insurance business of nlic

7/29/2019 insurance business of NLIc

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Chapter I

INTRODUCTION

1.1 Concept of Insurance

As the term insurance is related with risk, it will be better to understand

what risk actually is before we define insurance .Risk is one of the main sources

of loss which creates obstacles in every step of life of an individual. some times

it is also said risk goes where people go of course human life is full of risk

and people cant run away from it as risk is unpredictable and such risk causes

great physical losses to people .in this case people can lose not only their

property ,can lose their own life as well .the destruction of property or assets

makes human suffered and if something happens to the bread earner ,personwho earns for the family ,it will be hard for the other reliable family member to

get survive such natural disaster or accidental events may be due to fire ,earth

quake ,flood ,war, theft ,sink of ship ,accident etc .in fact those who wants to

minimize such risk seeks certain mechanism to cover such losses an insurance is

the only method that can avoid losses to some extent and people can be secured

from risk somehow.

Insurance is one of the major risk handling methods so that people can feel

free to operate their business. Insurance is an instrument to spread the loss

caused by a particular risk over a number of persons who are interested toaccept risk for certain return. In other words insurance is a co-operative device

which provides security against ones life or property.

In this modern world, it is hard to live a normal life without insurance.

Insurance collects a small amount called premium from the people and

compensated to those who suffer.

In this modern world, it is hard two concepts under insurance which are as

follows:

1.1.1) Traditional Concept

According to this concept insurance is defined as co-operativedevices 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 ConceptAccording 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 Historical Background Of Insurance In Nepal

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 nationalcompanies 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 weresuccessful 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. Ltd5. 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. Ltd9. United insurance Co. Ltd

10.Premier insurance Co. Ltd11. Neco insurance Co. Ltd

12. Sagarmatha insurance Co. Ltd

13. Alliance insurance Co. Ltd

14.N.B insurance Co. Ltd15. 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 fiscalyear, different insurance companies registered a total transaction of Rs 14.4 billion,

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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 25companies 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.

1.3 Study of life insurance business

Study of life insurance business some how provides information. Benefits

and need of insurance .the interested people night get the knowledge of insurance

thoroughly although they were in confusion before. From this report, the concerned

organization realizes their weakness &the insurance board i.e. Beema Samitee can

suggest them to do the improvement, This field report let us know the mobilization

of resources & their impact in the economy of the country from the life insurance

business .Most of all, the study of insurance policy of NLIC reveals the weakness& problem in the insurance business so that major remedies can be searched.

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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.

1.4 Problem of life insurance business in Nepal

Even if the insurance business started a long time ago in Nepal, till now many

people do not know even the meaning of insurance .since most of the people exist

here are illiterate .they do not know the importance of insurance .so no doubt, a lot

of problems have been facing by life insurance companies some of the problemsfaced by the insurance industry of Nepal are shown in the next page.

1.4.1 Lack of insurance awareness

In the context of Nepal ,people are still unaware of life insurance policy .only

few have the knowledge of life insurance polices and rest are unconscious about its

polices .the future of life insurance is dark until people are introduced about its

polices . In order to expand the life insurance business, people should be given the

entire where cab we get the life insurance polices if we are able to make people

realize about the benefits and importance of life insurance in the real life then the

future of life insurance business can flourish.

1.4.2 Lack of compulsory education about insurance

In the education system of our country ,there is not given the introduction of

insurance in school level .this subject is being taught only in the campus level

,which is not sufficient to get the whole knowledge about life insurance ,which

make barrier in the growth of insurance business.

1.4.3 Limited market

For expanding life insurance business, wide market is necessary .but since

Nepal itself is a small country; its areas of trade and industry are also small. The

life insurance business has not yet been able to reach to the rural areas .it is

concentrated only in urban areas and the villagers are still unaware of life insurance

and in this situation it is not possible to develop the insurance business.

