2. Introduction
One of the First Reinsurance Broking Firm of Nepal
Incorporated in the year 2022, licensed by Nepal Insurance Authority
Promoted by prominent leading business houses of Nepal
Strategic partner with Global Insurance Brokers Pvt. Ltd., Mumbai, India
5. Market Status 2077/78 (2020/21)
Source: Nepal Insurance Authority
4.58
9.09
1.78
2.40
2.14
1.26
0.81
1.11
3.34
3.41
1.16
2.22
1.58
0.88
0.42
1.01
F IRE MOT OR MA RINE E NGINE E RING MIS C E LLA NE OUS A GRI MIC RO A VIA T ION
PORTFOLIO WISE MARKET PREMIUM OF NEPALESE NON LIFE
INSURANCE (IN BILLIONS)
Gross Premium Reinsurance Premium
6. Micro Insurance
•Microinsurance products offer coverage to low-income households or to individuals who
have little savings
•It is tailored specifically for lower valued assets and compensation for illness, injury, or
death
•Minimum paid up capital is set to NPR 750 million as set by Nepal Insurance Authority
•Insurance agents specified by Nepal Insurance Authority for microinsurance
• Non Government Organizations
• SME Enterprises
• Micro finance institutions
• Cooperative Institutions
• Other institution registered under Company Act
•As of current situation, the existing non life insurance have generated a portfolio under
microinsurance which includes sum insured below or equal to NPR 1.5 million
7. Micro Insurance Provisions for Nepal
(NIA Directives, 2019)
S.No Type of Micro Insurance Maximum Sum Insured (NRs.) Premium Rate (%)
1 Property Insurance 5,00,000 0.2%
2 Household Insurance 5,00,000 0.05%
3 Health Insurance 50,000 per family (maximum 5 family
members)
4%
3 Accidental Insurance 3,00,000 0.1%
4 Cattle and Poultry and Crops 2,00,000 As mentioned in policy
5 Critical Illness 1,00,000 As mentioned in policy
6 Others 3,00,000 0.5%
8. Micro Insurance Business Nepal Insurance
Industry from 2074/75 to 2077/78 (in
billions)
0.71
0.33
0.01
0.00
0.30
0.31
0.00
0.00
2.25
0.03
0.00
0.00
2077/78 2076/77 2075/76 2074/75
Micro Gross Premium Micro Reinsurance Premium Micro Claims Paid
• Micro Insurance – For properties with sum insured below than 15 lakhs
9. Agriculture Insurance
•21.32% of Nepal GDP is contributed by Agriculture (CBS,2021)
•In Nepal, the development of agriculture insurance was initiated in 2013 (2069 B.S. in Nepal) with the
issuance of a Directive related to governmental premium subsidies for crop and livestock insurance
•Livestock: cow, buffalo, sheep/ goat, pig, etc
•Poultry: hen, duck, ostrich, pheasant (not subsidized)
•Fish: fish, trout, fish pond
•Honeybee insurance policy
•Crop insurance
• Based on input cost: Vegetable, mushroom, paddy, potato, fruit, banana, cardamom, bee.
• Based on production cost: vegetables, seeds, chaitedhaan (a type of seasonal paddy), ginger, turmeric, tea,
coffee, citrus fruits, and weather-index based policy
10. Agriculture Insurance (contd….)
•The premium rates vary according to the policy, ranging mostly from 5% to 7% of the sum
insured, except for pond (1%), hen, pheasant (1.25%), ostrich, fish (2%), and apple insurance
(8%)
•The agent commission fee for all policies is 15% of the premium
•To stimulate low-income farmers to participate, the state subsidizes 75% of the premium, an
increase from 50% in 2014
•The policies cover the following risks and perils:
• All policies: fire, lightning, earthquake, flooding, landslide, drought, storm, hailstorm, frost, snow,
sudden or accidental external factors, disease and illness
• Extra for crop insurance: damage caused by pests
• For fish insurance: damage caused by lack of oxygen and ammonia or death due to poison.
11. Exclusions in Agriculture Insurance
•The agricultural insurance policies exclude compensating losses caused by
• Mandatory destruction by a government authority
• Loss from theft
• Sale of land (for crop insurance)
• Loss of identification tag (livestock insurance)
• Excess capacity or overcrowding (fish insurance)
• Death due to bird flu (poultry insurance)
• War, terrorism, nuclear arms and radioactivity
• Livestock being used for a purpose other than specified
12. Major Achievements in Agriculture
Insurance (NIA Statistics)
•The total sum insured has increased from 625 million NPR in 2014 to 22 095 million NPR (163.5
million EUR) in 2019, with livestock insurance policies comprising 95% and crop insurance
policies 5% of the entire sum insured
•The total premium collection has increased from 23 million NPR in 2014 to 1 005 million NPR
(7.4 million EUR) in 2019
13. Challenges in Agriculture Insurance
•80% of people in Nepal live in hard-to-access rural areas with insufficient infrastructure to
effectively obtain agriculture insurance products
•Lack of awareness of agriculture insurance among the low income segments, and lack of public
confidence towards the agriculture insurance market
•Lack of relevant human resources in rural areas, and insufficient adequate auxiliary services,
such as agriculture technicians, weather stations, and others
•Commercial insurers’ lack of interest, due to geographical and infrastructural constraints, lack of
know-how, and farmers’ low and irregular income
•Moral hazard and fraudulent claims are not uncommon
•Concerning crop insurance that constitutes only 5% of the total sum insured, there are
difficulties in accurately assessing risks, input costs and losses related to crop production.
