Kathmandu, Mar. 13: The 12th Insurance Congress of Developing Countries (ICDC) kicked off here today amid a gathering of over 300 participants, about 200 of them international insurance personalities from around the globe.
Finance Minister Dr. Ram Sharan Mahat inaugurated the Congress, being held for the first time in Nepal. The theme of the Congress this year is Facing the Challenges in the Emerging Insurance Markets in the 21st Century.
“The insurance industry has contributed substantially to the development endeavour through its useful role in mobilising smaller and widely scattered savings for investment and deployment in the socially and economically optimal areas and pursuits,” Mahat said in his inaugural speech. “The insurance industry would undoubtedly be a major player in the process of realising the economic growth prospects and opportunities of the nation.”
The Finance Minister added that the growth of insurance business symbolised the increase in the volume of economic activities, trade and transit transactions along with the concerns of people for protecting their valuable goods and properties. “Though the present volume of Nepal’s trade and transactions might not be at levels as expected and the Nepalese industry’s premium collection on all the headings might look unimpressive, this industry is bound to grow at a sound and sustained pace in a very short period of time, given the favourable atmosphere and the conducive framework being established and promoted for its competitive growth.”
The Finance Minister said the insurance industry is also immensely benefited by the emphasis on reform and restructuring of the economic regime, both in the macroeconomy and its important sectoral dimensions. “The growth in the non-agricultural sector of the national accounts at 5 per cent for the past five years (1994/95-1998/99) has also contributed to the growth of this sector, which in itself has assumed immense role for contributing to the accelerated growth process.”
He said the financial and insurance sector in Nepal was greatly benefited by the increased openness and competitive structure of the Nepalese economy, mainly in the non-agricultural sector. “Nepal’s economy is largely open with the total merchandise trade as a percentage of GDP being at 37% during FY 1998/99 and 39.3% during FY 1997/98.
He said the government had also played a positive role by the fostering of this industry by welcoming the foreign investment in insurance and re-insurance sector for the foreign and local entrepreneurs.
“The opening of such an important sector would certainly bring a significant change in the insurance industry, in terms of the volume of business, growth of employment, support to other business, and the promotion of the economic interest of the people. The government, with the reform and restructuring objective in mind, is also working toward formulation of various rules and regulations encompassing the different segments and processes of the financial sector of the economy, and many relevant acts are also along the stages of being revisited and amended,” Dr. Mahat said. “All these coupled with Nepal’s preparations for joining the World Trade Organisation should prove as a boon for the growth of the insurance in the days to come.” Mahat hoped the growth of the insurance industry in Nepal would also help in the process of developing Nepal as an international financial centre for which the necessary legislative arrangemtns are being put in to effect.
In his remarks, V.R. Ayllon, President of the Association of Insurers and Reinsurers of Developing Countries said that the local companies and countries of the emerging markets must leverage their own strengths, benchmark on and assimilate global best practices, and constantly shore up its technical capabilities in order to succeed in the global economy.
“We must also pay attention to the shifts in customer lifestyles brought about by technology as these will have a profound effect on how insurance is bought and sold. Along this line we must also pay attention to the products that other financial service companies are introducing as an alternative to insurance.”
Earlier, Chairman of the Insurance Board of Nepal and the 12th ICDC Organising Committee Lava Prasad Sharma gave a brief introduction of Dr. Mahat.