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1.4.4 Low purchasing power

Most people of neap are living under poverty .so majority has less purchasing

power in this condition no one can think of insuring themselves as they need to

pay the premium compulsorily to the insurer . Their daily income is not sufficient

of daily survival so cant think of insurance at the prevailing income level.

1.4.5 Lack of re-insurance company

It is very sad for us that no re-insurance companies have been established in

Nepal .Nepals insurance companies has re-insurance contract with foreign

companies .so countrys premium amt is going outside the country .due to the flow

of currency to foreign countries. Devt. of life insurance business has been affectedso in order to remove this defect, it is necessary to establish re-insurance companies

in Nepal.

1.4.6 Lack of advertisement:

Of course, we have seen a lot of advertisement of a product and services that

launch in the market but till now we havent fount any insurance company doing

proper advertisement about life insurance and its benefits.

1.4.7 In lack of compulsory insurance

Other developed countries insurance starts as the person takes birth insurance iscompulsory there but in our country, it is hard to find the person who has insured

his life, which is creating problem in the development in the development of life

insurance business.

1.4.8 Complicated claim procedure

We hear so many complain in the claim of loss from insurance companies the

claim procedure is very complicated and is very difficult to get the compensation in

time. As a result people may build negative attitude towards insurance companies.

1.4.9 Problem of unemployment

Unemployment is the major problem in the context like Nepal. Since there is a

great problem of unemployment ,doesnt arise the question of insuring themselves

as it will be difficult for unemployment people to maintain the daily expenditure of

their life ,they cannot paid the premium amt regularly to the insurance company.

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1.5 An Overview On Nepal Life Insurance Company (NLIC)

Nepal Life Insurance Company was established under the Company Act 2053 and

Insurance Act 2049 as a public limited company on 2058/01/21 (04/05/2001).Nepal Life Insurance Company is the foremost life insurance company established

by private investors. The promoters of the company are a group of well known

businessmen and business houses of Nepal. Within the eleven years of operation

the Company has set up an excellent business record and has a strong financial

position.

The company has an authorized capital ofRs. 100 Crore. issued Capital of Rs 50Croreand Paid-up Capital of Rs 37.5 Crore. As on Ashoj 2069 the company hasinsured 4, 85,541 under conventional policies worth Rs. 5329 Crore and 3, 34,460

Foreign Expatriate policies worth Rs. 16273 Crore. Out of the total premium

collected the company has invested Rs. 1132 Crore as per guidelines of BeemaSamiti. The company has insured itself with well-know reinsurance company

"Hannover Re Life Reinsurance Company", Germany for conventional policies and

"SCOR Global Life", France for Term Assurance Foreign Expatriate policies .

1.5.1 Visions And Missions:

To endeavor through the noble institution of Life Insurance in

making every family economically safe and secure whereby every citizen of Nepal

may contribute his might in building a healthy, prosperous, strong & Vibrant

Nation.

To cater to financial and Social needs of every segment of society by designing

differentiated and innovative insurance instruments. To provide after sales service

to customers that can be hailed as the best.

1.5.2 How is NLIC Different From Other Insurance Companies?

Being in the business of selling life insurance products it is

performing the same job as the other insurers dealing with "Life Insurance".However, Nepal Life Insurance Company has its own identity because of the

mission and manner for which it is working. The company is working with a timebound strategy to fulfill its vision of spreading message of insurance to every home

and to contribute substantially in making Nepal an economically healthy and

vibrant nation. Apart from spreading the network of branches all over Nepal the

company plans to make a quantum jump in number of agents and to provide them

adequate training for providing knowledge and skill, so that the company can reach

and depth in the market.

The company is focusing on providing qualitative services of International

Standard. Our ambition is to provide across the counter services in all itsoperations.

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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.

1.6 Organizational Structure

The Company is having composition of seven directors, five

from promoters, one public director and one independent director. The chair

person is elected among the directors .The operating wing of the company is

headed by the Chief Executive Officer, in the corporate office. He is assisted

by a Senior Deputy General Manager, Assistant General Manager anddepartmental heads of underwriting and policy servicing, finance, information

technology, personnel and marketing. The branch offices which are theoperating offices of the company are headed by the branch managers who are

assisted by marketing and administrative staff in the office and by a network

of agents in the field. The company plans to reach every segment of the

population geographical, social, professional etc., so as to provide social

security to every eligible citizen.

