NLG, Shikar top performers among non-life insurance cos in 2012-13

KATHMANDU, SEP 23 - 2013

The NLG Insurance Company topped the list of policy issuance, while the Shikar Insurance collected the most premiums in the last fiscal year 2012-13.

According to the Insurance Board of Nepal (IBN), the company issued 159,156 policies in the segment last fiscal year, which is the highest among non-life insurance companies. Shikhar, on the other hand, collected premiums worth Rs 922.97 million, which is the highest among insurers.

A total of 17 insurers, including the Rastriya Beema Sasthan, issued a total of 790,498 policies and collected a total premium of Rs 8.98 billion last fiscal year. The NLG is followed by the Siddhartha Insurance , the Lumbini General, the Nepal Insurance and the Alliance Insurance companies as the top five insurers in terms of policy issuance.

The IBN statistics shows that the NLG issued 129,002 policies for automobiles, 16,128 fire insurance policies and 703 policies for marine insurance. The NLG has collected premiums worth Rs 650.84 million. “Third party insurance by motorists particularly helped to boost policies in recent years,” said an official of the NLG.

The Siddhartha Insurance issued 78,918 policies in a year. The Lumbini General Insurance issued 78,481 policies, followed by the Nepal Insurance Company (70,837 policies) and the Alliance Insurance (60,262 policies) round out the top five in the category.

From the segment of top premium collectors, Shikhar is followed by the Himalayan General Insurance , the Nepal Insurance , the NLG and the Siddhartha Insurance .

Of the Shikhar’s premium collection of Rs 922.97 million, it received its biggest contribution from vehicle related insurance products, which contributed Rs 335.77 million in premiums.

With a premium collection of Rs 898.05 million, the Himalayan General Insurance secured second position.  Shreeman Karki, director at the Insurance Board of Nepal said the government’s regulation to make third party insurance mandatory while renewing vehicles helped increase the insurance premium significantly last year. The companies collected premium worth Rs 8.1 billion in 2011-12, but the figure increased the following year. “The increasing number of vehicle users in recent times has helped increase both the number of policies, and premium amount, in vehicle insurance,” he added.

Including the Rastriya Beema Sansthan company, which carries out both life and non-life insurance, there are a total of 17 insurance companies that provide non-life insurance. These companies issued a total of 790,498 policies and collected Rs 8.9 billion in premiums by the end of the last fiscal year.

These insurance companies have been insuring economic activities under five headings in non-life insurance, related with: fire, marine, aviation, automobiles, construction and miscellaneous. The companies have issued a combined 529,220 policies, the highest being automobile related insurance, while only 87 policies were granted in aviation related insurance.

Karki said the low number of policies in the aviation sector was due to its small market size, along with the high risk that is embedded in insuring the sector. “Also, there is a high risk in keeping a large amount of retention in the segment, which has made insurers reluctant to increase the policies for aviation.”

Karki expressed hope for increasing the premium in non-life insurance in the future, due to the growing attraction for cattle and other agricultural insurance.

The companies paid Rs 3.19 billion in claim settlements for non-life insurance last year.

Nin-Life Insurance Companies’ Performance Compared

Companies  >>  No of policies issued  >>  Premium collection

Nepal Insurance     70,837    Rs 684.91 million

The Oriental Insurance     19,193    Rs 546.35 million

Rastriya Beema Sansthan    20,705    Rs 576.19 million

National Insurance     25,541    Rs 482.56 million

Himalayan General Insurance     37,966    Rs 898.05 million

United Insurance     24,199    Rs 390.31 million

Premier Insurance     21,809    Rs 329.65 million

Everest Insurance     8,043    Rs 308.53 million

Neco Insurance     38,945    Rs 412.39 million

Sagarmatha Insurance     60,201    Rs 735.01 million

Alliance Insurance     60,262    Rs 594.84 million

NB Insurance     9,460    Rs 74.73 million

Prudential Insurance     17,192    Rs 270.56 million

Shikhar Insurance     59,590    Rs 922.97 million

Lumbini General Insurance     78,481    Rs 508.95 million

NLG Insurance     159,156    Rs 650.84 million    

Siddhartha Insurance     78,918    Rs 601.99 million

Source: The Kathmandu Post

Oriental, Everest, Lumbini, United in red as underwriting losses rise

KATHMANDU, Dec 25, 2012

Country´s non-life insurance industry was in the red in the first quarter of the current fiscal year as huge underwriting loss erased gains made through hike in net premium income.

The total net loss of non-life insurance companies stood at Rs 88.39 million in the first three-month period of the current fiscal year as against net profit of Rs 117.39 million recorded in the same period last fiscal year, show balance sheets of non-life insurance companies, excluding state-owned Rastriya Beema Sansthan, Shikhar Insurance, National Insurance and NB Insurance that are yet to make their first-quarter financial results public.

