Government targets 50 percent insurance coverage in 5 yearsThe government has made mandatory to both life and non-life insurers to sell at least 5 percent of their sold policies in micro insurance. The scheme targets to minimise the financial risks associated with agriculture, livestock and other small rural businesses.
The government has targeted to bring half of the population under the coverage of health and life insurance in the next five years. The government said its main focus will be on promoting the health and micro insurance at the grass roots level.
The government released the target in its concept paper of the 15th Five Year Plan. The draft of the plan says that within the prescribed time frame, 50 percent of the population will have purchased property insurance and similar proportion will have coverage of life and health insurance while 10 percent of farmers will have insured their products under farm insurance.
The Insurance Board’s target however contradicts with the target in the next plan. As per the board officials, the coverage of health and life insurance could be made available to a maximum of 25 percent of the population by 2019-2023.
The board’s record shows that insurance companies have sold 6 million units of life insurance policies to their clients as of mid March. Chiranjibi Chapagain, chairman of the board, said that the insurance coverage stands at only 17.5 percent of the total population, provided an estimated five percent have purchased insurance policy from more than one life insurance companies. “Based on the current trend, it seems hard to meet the target of 50 percent as envisioned by the concept paper.”
There are 19 life and 20 non-life insurance companies operating in the country. The non-life insurers have been selling an average of 700,000-800,000 units of insurance policies every year. Based on the statistics, the board is optimistic in meeting the target in other insurance business.
According to the board, there is a significant rise in the trend of purchasing property policy mainly after the 2015 earthquake. But the growth in farm insurance and micro insurance still appears slow.
Chapagain expressed that the farm insurance business could rise by a notable number in the future with the government prioritising agricultural production in the next period plan. The government has set the target of 5.4 percent annual growth in agriculture for the next five years.
The board in January 2013 implemented the Crops and Livestock Insurance Directives and six types of insurance policies have been issued in this regard over the period. The policies cover various types of crops, vegetables, cereals, fruits, poultry, fish, cattle and farm animals. Since then the government has been providing a 50 percent subsidy on insurance premiums of crops, livestock and poultry since 2013-14.
The government has made mandatory to both life and non-life insurers to sell at least 5 percent of their sold policies in micro insurance. The scheme targets to minimise the financial risks associated with agriculture, livestock and other small rural businesses.