April 4: Big insurance companies have failed to implement the instructions of Nepal Insurance Authority that insurance such companies should issue a minimum of 10% micro insurance policies. In five years since the NIA issued the instruction, such companies have only issued 2 percent of their total investment in micro insurance. The big insurance companies have stopped issuing new policies for micro insurance after the opening of separate companies for micro insurance business.

In order to provide access to insurance to the poor and the underprivileged, the then Insurance Board issued the micro insurance guidelines in 2071 BS. Later in the year 2075, the insurance companies were instructed to ensure 10 percent of their total business for micro insurance.

As the big insurance companies did not implement the instructions, the authority has given permission to three companies to issue micro life insurance policies and four companies for non-life insurance business. However, the NIA has not removed the mandatory provision for other insurance companies to issue micro insurance policies. But the big insurance companies are least interested in the micro insurance business.

According to the data published by the authority, five of the 14 non-life insurance companies did not issue micro insurance policies in mid-February to mid-March of the current fiscal year (FY). Expansion of micro insurance business of National Insurance Company, Himalayan Everest Insurance Company, Sanima GIC Insurance Company, Siddharth Premier Insurance Company and United Azod Insurance Company was zero in the review month. Apart from this, the expansion of micro insurance business of other companies was also insignificant.

Among the 14 life insurance companies in operation, Himalayan Life Insurance Company did not issue micro insurance policies in the review month. The data of NIA mentions that the micro insurance business of other companies is also declining. Similarly, in mid-February to mid-March, eight such companies had zero renewal of micro insurance policies.

The Insurance Act 2079 mentions that the insurance aimed at low-income, socially and geographically backward people is defined as micro insurance and a separate company can be established for such business. According to the provisions of the Act, the NIA has given permission to establish new companies.

Insurers argue that since the license has been given to a separate company for micro insurance business, the justification of 10 percent micro insurance is irrelevant.

Rajuraman Poudel, executive director of the Nepal Insurance Asuthority, said that the license were given to the new companies after the old companies were not interested in micro insurance business. He also clarified that until the authority revokes the directive, the directive given to the insurance companies to expand their business in the micro insurance sector remains the same.

While the old companies are not interested in the micro insurance business, the new companies are aggressively expanding their business. In less than one year of operation, non-life insurance companies have sold 45,358 insurance policies and collected insurance fee of Rs 10.33 million as of mid-March of the current year. Meanwhile, non-life insurance companies have sold collected Rs 13.2 million by issuing 13,000 micro insurance policies.