The loss was reported as 13 of the 17 insurance companies posted an underwriting loss of Rs 66.68 million, meaning income generated from sales of policies, commission extended by reinsurance companies and returns on various investments could not sustain various forms of expenses, including claim settlement, and bulging provisioning for risks.

The biggest victim of this mismatch was The Oriental Insurance, which posted a net loss of Rs 136.72 million during the review period. The loss was reported despite recording a net premium income of Rs 177.09 million, which was surprisingly also the highest in the industry.

“We were hit with quite a big loss this time because of claim filed by Sita Air,” a high-ranking official of the company told Republica on condition of anonymity.

The insurer, which had insured Sita Air´s aircraft that crashed inside Kathmandu Valley in September, is said to have extended compensation of around Rs 170 million to the airline.

Another big loss maker during the quarter was Everest Insurance, which suffered a net loss of Rs 35.42 million. But unlike The Oriental, Everest incurred the loss largely due to fall in premium income.

The net premium income of the insurance company fell by 43.65 percent in the period to Rs 52.75 million as the insurance sector regulator put a temporary ban on its fire insurance business - one of major revenue generators - after it was found guilty of making excessive advance payment against a fire claim filed by a company owned by one of its promoters.

To protest this as well as issuance of a directive on corporate governance, the company in September stopped issuing new policies for around 10 days, which also left a dent on its income.

“We are expecting the regulator to lift the ban soon following which business will come back to normalcy,” a high-ranking official of Everest Insurance told Republica on condition of anonymity.

Like Everest, Lumbini General Insurance also incurred net loss of Rs 28.02 million due to 24.89 percent fall in net premium income to Rs 71.03 million.

The company - which earlier this year faced regulatory action for conducting credit business, failing to settle claims in time and haphazardly issuing policies without proper evaluation of risks - is also said to have incurred losses in automobile insurance business, which led the company to post underwriting loss of Rs 29.93 million.

Another company, which towed the line of loss-making insurers, was United Insurance. The company suffered a net loss of Rs 5.28 million, despite 21.55-percent hike in net premium income.

“This was because we provisioned around Rs 29.5 million for possible loss likely to arise from the fire that engulfed electronics warehouse of Chaudhary Group in October,” a company official said on condition of anonymity. “If we had not allocated the amount we would have posted profit.”

Net loss of non-life insurers

The Oriental - Rs 136.72 million
Everest - Rs 35.42 million
Lumbini - Rs 28.02 million
United - Rs 5.28 million

Source: Republica

Insurers told to reduce number of unsettled claims by half

KATHMANDU, May 28, 2012

The Insurance Board has instructed all non-life insurance companies to reduce the number of unsettled claims by half within the next six months after a deluge of compensation-claim applications remained unapproved for months, and even years, upsetting customers who had bought policies in hope of being rescued at times of trouble.

The insurance sector regulator issued the instruction by calling CEOs and claim department chiefs of 16 private non-life insurers, that insure cars to cargos, to its head office in Chabahil.

“We had to issue the order after we found that many companies were simply harassing their clients by not honoring valid compensation claims and releasing payment on time,” Binod Aryal, executive director of the Board, told Republica, adding,“Such practices will not be tolerated anymore”.

He also warned of action against companies if they fail to settle outstanding claims within next six months. He, however, did not mention the kind of “action” the Board is planning to take.

Data compiled by Republica show that 14 publicly-listed non-life insurance companies have piled up 19,296 unsettled claims worth Rs 2.57 billion till the first nine months of the current fiscal year - up 25.6 percent in terms of number and 39 percent in terms of amount from nine-month period of last fiscal year.

The other two non-life insurers, which are not listed in the stock market - National Insurance and The Oriental Insurance - have 665 and 800 unsettled claims, respectively, to their names, according to data provided by the Board.

The order issued by the Board means non-life insurance companies will have to fork out over Rs 1 billion to settle more than 10,000 claims by November.
“I don´t think this is impossible,” Aryal said. “All they (insurers) need to do is add more staff to the claim department if they are facing shortage of human resources to settle insurance claims on time.”

The Insurance Board, during a recent survey, had found that most of the claims waiting to be settled incorporated motor-vehicle insurance claims.

Although statistics on the overdue amount are not available, the Board said even small payments of less than Rs 20,000 were kept pending for years.

“What was even more disturbing was the practice of pestering clients time and again to submit various documents under the pretext of investigation,” an official of the Board had told Republica on condition of anonymity last week. “This shows dominance of unprofessional management at insurance companies.”

Source: Republica