Professional Documents
Culture Documents
Traditional Concept
According to this concept insurance is defined as co-operative devices to spread the loss among the entire member. According to D.S. Hansell Insurance may be defined as the social device providing financial compensation for the effects of misfortune. The payment being made from accumulated contribution of misfortune. The payment being made from accumulated contribution of all parties participating in the scheme
1.1.2)
Modern Concept
According to modern concept insurance is a contract where. The insured must have an insurable interest in the subject insurance. Insurer charges a certain sum called premium as consideration.
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Insurer will make the payment in a certain definite losses. According to W.Peterson Insurance is a contract by which one party for compensation called premium. Assumes particular risk of the other party and promises to pay to him or his nominee a certain sum of money on a specified contingency. In brief, we can say that insurance is the risk distributing devices where the insured pays a certain sum called premium to the insurer and the insurer agrees to pays security upon a particular risk within a specified period of time. There are mainly two broad sectors of Insurance: a) Non-life or general Insurance It deals with the insurance of the things not of human such as fire, marine motor, property accident, engineering, aviation. Miscellaneous, etc. b) Life insurance It deals with the insurance of human life, Life insurance is an agreement between insurer (Insurance co.) and the insured (person who does the life insurance) where insured pays a sum called premium to the insurer and the insurer promises to bear the risk that comes in insureds life for a specified period of time. According to R.S Sharma life Insurance may be defined as a contract, where by the insurer in consideration of premium, paid either in lump sum or in the periodical installments, undertakes to pay an annuity or certain sum of money, either on the death of the insured of on the expiry of certain no. of years. Actually to say, life insurance business is very important in economies as it compels people to do saving and it is a good sources of investment as well thats why the trend of life insurance business is increasing in our country too.
1.2
One has to face uncertain risk in each stage. Such risk may be financial loss or loss of own life that really that really makes people effected .the only device to get relief from risk is insurance which some how makes human life worthy as insurance avoids the losses from uncertain risk .Insurance also can be said as device by which people can feel free to do any activities. The history of insurance business is not so long in Nepal as comparison to other countries. The scope or insurance was also narrow .therefore; no national companies were engaged in the business of the business of insurance before
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2004 B.S. The first established insurance business Co. was Nepal insurance and transport Co. ltd which established at 8th Ashwin 2004 B.S. but it was limited in conducting only general insurance thats why the insurance activities of Nepal were conducted by Indian insurance co. up to the year 2025 .those companies were successful in collecting amount of premium across the boarder and it is the development of country. So considering this on 1st poush 2024 B.S under Nepal co. act 2021 .Rastriya Beema sanstha (Pvt.) ltd was established .Under the ownership of HMG. In the establishment period it performed only non life insurance business and later on after the 5 years of its Estd. period i.e. on 2029 B.S. it is started doing the life insurance business in Nepal. Many insurance companies conducting the life and non life insurance business in Nepal are as follows:
1. Nepal insurance Co .Ltd. 2. The Oriental insurance co .Ltd 3. Rastriya Bema Sansthan 4. National Insurance Co. Ltd 5. Nepal life insurance Co. Ltd 6. National life and general insurance Co. Ltd 7. Saving bema and credit security corporation Co. Ltd 8. Himalayan general insurance Co. Ltd 9. United insurance Co. Ltd 10. Premier insurance Co. Ltd 11. Neco insurance Co. Ltd 12. Sagarmatha insurance Co. Ltd 13. Alliance insurance Co. Ltd 14. N.B insurance Co. Ltd 15. Life insurance corporation ltd 16. American life insurance Co. Ltd 17. Prudential insurance Co. Ltd 18. Everest insurance Co. Ltd
As the passage of time, today number of insurance companies has been established. This can be considered as the golden success in the insurance business history of Nepal. Such insurance companies are contributing a lot in the economic growth of the country. The insurance business that has nearly six-decade old history in Nepal has witnessed a significant growth in the recent years. In the last fiscal year, different insurance companies registered a total transaction of Rs 14.4 billion,
according to the Insurance Committee. According to the statistics provided by the committee, life insurance saw a transaction of Rs 8.9 billion and no-life insurance Rs 6.5 billion. Over 16 companies are providing non-life insurance service while eight companies are providing life insurance service. Rastriya Beema Sansthan provides both life and non-life insurance services. In the previous fiscal year, the 25 companies had registered a total transaction of Rs 10.9 billion including Rs 6.5 billion in non-life insurance and Rs 4.4 billion in life insurance. The private sector Nepal Insurance Company had begun the insurance business for the first time in Nepal on Jestha 4 2008 BS through non-life insurance. Chairman of the Insurance Committee Dr Phatya Bahadur KC said increased awareness among the people about the risks associated with life and goods has been leading to a growth in insurance business. KC said there is still lack of positive attitude about insurance while it has also not been on governments priority and insurance is yet to come within the reach of commoners. Besides, the lack of transparency also hampered monitoring in the sector in the past, he said. Rastriya Bema Sansthan recorded transaction of Rs 1.542 billion including Rs 1.2 billion in life insurance and Rs 340 million in non-life insurance in the last fiscal year. In the previous fiscal year, Beema Sansthan has recorded business of Rs 1.026 billion from life insurance and Rs 190.8 million from non-life insurance.
