By Dipesh Ghimire
Increasing Insurance Accessibility: The Need for a Comprehensive Approach
To increase insurance accessibility and its importance among the general population, it is essential to integrate insurance education into the school curriculum. Raising awareness about why insurance is necessary should start at a young age. By introducing insurance education early on, students will develop a deeper understanding of its significance, thus fostering a more informed and financially secure generation.
The role of the state is critical in helping people understand the value of insurance and ensuring that it becomes a basic pillar of financial literacy.
Currently, one of the key issues in Nepal’s financial system is the ‘dynamic’ nature of interest rates on deposits. These rates should not be fixed permanently under any policy. Once a policy is introduced, it should be flexible, ensuring it adapts to the ever-changing financial landscape. The current structure of institutional deposits needs to be revisited. The rigidity in the policy and regulatory framework makes it difficult to accommodate the changing needs of the market. Therefore, to keep up with evolving market demands, it is crucial for policies to remain adaptable and responsive to change.
In the case of Nepal Life Insurance, the company has been diversifying its investment portfolio through its subsidiary companies, as allowed by the current insurance law. However, the taxation on these companies should also be reconsidered to foster more investment in such diversification strategies. For insurance companies to thrive, they need an environment that encourages growth and expansion. One way to achieve this is by easing the tax burden on these subsidiary companies, which would, in turn, promote greater investment in diverse sectors.
Furthermore, with the increasing role of technology in our daily lives, the insurance sector must focus on expanding its technological services. The government should incentivize insurance companies to integrate technology into their operations. The rapid growth of technology has opened new avenues for services, and insurance companies need to embrace these changes to stay competitive. By leveraging technology, insurance services can become more accessible, efficient, and user-friendly, ensuring that the industry continues to grow in line with global trends.
In a dynamic market, customers' needs change constantly, and they often look for services that meet their expectations. For instance, the issue of policy surrender rates remains a critical concern. It's important to understand why people surrender their policies. Is it due to lack of understanding or other reasons? Often, policyholders may not fully understand the long-term implications of surrendering their insurance policies. Insurance companies must ensure that customers are aware of the potential risks and consequences of surrendering their policies. This includes explaining that once a policy is surrendered, it may not be available at the same price in the future. Clear communication at the time of sale is vital to prevent misunderstandings and potential regrets later.
There should be no ‘loopholes’ in insurance policies that favor the companies at the expense of policyholders. It is crucial for both the insurance company and the policyholder to have mutual benefits and fairness in the policies. A policy that harms one party in favor of the other will only lead to dissatisfaction and distrust. Therefore, regulations and policies should be carefully crafted to ensure they are equitable and do not create situations where one side is unfairly advantaged over the other.
To minimize the surrender rate, all stakeholders—insurance companies, regulatory authorities, and customers—must collaborate. Efforts should be made to reduce misunderstandings and offer better transparency about the policy’s value and long-term benefits. By creating an environment of trust and clear communication, the insurance sector can ensure greater customer retention and satisfaction.
Additionally, comprehensive policies that explain the value of continued insurance coverage are necessary for increasing insurance penetration and ensuring its long-term success in Nepal.
Ultimately, increasing the accessibility and effectiveness of insurance in Nepal requires a coordinated effort between the government, insurance companies, and the public. By addressing gaps in education, policy frameworks, and customer communication, the insurance sector can be expanded to benefit more individuals and contribute to the country's financial stability.
