Situation Analysis of Insurance Services in Nepal

The paper aims to analyse the current situation of insurance services offered by different institutions in Nepal and explore the opportunities and challenges of insurance sector. It also discusses the regulatory and development issues in insurance sector. The paper has been prepared based on desk review. The study concludes that Nepalese insurance industry experienced slow growth, limited coverage and low penetration and density over the long period prior to 2001 which is gradually increased thereafter. There is the domination of commercial insurers in insurance industry, domain of social insurance and social security programs also growing immensely but deposit insurance and insurance services by non-insurance organizations is in small scale. The regulatory issues in insurance sector is crucial as the industry has been faced poor corporate governance practices, poor quality of services, rising of fraudulent activities, low insurance coverage and penetration, under insurance, mis-selling and force selling, lack of qualified insurance personnel. Insurance is a pillar of the financial system, permanent sources of fund to banking sector and capital market. For the financial stability and sustainable economic growth, there should be sound coordination among the regulatory authorities and market players. The ultimate goal of these organizations should be to ensure the protection of rights of the customers.