Administrator at Beema Sansthan Binod Aryal said the reach of insurance to rural population is yet to grow even though insurance business is growing in the urban centers. He said keeping in view with the little access of rural population to insurance, the Beema Sansthan is launching different insurance schemes like health insurance, crop insurance and livestock insurance. The Rastriya Beema Sansthan began its business in 2024 BS and it has expanded its services to all 75 districts. It has been providing life insurance service to over 75,000 employees. From both life and non-life insurance, the company has been earning around Rs 350 million premium every year. Economist Radheshyam Malakar said insurance companies play a great role in collecting the capital spread across the country. With awareness about the accidents and risks associated with industrial sector and risks posed by natural disasters, many people have started understanding the importance of insurance.
Selection of the topic study of life insurance business may due to followings: To show the trend of life insurance business. To make people convince a about the need & importance of insurance. To disclose the weakness &give appropriate suggestion for improvement. To know the difficulties faced by Nepalese insurance business. To give entire knowledge of life insurance.
This ambition cannot be fulfilled without the help of information technology. The company has strong IT infrastructure. All Branches of Nepal Life has been connected through wide area networking to provide better customers service.
Nepal life insurance Companys head office is situated in heritage plaza Kathmandu Nepal. It has many branch offices. Some of them are: 1. Kathmandu Branch 2. Banepa Branch 3. Narayanghat Branch a. Gorkha b. Kawasoti 4. Heatauda Branch 5. Nuwakot Branch 6. Lalitpur Branch 7. Balaju Branch 8. Naxal Branch 9. Birgunj Branch
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10. Biratnagar Branch 11. Birtamod Branch 12. Urlabari Branch 13. Lahan Branch a. Rajbiraj b. Siraha c. Gaighat 14. Phidim Branch 15. Janakpur Branch 16. Chandranigahapur Branch 17. Gaur Branch 18. Dharan Branch 19. Mahendranagar Branch 20. Dhangadi Branch 21. Nepalgunj Branch a. Humla b. Gulariya 22. Surkhet Branch 23. Butwal Branch 24. Dang Branch 25. Pokhara Branch 26. Palpa Branch The company also has many sub-sell branch offices all over the country to facilitate the people of the remote areas. NLIC has been providing employment of the country and I think it has contributed its best to solve unemployment of the country somehow. Similarly, around 2024 agents are involved in creating the awareness of insurance business/polices that NLIC has conducted In the fiscal year 2068/69 NLIC has been increasing polices of 20% from last year. From this, what we can say is, it is in the prosperity stage and also the insurance agents are being able to convince to prospects to get the insurance business. The main aims of NLIC are as follows. 1. To run successful and profitable insurance business and maintain its position appreciable in the market. 2. To provide security are reasonable insurance premium 3. To provide adequate return to shareholders 4. To develop manpower. 5. Contribute towards betterment of nations and national
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companys point of view, the key to get success in relation to other companies is premium. So premium is the important factor that brings fluctuation in the activities of the company .Therefore, each insurance co .endeavors a lot to get more contract i.e. proposals but different factors affect them to accept the proposal & also many other things relating to insurance are the curiosity that I want to know .Besides, the great interest on insurance forced me to write the report on this topic. So I have strived, the great interest on insurance forced me to write the report on this .So I have strived a lot to study on this topic.