The board members of NLIC are as follows.

Chairman Mr. Pursatuam Lal Sanghai

Managing director Mr. Govinda Lal SanghaiDirector Mr. Ram Avtar Agrawal

Director Mr. Ramesh Gupta

Director Mr. Prakash Mundara

Director Mr. Harish Chandra Subedi

Independent Director Mr. Kamlesh Kumar Agrawal

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. Gorkhab. Kawasoti

4. Heatauda Branch

5. Nuwakot Branch

6. Lalitpur Branch

7. Balaju Branch

8. Naxal Branch9. Birgunj Branch

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10.Biratnagar Branch

11.Birtamod Branch

12.Urlabari Branch

13.Lahan Branch

a. Rajbirajb. Siraha

c. Gaighat

14.Phidim Branch

15.Janakpur Branch16.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 Branch26. 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 theinsurance 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 premium3. To provide adequate return to shareholders

4. To develop manpower.5. Contribute towards betterment of nations and national

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6. Lastly, to provide first class insurance services.

1.7 Types of insurance policies sold by NLICNLIC sells the following life insurance polices for the sake of it clients.

1.7.1 Endowment life assurance policy

The main objective of this type of life insurance policy is to encourage the

insured towards saving and to providing financial support to the family members of

insured who rely on him.

In this type of insurance, a certain amount of money is paid in installment for a

certain period of time/this premium amt. need to be paid till the expiry of the periodof insurance but in case if the insured dies before the period . the premium amt

need not be paid and insures pays the insured amt .to insured if he is alive till date

but if the insured is dead then the amt. is paid to his beneficiaries.

1.7.2. Childs education and marriage endowment life assurance

policy

Actually this type of insurance is done by parents in order to arrange the sum of

money to fulfill their educational need and for their educational need and for their

marriage. This type of insurance really helps to minimize the burden to get lumpsum for further education and marriages as well. like others in this type of

insurance also insured need to pay premium for a certain period if he is alive but if

he dies before the completion of the stated period then premium shouldnt be paid

but the insurer pays the insured amt. only after the completion of the period and in

case if child is dead before the expiry of period then the policy can be transferred to

another child.

1.7.3. Anticipated endowment life assurance policy

In other life insurance policies ,insured amt is paid only after the completion of

the insurance period but in this policy insured amt is paid in advance as well after

the completion of certain years .this policy is available for the term of 15 ,20 and25

years period only.

Here also if the insured is dead before the completion of the period then the

remaining premium shouldnt be paid and the beneficiaries is paid the whole

insured amt .although the insured had already taken some percentage in advance.

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1.7.4. Endowment with accidental double benefits life assurance

policy

In this type of insurance if the insured dies directly by the accident then thebeneficiaries of the insured is paid the double amount of the insured amount but the

amount is only up to 1 lakh

1.7.5 Level term life assurance policy

Those who are involved in the risky job and also having the weak financial

condition do this type of insurance in order to get secured from unfortunate

happenings .under this insurance policy the insured feels that his beneficiaries get

insured amt .although he dies .this policy has found popular among people as the

premium in minimum.

1.7.6 Single premium anticipated plan

It is also like as anticipated endowment plan .it is only for 10 years to 15 years

only.

In this policy premium has to pay whole money at once in this policy premium

has to pay insured amount as the term of his period.

1.8 Objective of study

This report has been prepared specially to see the scope of life insurance

business in Nepal and the problems that has been facing by Nepalese insurance

businesses especially by NLIC. NLIC has raised the more scattered funds through

the life insurance policy.

To know the scope of life insurance business.

To evaluate the trend of life insurance business.

To make people realize the need and importance of insurance.

