October 13: Life insurance companies of Nepal have collected insurance worth more than Rs 26 billion as of mid-September this year. However, the business of insurance companies has declined due to the effect of the global economic recession and the rising interest rates of banks.

According to the Insurance Board, the 19 life insurance companies in operation have issued 14.14 million policies and collected insurance fees of Rs 26.37 billion until mid-September.

Between mid-August to mid-September, the companies collected insurance amount of Rs 10.97 billion. However, the collection of insurance fees in the review month declined by 27.11 per cent compared to a month ago. Between mid-July and mid-August, insurance companies had collected insurance amount of Rs 15.57 billion.

Raju Raman Paudel, executive director of the board, said that the business of insurance companies has affected by the decline in economic activities and the increase in interest rates of banks. 

"The effect of the financial recession and the increase in interest rates of banks have affected the business of insurance companies. That is why the business of insurance companies has decreased in September compared to August," he added.

Lately, banks have announced term deposit schemes for a period of up to 20 years with returns up to 10 times the initial deposit.

A large part of the insurance amount collected in the review month is the result of by the renewal of policy. According to the board, the companies collected Rs 2.20 billion as the insurance fee and Rs 12.85 billion as renewal fee.

Ramesh Kumar Bhattarai, Chief Executive Officer (CEO) of Mahalakshmi Life Insurance Limited, said that the business of the insurance companies has also been affected due to the slump in banking activities. 

"People pay for insurance only when all the needs are met," he said, "When the banks have stopped lending, and the cash flow in the market is low, the priority of the general public is on meeting the basic needs,'' he said.

According to the data of the Insurance Board, Nepal Life Insurance Company has done the most business till mid-September. This company has collected Rs 7.62 billion in insurance fees as of mid-September. Similarly, National Life Insurance Company has collected Rs 3.23 billion, Life Insurance Corporation (Nepal) Limited has collected Rs 3.19 billion , Union Life has collected Rs 1.44 billion, and Asian Life has collected Rs 1.21 billion.