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4. This report has been made on the basis of the course of BBS 3rd year program so this report will not be precise. 5. Basically, the study deals with NLIC so it may not be applicable to other insurance companies. 6. All sufficient data werent available therefore the secondary data from NLIC itself are the limiting factor. I hope that keeping these constraints in mind the reader will find this report informative and useful.
CHAPTER II
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Premium income Fiscal year 2064/65 2065/66 2066/67 2067/68 Life insurance premium 11073165 80681204 111656439 162495419 Table no. 1 % increase (decrease ) 628.6% 38.392% 45.53%
premium Amount 162495419 200000000 111656439 150000000 80681204 100000000 50000000 11073165 0 2064/65 2065/66 2066/67 2067/68 Fiscal year
premium
Figure No.:1
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The above table shows the premium collection from the above table, the premium income for the fiscal year 2064/65 RS.11073165 .in the fiscal year 2065/66 it has increased to RS. 80681204. Similarly, on fiscal year 2066/67, 2067/68 it has increased to RS.111656439 & 162495419. From the table we knew that the life insurance business is being accepted by the society as the premium amount is being increased every year. The above figure shows that the % premium on fiscal year 2065/66 has increased by 628.61% which is satisfactory. Similarly the percentage of the increment somehow has decreased but the premium has been increased in fiscal year 2066/67 and 2067/68.
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commission
Amount 10000000 5000000 1624648 1967755 3663479 commission 7505706
0
2064/65 2065/66 2066/67 2067/68
Fiscal year
Figure No.:2
The above chart and table shows the commission paid to agents. From the table we can see the commission paid to agents. From the table we can see the commission to agents is in increasing trend. In the fiscal year 2064/65 the commission was RS.1624648. For fiscal year 2065/66 the commission was RS.1967755 which was increased by 21.11%. Similarly, in the fiscal year 2066/67 the commission was RS. 3663479 which was increased by 86.17% .In the fiscal year 2067/68 the commission is RS. 7505706. In this year commission has increased in high percentage. This increasing trend of commission paid to agents shows that the agents are able to convince to prospects to sell the policy.
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Advertisement expenses
Table No.:3 Advertising % increase expenses 41538 610125 1368.83 1382127 126.53 889841 -35.68 Source: Annual report of NLIC
advertisement 1500000 1000000 Amount 500000 0 2064/65 2065/66 2066/67 2067/68 Fiscal year 41538 610125 1382127 889841 advertisem
Figure No: 3
From the above table we can say that the advertisement expenses has increase in 2065/66 with 1368.68% and 126.53 % respectively in 2066/67 and in 2067/68 it has decreased with 35.68%. Here we can say that NLIC has spent huge amount in advertisement in year 2066/67. Sometimes it had spent only few amounts in advertisement. Same had happened in year 2064/65 where NLIC spent only Rs.41, 538. It is now clear from the figures that whenever NLIC spends money in advertisement the premium rises. The increase in advertisement cost had increased the premium. This can be seen in the fiscal year 2065/66 where the rise in premium as well as rise in advertisement cost is highest among other fiscal years i.e.1368.83% increase in advertisement cost brought 628.6% increase in premium. Finally we can say that NLIC need to allocate adequate budget in order to get success and it should check and evaluate the effectiveness of advertisement by checking the policy holders whether they have increased or not.
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Table no.:4
Fiscal year 2065/65 2065/66 2066/67 2067/68 Total policy %increase 2157 13000 502.68 19025 46.34 21375 12.35 Source: Annual report of NLIC
Amount
13000 2157
20 65 /6 6
20 66 /6 7
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Fiscal year
Figure No.:4
From the above table we can know that the total policy issue by NLIC for the above four year. Here from the above figure we can know that it has been increasing its policies day by day. In the fiscal year 2064/65 it has issued 2157 policies. Similarly in fiscal year 2065/66, 2066/67 it has issued 13000, 19025 policies respectively. In the fiscal year 2067/68 it has issued 21375 policies which is more satisfy. Here we find the policy issued has increased even the other life insurance companies. Therefore no one can ignore its attempts towards the insurance business.