To know the amt. of premium collected form life insurance.

To know the weakness & give appropriate suggestion for improvement.

To know the present situation of life insurance business in Nepal.

1.9 Justification of study

Since Nepal is one of the least developed countries, may people still dont know

the importance and benefits of insurance. So I choose the topic Life insurance

business of NLIC among many other topics in other to provide so me information

about life insurance. In the present, of course, there are many companies that have

been registered in the Beema Samittee (Insurance board) to run the life insurancebusinesses in Nepal. So it seems to be competition among them. From the

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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, thegreat 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.

1.10 Research methodology

The research has been designed to extent of life insurance business conducted

by NLIC. The research design has been analyze to show the trend of life insurance

business & its problems.

Secondary data are the base of this report .All the available data used in this

report is secondary. Most of the data are collected from NLIC. How ever .The

following source has been used to collect required data about NLIC.

Annul reports of NLIC Records and bulletins of the concerned area

Relevant previous studies

Reports of bema samitee

Data collection procedure

The required data, facts & figures have been obtained from the office of NLIC

& insurance board. The flowing procedures have been done while doing this study.

1. The obtained data were tabulated

2. The tabulated data were presented and analyzed

3. Conclusions were made on the basis of analyzed data

1.10 Limitations of study

1. Though most of the personnel from the company were very co-operative

in providing the necessary facts and data, at many times they were quite reluctant to

provide certain data, which they considered, was company's secrecy.

2. The study of data is limited to only 4 years period.

3. Detail study could not be done due to limitation of time.

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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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PRESENTATION AND ANALYSIS OF DATA

The main objective of this chapter is to do the performance

evaluation of life insurance business in the context of NLIC. Here we analyze

premium income, investment of life insurance premium fund of NLIC, commission

paid to agents, advertisement and publicity expenses and policies issued by NLIC.

2.1 Premium collection

Actually the main source of earning of the insurance co. is premium .so the

success of the co. depends upon how much the premium amount they can collect.

Premium can be collected much if the co. is able to sell the no. of polices. The

following table shows the premium collected by NLIC.

Premium income

Table no. 1

Fiscal year Life insurance premium % increase

(decrease )

2064/65 11073165 -

2065/66 80681204 628.6%

2066/67 111656439 38.392%2067/68 162495419 45.53%

Source: Annual Report of NLIC

Figure No.:1

premium

11073165

80681204111656439

162495419

0

50000000

100000000150000000

200000000

2064/65 2065/66 2066/67 2067/68

Fiscal year

Am

ount

premium

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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 premiumamount 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.

2.2 Commission paid to agents

Agents are the heart of the insurance business as the insurance businessincreases if agents are able to convince to the prospects and sold the policies. So

sufficient commission to them can increase the insurance business some how.

Following table and chart shows the amount of commission paid to agents of NILC.

Commission paid to agents

Source: Annual Report of NLIC

Table No.:2

Fiscal year Commission %increase

2064/65 1624648 -

2065/66 1967755 21.11

2066/67 3663479 86.175

2067/68 7505706 104.82

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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 fiscalyear 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.

2.3 Advertisement and publicity expenses done by NILC

In this growing age of business, it is necessary to advertise the product andservices of the co in order to survive in the competition. Advertisement helps

people to know about the services that NILC has launched and it can get success to

sell the life insurance policies. So advertisement let people know about the product

and services of any organization.

So here I am trying to show the impact of advertisement in selling life

insurance polices in the context of NLIC for the following 4 years.

commission

1624648 19677553663479

7505706

0

5000000

10000000

2064/65 2065/66 2066/67 2067/68

Fiscal year

Amou

nt

commission

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Advertisement expenses

Table No.:3

Fiscal year

Advertising

expenses

% increase

2064/65 41538 -

2065/66 610125 1368.83

2066/67 1382127 126.53

2067/68 889841 -35.68

Source: Annual report of NLIC

Figure No: 3

From the above table we can say that the advertisement expenses hasincrease 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 costbrought 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.

advertisement

41538

610125

1382127

889841

0

500000

1000000

1500000

2064/65 2065/66 2066/67 2067/68

Fiscal year

Amount

advertisem

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2.4 Policy issued by NLIC

To evaluate the trend of life insurance business of NILC policies issued can

be used .More the number of policy issued, more it gains popularity. We can

understand about the policy from the table given below.

