November 9: The business of non-life insurance companies declined by 13 percent in mid-September to mid-October of the current fiscal year.

The business of non-life insurance company has been affected due to the lack of liquidity in the banking system, which has led to a decline in credit flow from banks.

Since the beginning of the current fiscal year, the business of insurance companies has been decreasing. According to the Nepal Insurance Authority, the non-life insurance companies collected insurance premiums worth Rs 2.967 billion from mid-September to mid-October of the current year. The insurance premiums collected between mid-July to mid-August was Rs 4.475 billion and the figures in mid-August to mid-September was Rs 3.39 billion.

There is a mandatory provision for banks to insure the collateral taken while disbursing the loan. Due to the lack of liquidity, credit flow of banks has been limited.

Similarly, due to the strict policy adopted by the government for the import of vehicles, the non-life insurance business has also been affected.

Although the collection of insurance premiums dropped, there has been a general increase in the number of insurance policies issued from mid-September to mid-October compared to the previous months.

The companies issued 221,642 insurance policies from mid-July to mid-August, 223,727 from mid-August to mid-September and 244,097 from mid-September to mid-October.

Rajuraman Poudel, executive director and spokesperson of the authority, said that along with the decline in economic activities, there has also been a decline in the business of insurance companies. “Due to lack of liquidity, banks have tightened credit flow, impacting the business of non-life insurance companies,” said Poudel.

 According to the regulations of the Nepal Rastra Bank, banks must insure the property they take as mortgage.

The non-life insurance companies operating in the first quarter of the current fiscal year (mid-July-mid-October) did business worth Rs 10.84 billion. Up to this period, the companies issued a total of 689,468 insurance policies.

Two companies managed to collect more than Rs 1 billion as insurance fees by mid-October. The government-owned National Insurance Company collected the highest insurance premiums of Rs 1.264 billion from the sale of 10,255 insurance policies. Similarly, Shikhar Insurance sold 61,585 insurance policies and collected Rs 1.2 billion as insurance fee.

General Insurance collected the lowest insurance fee of Rs 251.5 million. By August, Sanima General was among the lowest performing companies. During this period, the company did business worth Rs 283.6 million.