January 7: The business of insurance companies, which was affected by the decline in economic activities, has started to improve. The business of life and non-life insurance companies, which had declined in the initial months of the current fiscal year, has shown improvement by mid-December.

According to the data of Nepal Insurance Authority, by mid-December, life insurance companies collected a total of Rs 12.31 billion from first insurance fee and renewal fee. By mid-October, they had collected Rs 8.63 billion in insurance fees. Similarly, by mid-December of the current fiscal year, they collected a total of Rs 61.74 billion in insurance fees.

In mid-November to mid-December, the life insurance companies did business worth Rs 2.34 billion. For this, they sold 433000 new insurance policies.

The business of non-life insurance companies also seems to have increased by around Rs 700 million. The authority informed that the life insurance companies collected Rs 2.28 billion in insurance premiums between mid-October to mid-November, which increased to Rs 2.99 billion in mid-November to mid-December. 

Along with the economic recession, the business of insurance companies was affected as the credit flow of banks and financial institutions decreased as well as the commercial activities were affected. However, the recent improvement in economic activities has had a positive effect on the insurance companies’ business. With the improvement in remittance inflow, more liquidity has been seen in banks and financial institutions. As a result, banks have reduced interest rates and emphasized on lending. Nepal Rastra Bank adopted a flexible policy through the review of the monetary policy saying that there has been an improvement in the indicators of the economy. NRB has announced in its macroeconomic and financial situation report that the external and internal indicators of the economy are in a strong state. It also reduced the policy rate. Similarly, the central bank has shown flexibility in lending in areas such as real estate, vehicles, shares etc. 

Earlier, the credit flow of banks and financial institutions had decreased due to recession and the business activities of insurance companies were affected. Since insurance is mandatory to take a loan from the bank, the lack of loan investment had also affected the business of the insurance companies. Insurers say that the increase in lending from banks and financial institutions will also have a positive effect on the business of insurance companies.