Table of Total Policy

Table no.:4

Fiscal year Total policy %increase

2065/65 2157 -

2065/66 13000 502.68

2066/67 19025 46.34

2067/68 21375 12.35

Source: Annual report of NLIC

Figure No.:4

From the above table we can know that the total policy issue by NLIC forthe 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.

Total policy

2157

1300019025 21375

05000

10000150002000025000

2064

/65

2065

/66

2066

/67

2067

/68

Fiscal year

Amount

Total policy

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2.5 Investment of fund done by life insurance department

of NLIC

Since profit maximization is the major objectives of the company, they used

to invest net premium amount in different sectors by analyzing risk the sectors are

Fixed deposit Loan to policy holders

Others

The following table shows the investment of fund in different sectors done

by NLIC:

Table no.:5

fiscal year Fixed deposit Interest on policy Total

2064/65 2617869 - 2617869

2065/66 16255179 - 16255179

2066/67 24380505 1700000 26080505

2067/68 27391577 2947295 30338872

Source: annual report of NLIC

2617869

16255179

24380505

1700000

27391577

29472950

5000000

10000000

15000000

20000000

25000000

30000000

Amount

2064/65 2065/66 2066/67 2067/68

Fiscal year

Investment on fixed Deposit and interest on

policy

Fixed depositt

Investment on policy

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 inthis year they have invested in interest on policyRs.2947295. So the total

investment difference is Rs. 30338872.

2.6) Balance Sheet of NLIC as on Asadh 2068 B.S

Particulars Current Year Previous YearSources

Paid up capital 375,000,000 375,000,000

Reserve & Surplus 36,854,186 34,827,639

Life Assurance Fund 7,653,368,402 5,525,319,707

Catastrophe Reserve - -

Long term loan & Borrowing - -

Total Sources 8,065,222,588 5,935,147,346Uses

Fixed Assets (Net) 380,065,468 403,402,868

Long Term investment 6,175,400,386 2,029,430,870

Policy Loan 476,191,046 307,797,774

Other Long Term Loan 52,528,217 36,562,462

Current Assets, Loans and advances:

Cash and Bank Balance 104,994,673 146,592,007

Short Term Investment 2,122,161,527 3,119,024,380

Other Short Term Loan 1,522,467 1,388,544

Other Assets 341,179,837 211,404,844

Total (A) 2,569,858,504 3,478,409,775

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Current liabilities and provisions:

Current Liabilities 1,432,380,416 231,288,470

Provision for Unexpired Risk 100,038,155 57,657,855

Claims Payable 48,379,258 46,439,686

Other Provision 116,007,525 20,892,246

Total (B) 1,696,805,354 356,278,257Net Current Assets C = (A - B) 873,053,150 3,122,131,518

Miscellaneous Expenses (To the extent not written off) 31,546,046 27,785,906

Loss Transferred From Profit & Loss Account 76,438,275 8,035,948

Total Uses 8,065,222,588 5,935,147,346Source.:www.nlic.com.np/nepallife-bs-2067-68.php

Chapter III

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SUMMARY, CONCLUSION AND

RECOMMENDATION

3.1 Summary

Among all other insurance policies, life insurance is the most important

branch as it deals with the life of a person which is the value assets of every family.

Human life is surrounded by risk. Because of the risk around the man people the

man people cant fee free to run the activities smoothly. Man is mortal. One cannot

run away from death. So the death of a person really affects in family members

especially the death of bread earner causes a great financial loss which makes

difficulty to the dependent members to run their life as usual. In this situation

people seeks the devices to secure from such losses and life insurance can such the

problems a bit.

