Rabindra Ghimire

Contribution of Insurance Industries in Economic Development of Nepal

The paper discusses on role of insurance industries in economic development of Nepal and analyses its contribution in Nepalese economy. The paper is prepared based on secondary data. Insurance, lately recognized its activities by UNCTAD since 1964 however, the contribution of insurance is not less than banks and other financial institutions. Insurance shares the risk, provides financial protection, reduces the financial distress and accelerates the pace of economic growth. Insurance mobilizes resources collecting small amount of scattered fund in terms of premium and provides large amount of fund to government and private sector. Insurance address the requirement of medium and high income class people, but large portion of low income and poor people are excluded from the insurance services. Microinsurance products address the marginalized and poor income people which is currently in practice more than 100 countries in the world. Nepal, recently has introduced Crop and Livestock Insurance schemes which is going to be implemented through 17 commercial insurers. Government provides 50 percent premium subsidy for clients who purchase the agriculture insurance policy. The paper concludes that insurance has played positive role in economic development of Nepal.

Perception of Uninsured Person Towards the Life Insurance Policy

The study aims to explore the reason behind of unwillingness of purchasing life insurance policies. It also examines the differences on opinion of respondents and their level of education, income, expenditure, and fixed asset. A structured dichotomous questionnaire was used to obtain the perception of 300 uninsured respondents using purposive sampling method. Mode and Mann Whitney U test have been used to find the perception and difference on perception of respondents respectively. The study concluded that both financial and non-financial reasons affected the respondents. These are reasons likely to be the dependency over the relatives in the time of hardship, low bonus rate of life insurance, and sufficient property they have. Similarly, mistrusting psychology over life insurance, perceiving the low quality services of company, lack of convincing capacity of agents, and complex claims settlement process are seemed to be the non-financial causes. Inferential statistic show that level of education and expenditure do not make difference on perception of respondents but assets and income have shown the greater influence the perception of uninsured significantly. It has been suggested to concerned authority to increase the social faith over insurance by different means like awareness campaign, introducing the investment linked type product, improving the service quality and increasing the financial performance of the companies. Government should offer financial incentives to increase the demand of insurance product.

Life Insurance Development and Economic Growth in Nepal: An Empirical Study Using VECM Approach

This article examines long-term relationship between life insurance and economic growth in Nepal. The study includes GDP and money supply as macroeconomic variables and life insurance premium as insurance industry variable. Annual data has been taken for 31 years (1983-2013) and Vector Error Correction Model has been employed to observe the long term relationship. It has been found that time series data has unit root in level but in first difference all three data set found no unit root. The study concludes that GDP, life insurance premium and broad money supply (M2) have long run relationship.

Does Business Duration of Life Insurance Companies affect the Financial Performance: A Case of Nepal

The paper aims to delve the impact of duration of operation to profitability in life insurance companies in Nepal. Eight private sector life insurance companies which were established in different phases have been compared on the basis of five years data. Six different ratios have been taken under consideration. The descriptive analysis proved that there is difference between the average of five years ratio between the four old and four new companies. The independent t test illustrates that there is significant difference between the financial performance of old and new companies in terms of GPPE and APE ratios however, in terms of IIIA, ROE, ROA, and EPE ratios there is no significant difference between the financial performance of old and new companies. The findings may be useful to insurers, policymakers and investors. It has been suggested to new companies that they should increase GPPE, APE, ROE and EPE ratio which are significantly lower as compared to the old companies.

Crops and Livestock Insurance Practices in Nepal

The objective of this paper is to discuss the micro insurance practices in Nepal, review the existing Crops and Livestock Insurance Directives, 2013 (CLID) and regulatory framework in Nepal. The paper has prepared on the basis of secondary data. Available literature and relevant documents were reviewed and analyzed to arrive in to conclusion. We have discussed 7 different insurance schemes in practice in different parts of country and further suggested appropriate delivery model on the basis of existing resources and structure. There are two basic approach of agriculture insurance: activity based approach and institution approach. Activity base approach allows to all commercial and non commercial insurers to sell the agriculture related insurance products continue with the products which are already sold. In contrast, in institution base approach, only agricultural insurance product is sold. In Nepalese context, institutional base approach would be better in different grounds. First, Nepalese commercial insurers have not financial and technical capabilities to cover the large agriculture sector. They have focused their institutional network in cities and semi urban area. Lack of reinsurance support discourages them to enter the agriculture insurance. Obviously, challenges are ahead but these can be minimized through strong regulatory framework, clear vision and policies, government commitment and strong motivation of insurer. Basically challenges can be pointed out as institutional challenge, technical challenge, operational challenge, geo-climatic challenge, diversity in risk exposure, lack of trustworthiness, high operating cost are some challenges may face by the all stakeholders of the agriculture insurance industry.

Impact of Income Structure to Profitability: Empirical Evidence from Life Insurance Industry in Nepal

Purpose: This paper has two objectives: first it explores the income structure and their trend. Second, it aims to confirm whether the income structure and financial performance have any significant difference on younger and older firms.Methodology: This paper obtained data from the financial statements of eight life insurance companies for five years period (2007/08 to 2011/12). Seven parameters of sources of income and four parameters of profitability and earnings analyses and arrives into conclusion using descriptive statistics, Pearsons correlation and t test along with descriptive statistics.Findings: This study concludes that age of firm influence the income structure but it is indifferent in profitability and earnings. Similarly types of income sources and Net Profit Margin and Return on Asset have negative but Return on Equity have positive correlation.Implication: The main implication of this study is that it contributes additionally to understand the income structure of the life insurance companies and their relationship with profitability in general and to explore differences on financial performances between younger and older firms in particular.