20 67 /6 8
Table no.:5
fiscal year 2064/65 2065/66 2066/67 2067/68 Fixed deposit 2617869 16255179 24380505 27391577 Interest on policy 1700000 2947295 Total 2617869 16255179 26080505 30338872
Figure No.:5
An investment made by NLIC in fiscal year 2064/65 in fixed deposited was Rs.2617569 but in this year NLIC did not invested on any policy. In 2065/66 investment of RS 16255179 was done in fixed deposit. This year also no investment was made on any policy.
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Similarly in 2066/67 invested of 24380505 was invested in fixed deposit which was more than year previous fiscal year. This year the company invested amount of Rs. 1700000 on policies. Investment of NLIC on 2067/68 in fixed deposited was RS27391577 but in this year they have invested in interest on policyRs.2947295. So the total investment difference is Rs. 30338872.
7,653,368,402 5,525,319,707 -
8,065,222,588 5,935,147,346
2,569,858,504 3,478,409,775
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Current liabilities and provisions: Current Liabilities Provision for Unexpired Risk Claims Payable Other Provision Total (B) Net Current Assets C = (A - B) 1,432,380,416 231,288,470 100,038,155 48,379,258 116,007,525 57,657,855 46,439,686 20,892,246
Miscellaneous Expenses (To the extent not written off) 31,546,046 Loss Transferred From Profit & Loss Account Total Uses 76,438,275
8,065,222,588 5,935,147,346
Source.:www.nlic.com.np/nepallife-bs-2067-68.php
Chapter III
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3.2 Conclusion
Life insurance is important not only in reducing the risk I human life but it is also a medium of compulsory saving company accumulates the scattered amount and resources and invests in the productivity sector which helps to improve the economic conditions of the county from the above study we can conclude that as
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the premium amount increases profit of the company will increase and vice versa so the company so take important steps to make the promotional activities to sell the polices. Although the company is concentrated only in the cities in present, it can expand its branches to the other remote parts of the country, which definitely creates employment opportunities. The performance of NLIC makes direct impact of the economic growth of the country as it invests the collected amount in government securities and fixed deposit account so it can e concluded that life insurance plays a vital role in the development of national economy. In present context Rastriya Beema Sansthan, NLIC Nepal Life Insurance Company, American Life Insurance Company is conducting life insurance business in Nepal. Nepal life insurance Co. and American life insurance Co. are the newly estd.
3.3 Recommendation
From the above study following recommendations can be drawn in prove the position of the company.
1. First of all company need to bring the policies and programs according to
need of prospect fro that it needs to conduct the researches to know their need.
2. Advertisement done on insurance is not satisfactory in order to success.
Popular Medias like TV, Radio, newspapers etc should be used to show the benefits and importance of insurance to the people.
3. Company is unable to provide services to all the parts of the country so its
motivate them by giving different types of facilities who brings more businesses.
5. Training and seminars should be held to make the agent more experienced. 6. The financials reports should be published in the time so that it will be
easier for the people to make decision whether to buy the policy from NLIC or not.
7. Due to the lack of re-insurance company in Nepal, countrys income is
going out of border which is financial loss. So in order to get secure from such losses, re-insurance company should be established.
8. New types of policies should be introduced to attract the prospect.
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Bibliography
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Management Taleju prakashan ktm. Mishra, M.N (1998) Insurance Principles and practice, Seventh
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Veena Academic
Enterprises P.
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Ghosh, M.K and A.N. Agrawala, Insurance: Principles, Practice and Legislation, (1958) The Indian Press Pvt, Allahabad. Gup, Benton E, Commercial Banking (2005), Wiley and Sons, Inc, Singapore. Hodgman, D.R., Commercial Bank Loan and Investment Policy, 1963
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Paul, R.R. Money Banking and International Trade (1998) Kalyani Publishers, New Delhi.
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Others:
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http://bsib.org.np/
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