14. How Scope of Agriculture Insurance can
be widened
•Introduction of Microinsurance institutions and involving all aspects of agriculture insurance
without any cap on the sum insured
•Capacity-building for non-life insurers involved in agriculture insurance, and relevant human
resource development more broadly
•Enhancing supervision and monitoring mechanisms
•Revisioning of existing policies and encouraging production based crop insurance and need-
based product design
•Agriculture insurance literacy programs and training
•Developing a more effective client protection scheme and claims settlement mechanism,
together with more effective delivery channels and infrastructure improvement
•Better reinsurance support form reinsurers worldwide
15. No. of Livestock farms in Nepal
No. of business 6486
Business covered by insurance 3685
Not insured 2801
Out of 2801 business, 852 business are not insured due to lack of availability, 388 due to expensive, 758 think
not important, 233 think claim benefit not good, 196 due to not interest by insurers, 374 are due to unknown
Source: Central Bureau of Statistics, Nepal, 2021
16. Livestock Details
Animal Nos.
Total
Deaths
Natural
Death
Death due to
disease
Death due to natural
calamity
Cow 44873 4960 1650 3051 259
Buffalo 34653 3268 1136 2022 110
Goat 150538 19880 4143 15065 672
Himalayan Goat 31781 4043 1052 2332 659
Sheep 88421 10761 3034 6173 1554
Pig 38660 13189 6982 5825 382
Source: Central Bureau of Statistics, Nepal, 2021
17. Agriculture (Cattle, Crops, Fisheries, Poultry)
Business Nepal Insurance Industry from
2074/75 to 2077/78 (in billions)
1.52
1.06
0.97
0.65
1.10
0.79
0.71
0.49
0.62
0.66
0.97
0.34
2077/78 2076/77 2075/76 2074/75
Agriculture Gross Premium Agriculture Reinsurance Premium Agriculture Claims Paid
20. Agriculture Insurance Provisions (NIA
Directives, 2016)
S.No Type of Agriculture Insurance Premium Rate (%)
1 Crops Insurance 5%
2 Livestock Insurance 5%
3 Birds and Poultry 5% yearly or 1.25% per
batch
3 Fisheries 2%
• Deductible is 10% of sum insured
• Additional premium of 1% in Fisheries if the insured wants to insure the raceway/pond
21. Agriculture Insurance Provisions (NIA
Directives)
Cattle and Crops Age Premium Rate Deductible Remarks
Goat
1-3 months 7% 10%
Accidental Insurance for insurer upto 2,00,000 for an
additional premium of 0.05%
3 months-5 years 5% 10%
5 years-7 years 7% 10%
Coffee 5% 10%
Dragon Fruit Investment 5% 10% For 3 years insurance based on investment, after that
insurance based on production
Dragon Fruit Production 5% 10%
Banana 5% 10%
Sum Insured to be allocated under variable cost and fixed cost
Cow/Buffalo and other lifestock 5% 10%
Cardamom 5% 10%
Fish less than 1 year 2% 10%
Fruit 5% 10%
Paddy 5% 10%
Tea 5% 10% Insurance to be done only after plantation for new area
Vegetable insurance production based 7% 10%
Vegetable Insurance 5% 10%
As per directives by NIA, there is no mentioning of any deductible but the directive clearly states that only
90% of the sum insured will be paid in case of loss
22. Opportunities
On an average 63.21% of the total gross premium is ceded to reinsurer
From the graph, we can see that except the motor portfolio most of the gross premium is ceded
to reinsurers
Motor reinsurance to be done inside the country only as per directive from Nepal Insurance
Authority
Out of the reinsurance premium ceded, 20% direct cession is distributed inside Nepal only (10%
each to Nepal RI and Himalayan RI)
Besides 15% of treaty business to be provided to Nepal Reinsurance and Himalayan Reinsurance
in the first year which will be increased to 20% the second year as per the circular provided by
Nepal Insurance Authority
23. Existing Top International Brokers
Providing Services in Nepal
J.B Boda India and UK (more than 50% of the market)
Risk Care
Synergy Brokers
First Policy
India Insure
KM Dastur
Denion Reinsurance Brokers
Protection Reinsurance
Bharat Reinsurance Brokers
Sridhar Reinsurance Brokers
24. Major Reinsurers operating in Nepal
GIC Re (more than 50% of market share)
Hannover Re
CICA Re
Tunis Re
Asian Re
WAICA Re
Zep RI
Kenya RI
Nepal RI
Himalayan RI
25. Challenges
Lack of technical manpower especially portfolio underwriter in reinsurance broking in Nepal
Influence of international brokers with the domestic insurers
No clarification on broking services has been provided by the Nepal Insurance Authority yet
26. Future Prospects
Initial phase of reinsurance broking hence there is more possibility of growth
Reinsurance Broking is an international business
To penetrate the international market it is necessary to be registered with Lloyds London
Broker at Lloyds have further exposure in the international market as well
