Kathmandu, Feb. 17: Nepal’s insurance market may be small in terms of premium collection, but the country is trying to secure a place in the business that spreads beyond national boundaries, officials say.

“We are organising the 12th Insurance Congress of Developing Countries next month,” says Insurance Board’s Chairman Lava Prasad Sharma, who also heads an organising committee that comprises representatives of the insurance companies and other related business organisations. The 13th gathering will be held in Nigeria.

The Insurance Congress of Developing countries (ICDC), started first in the Philippines in the seventies, has come across a long journey and has a long way to go in the century that also marks the beginning of a new millennium. It has changed the name twice converting itself finally into ICDC from the Association of Insurers and Re-insurers of Developing Countries in 1998. The concept started originally as the Third World Insurance Congress in 1975.

“We take the upcoming Congress basically as a forum for discussion and exchanging experiences with insurers, re-insurers and surveyors of both developed and the developing countries,” says Sharma who expects at least 200 international representatives and 200 local participants during the three day event that kicks off on March 12.

“We have already received confirmation from 160 plus prospective participants,” adds Board’s Secretary Ramesh Raj Bhattarai.

“The Congress will be quite encouraging both in terms of the number of participation and the issue that is being discussed during the gathering that intends to discuss challenges facing the emerging insurance markets in this century,” he added.

“We will discuss our problems and ways to resolve them,” says Sharma. “By sharing with insurers, re-insurers and the surveyors of international repute, the local insurance companies will learn as to how they can survive in the business and how they can solve the problems.”

The Congress, participants and organisers believe-would be beneficial to the domestic insurance companies, the majority of which started in the nineties.

Nepal’s fairly small insurance market has over a dozen players and there are one or two others in the pipeline. Expanding the size of market and the coverage perhaps is the biggest challenge the insurance players face at the moment.

Annual growth

“The insurance business is growing by 20-25 per cent annually,” says Sharma who predicts premium collection this year will touch the 1.5 billion mark this year. “We expect the non-life part of insurance to raise 1.25 billion rupees and life insurance to recover 300 million rupees.”

Figures, however, cannot be predicted because Rastriya ‘Beema Sansthan, the state owned company which controlled over 50 per cent shares until around four years ago, has not had its auditing done for the last few years, according to the Board.

30% collection crosses border

The other problem lies in retaining the amount of money that goes out to the re-insuring companies around the world. “Net 30 per cent of the total collection crosses the border every year,” says Sharma. “This can be checked to a large extent if we could bring in a re-insurer here.”

There are efforts towards that end, he says. A Korean re-insurer company, ranked sixth in Asia, is interested in coming here, but the process is not progressing satisfactorily, partly because the insurance companies need time to convince their re-insurers as the share of premium collection that goes to them could drop by around 20 per cent.

Anyway, Nepal will have a re-insurer company sooner or later, adds Sharma. The arrival of any such re-insurer company would increase retention to 40 per cent from around 20 per cent at present, the Board hopes. That means only 10 per cent of the premium collection will fly out in dollar terms, according to Sharma.

Challenges

Besides, there are other challenges that need immediate attention as well. “We feel the act that governs the insurance companies and the Board itself needs to be re-amended,” says Sharma. And, there are priorities such as splitting life and non-life insurance services which two companies — Rastriya Beema Sansthan and National Life and General Insurance Company — have been running since the beginning.

The other challenges, the Board sees, is to bring the economically active areas along the border in to domestic insurance net. “Exchange of ideas during the upcoming summit could make a great leap forward in tackling Nepal’s insurance prospects that have been growing steadily over years,” Sharma hopes.