The insurance regulator, Beema Samiti (BS), is making it mandatory for insurance companies to move out to rural areas and open branches in 753 local administrative units.
The BS has a target of ensuring that a branch of each insurance company is established in each of the local units of the country within five years, starting from 16 July which is the beginning of the next fiscal year, reports Republica.
The move is in line with the central bank Nepal Rastra Bank’s directive to banks and financial institutions making it compulsory for them to open branches in rural areas.
It may also be made compulsory for insurers to open two branches in rural areas for each branch in cities. The BS may also formulate rules such that insurance companies would not be allowed to open new branches in cities if they did not do the same in villages, said Mr Raju Raman Paudel, a director of the BS.
“In the rural areas, we can have agricultural insurance schemes and facilitate remittances to villages,” he said, adding that as villagers are involved in economic activities such as trade, animal husbandry, and farming, the concept of insurance companies in rural areas is feasible.
Mr Chiranjivi Chapagain, BS President, has said that insurance has not been able to flourish in the country due to the lack of insurance companies in rural areas.
According to Mr Chapagain, only 10% of the Nepali population has bought a life insurance policy. In addition, a quarter of people who bought life insurance stop paying premiums in the middle of the insurance period.
The cool response of Nepali citizens towards insurance is due to inadequate income, the harsh geographical terrain and lack of awareness, according to Mr Chapagain.
There are 18 life insurance companies and 20 non-life insurers in the country currently.