Insurance is defined as a social device providing financial compensation for

the effects of misfortune. Insurance is also a country by which the insurance

company promises to pay the stated or certain amount of money on specified

contingencies to the insured by which the company charges the amount called

premium from the insured.

Because of life insurance if any unexpected event happens to the insured the

person who insured his own life the beneficiaries can get financial support from the

insurance company on the other hand insurance is the means of compulsory saving.

People pays the premium amount regularly till the date of insurance contract andcan get a huge amount after the expiry of the insurance contract and can use that

amount for the purpose of childrens education marriage etc so from the insurance

one can feel safe and can do progress in his life.

Life insurance really has innumerable significance so although the size of insurance

market is very small in Nepal. Its popularity is increasing day by day.

In context of Nepal most of the companies are concentrated only to city so the

people of remote areas is the major weakness of company in order to success firstly

company needs to give equal priority to all the citizens of the country therefore

important steps must be taken by NLIC to develop life insurance business in

Nepal.

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 impactof 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 thebenefits and importance of insurance to the people.

3. Company is unable to provide services to all the parts of the country so its

needs to open it branches to rural areas as well.

4. As agents take part directly in the insurance business, NLIC should

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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9. Agents shouldnt be centralized in the urban areas.

10. Researches should be done by the expertise of the related field.

Bibliography

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BOOKS:

Bhandari, Dilli Raj (2057) Principal & practice of Banking &

Insurance Asia publication, Kathmandu.

Joshi, (Prof. Dr), Shyam, (2005) Banking and Insurance

Management Taleju prakashan ktm.

Mishra, M.N (1998) Insurance Principles and practice, Seventh

revised edition.

Pant, Prem R. (2002) Fieldwork assignment and report writing,

Second Edition, Buddha Academic Enterprises Pvt. Ltd., Kathmandu.

Shingh, Hirday Bir, (2007) Banking and Insurance Management

Asia Publication, Ktm.

Pant, P. R., (1998), Fieldwork Assignment and Report Writing,

Veena Academic Enterprises P. Ltd., Kathmandu, Nepal.

Banking Operation N.R Bank, Banking and Financial Statistics

Department, Different Issues.

Blac, Kenneth, Jr, and Harold D. Skipper, Jr, Life and Health

Insurance, (2003) Pearson Education, Delhi.

Cookerell, H.A.L., Insurance, (1964). The English Universities Press

Ltd. London.

Dinsade, W.A. and D.C. McMurdia, (1971) Elements of Insurance,

Pitman Publishing, London.

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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

Holyoake, Julia and Weipers, William Insurance (2002) AITBS

Publishers, Delhi.

Khadka S.J and Singh H.B Banking and Insurance, (in Nepali)

[2062] Asia Publication.

Lawrence S. Ritter and William L. Silber, Principles of Money,

Banking and Financial Market, 1977

Shekher and Shekher, Banking Theory and Practice (2001) Vikas

Publishing House, New Delhi.

Rose, Peter S., Commercial Bank Management, (1991) Irwin

McGraw Hill, New Delhi.

Sethi, Jyotsna, Elements of Banking and Insurance (2008) PHI

Learning Pvt. Ltd. New Delhi.

Rejda, George E. Principles of Risk Management and Insurance,

(2004) Pearson Education, Singapore.

Mowbray, A.H. and R.H. Blanchard, Insurance: Its Theory and

Practice in the United States, (1961) Magrow Hill Book Company

Inc., New York.

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Paul, R.R. Money Banking and International Trade (1998) Kalyani

Publishers, New Delhi.

Panda, G.S., Principles and Practice of Insurance (2000) Kalyani

Publishers, New Delhi.

ANNUAL REPORT:

Annual report of NLIC

Others:

www.nlic.com.np

www.beema.com.np

http://bsib.org.np/
http://www.nlic.com.np/http://www.beema.com.np/http://www.nlic.com.np/http://www.beema.com.np/

insurance business of nlic

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