market in the last fiscal year as well. This product, which usually matures in 15 years, generated revenue of Rs 6.33 billion, or around 48 percent of the total premium income, for life insurance companies.
The revenue generated from sales and renewal of endowment policies in the last fiscal year was 27 percent higher than that of the previous year.
The Insurance Board report shows demand for endowment-cum-whole-life policies also went up in the last fiscal year, with sales and renewal of the second most popular life insurance product standing at Rs 2.99 billion in the one-year period through July 15, as against Rs 2.33 billion in the same period the previous year.
Among companies that raced to sell life insurance policies last fiscal year, Nepal Life Insurance Company finished first with premium income topping Rs 3.2 billion in the year, up 38.5 percent from that of the previous fiscal year.
The second largest company, in terms of revenue collection, last fiscal year was Life Insurance Corporation (Nepal), which sold and renewed policies worth Rs 2.54 billion in the year, while National Life Insurance Company finished third generating a premium income of Rs 2.03 billion in the year.
Among new companies, Asian Life Insurance was the best performing life insurance company last fiscal year, with the insurer´s premium income topping Rs 1.04 billion in the year. But in terms of selling new policies, Prime Life Insurance beat Asian Life, as the insurer sold new policies worth Rs 641.12 million in the year as against Rs 278.89 million generated by Asian Life.
Top 5 life insurers in terms of revenue
Nepal Life Insurance - Rs 3.2 billion
Life Insurance Corporation - Rs 2.54 billion
National Life Insurance - Rs 2.03 billion
Rastriya Beema Sansthan - Rs 1.56 billion
MetLife Alico - Rs 1.45 billion