Insurance in nepal

Submitted By:

Submitted To:
Mr. Diwakar Bhatta

Introduction
• Cover used for protecting oneself
from the risk of a financial losses.
• Risk is covered in monetary value.
• Involves the Insurer and the Insured.
• Insurer is the insurance company who
provides the cover.
• Insured is an individual who takes the
insurance policy by paying a certain
premium.

BAFIA 2063
• The Bank and Financial Institutions
Act, 2007 section 3 provides that one
who is desirous to incorporate the
bank and financial institutions
• Required to do so by getting a public
limited company registered in the
concerned office.
• So in order to get the incorporation
and registration of bank and financial
institution, there must be

BAFIA 2063
• Necessary for the government to
regulate banks and financial
institutions in Nepal
• Created under the supervision of the
central bank of Nepal
• Authenticated by the house of
parliament
• Regulated by Nepal Rastra Bank

Stages of incorporation & registration
1. Approval for the
Registration of bank and
financial institution from
NRB
2. Incorporation and
registration of bank and
financial institution at the
Office of the Company
Registrar.
3. License for the

Approval for registration of bank and
financial institutions from NRB
• Memorandum of Association
• Articles of association
• Feasibility study report
• Personal particulars of the
promoters in the form prescribed by
NRB.
• A certified copy of the agreement
signed among the promoters before
the establishment of the bank
• Evidence of clearance of tax
certificate
• Other particulars and documents

Incorporation and registration of company
at the office of company registrar
• Memorandum of Association,
• Articles of Association,
• Copy of agreement among promoters if
any,
• Prior approval of respective agency if
necessary
• Citizenship certificates of promoters or
certificate of incorporation
• Permission letter of doing business in
Nepal if promoters are foreigners,
• Certificate that prove the nationality
of foreigners and certificate of

License of commencement of business by
NRB
• Matters concerning the maintenance of
minimum capital prescribed by NRB
• Matters concerning the existence of
adequate bases for providing services and
facilities
• Matters concerning the protection of the
rights and interests of depositors
• Consent given to comply with the conditions
prescribed by NRB

Fees for registration
Range of authorized Fees allocated by BAFIA,
capital Act
1 crore Rs. 150000

10000001 -100000000 Rs. 40000

100000001 -200000000 Rs. 70000

200000001 - 300000000 Rs. 100000

300000001 - 400000000 Rs. 130000

400000001 - 500000000 Rs. 160000

+500000000 Rs. 160000 + Rs. 3000
per crore

Fees for registration

• 0.01% of registered capital.
• The fees must be paid after all the
documents were submitted to Nepal Rastra
Rank .
• Depends on the company’s registered
capital .
• Up to Rs.5,000 the payment is made.
• The amount should be deposited at the
Nepal Rastra Bank.
• In the branch of the commercial bank
permitted by Nepal Rastra Bank, in the

Problems faced while registering banks &
financial institutions
• Excess Bureaucracy
• Conflict with promoters
• Lack of proper documents
• Time consuming Process
• Too many directives
• Others

Insurance
• A practice by which a company
provides a guarantee of compensation
for specified loss, damage, illness, or
death in return for payment of a
premium
• Elements of insurable risk
– Pooling of losses
– Payment of accidental losses
– Risk Transfer
– Indemnification

Registration as per insurance act 2049
• The desirous company who wants to
operate life insurance business must
have a authorized capital of Rupees
Two Hundred Million.
• The desirous company who wants to
operate non-life insurance business
must have a authorized capital of
Rupees One Hundred Million.

Process of insurance
• Selection of insurance
• Proposal form
• Evidence of respectability
• Survey of property
• Acceptance of proposal
• Issue of cover note
• Issue of insurance policy

Types of insurance
• Fire Insurance
• Marine Insurance
• Life Insurance
• Others
– Motor Insurance
– Household Insurance
– Engineering Insurance
– Aviation Insurance

Insurance Companies
• LIC Nepal
• Prime Life Insurance
• Asian Life Insurance

Prime Life Insurance
• Leading insurance company of Nepal
• Prime Life has been able to book a net
profit of NPR 87 million
• Offers three important benefits to its
valued customers: Savings with good
returns, Life security in case of unforeseen
events and Tax benefits as per
Government’s Rule
• Earned net profit of NPR 56.75 million in
the first full year operation.
• This is an unprecedented achievement in
the Nepalese Life Insurance Industry

Problems faced by Prime Life Insurance
• Limited scope for business
• Great competition among existed
companies
• Lack of awareness
• Educational level
• One sided economic condition

Asian Life Insurance
• Asian life insurance company is the
first life insurance company to receive
operating license from Beema Samiti.
• started functioning on third April,
2008 (Chaitra 21, 2064)
• Some Products:
– Asian Moneyback
– Asian Moneback-
– Asian Child Assurance
– Asian foreign employment (term)

Problems faced by Asian Life Insurance
• Lack of Consumer Awareness
• Lack of unstable government and
policies
• Lack of loyalty and sincerity
• Problem of capital/income generation
• Lack of necessary documents

LIC Nepal
• A joint venture between Life Insurance Corporation of India
(55%) and Vishal Group of Nepal (25%), the insurance
company has public participation to the extent of 20%.
• Life insurance Corporation (Nepal) Ltd. is instituted under
the Companies Act 2053, 27.12.2000 and has Registration
No: 765-057/58
• It has total authorized capital of Rs 25 crores and has
11,224 shareholders.
• The services provided by the LIC are:-
– ACCEPTANCE OF PREMIUM
– CANCELLATIONS AND SURRENDERS
– CHANGE OF MODE OF PAYMENTS
– NOMINATIONS
– POLICY LOANS
– REVIVAL OF LAPSED POLICY

Problems faced by LIC Nepal
• Problems in the field of:
– Insurance Committee
– Customer
– Agents
• 1% of whatever collection of money or
income they make has to be submitted
to insurance committee
• Among the whole population of
Nepal, only 5% to 6% are covered by
insurance.

Conclusion
• Uncooperative environment
• Lack of unstable government and
policies
• Lack of loyalty and sincerity
• Less collaboration with bank and
financial institutions for the promotion
of insurance company
• Problem of capital/income generation

Insurance in nepal

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