Insurance Industry

The history of Nepalese insurance industry is not that long. The first insurance company, "Nepal
Insurance and Transport Company Ltd" (now named as Nepal Insurance Co. Ltd) was established
in 1947 (2004 BS). Insurance has a positive impact on Nepal's economy as well. The sector is
gradually increasing its share on country's GDP. As of Year, 2017 the service sector contributes
the most i.e. 51.67 percentage to the Nepalese GDP compared to, industry contribution 13.4
percentage and agriculture contribution 26.24 percentage (World Bank, 2019). This shows the
dominance of service sector in the GDP of Nepal. The sector shows an increase GDP contribution
of 2.03% in relation to total premium earned by the insurance sector. In addition, the sector is also
increasing investment driving infrastructure of development, employment scenario in Nepal by
providing direct and indirect opportunities (Pant & Kc, 2018).

As of Year, 2019 there are total 40 number of insurance companies (19 life insurance companies,
20 non-life insurance companies and 1 reinsurance company). This development clearly indicates
that the golden days for the Nepalese insurance sector are possibly here. Similarly, the interest of
general public towards insurance over the last few years has grown as more Nepalis are looking to
get insured. The devastating earthquake of 2015 with the huge loss of human lives and property
proved to be an important lesson in this regard. As a consequence, people have become more aware
that insurance can be instrumental to mitigate the risks in the future.

Scope and Problem

The contribution of service sector is increasing gradually and continuously. Some major service
industries in Nepal are; tourism, transport, social, financial and many more.

Interviewee 1 highlighted that:

“Right now, compared to other industries like manufacturing and banking, insurance
industry has better scope for fresh candidates. The main reason is this industry is in early
growing stage, the growth of insurance industry is historical. Based on the data, annual
growth rate of life insurance companies is 33 percentage and for non-life companies 17
percentage. This growth in insurance sector is exemplary not only in the service sector of
Nepal, but also in the entire Asian region. Growth here denotes demand of insurance
 service in the market because of this demand of employment generation is obvious. This
growth rate will probably increase to 40 percentage which is significant by the end of next
year. So, to meet this demand insurance industry needs human resource. Thus, at the
present scenario insurance industry can be the best platform for career development.”

This means in order to meet the demand for customer side companies will have to expand in every
aspect like, capital, product line, efficiency in claim settlement procedure and so on. This demand
does exist in banking sector, but what about its growth rate.

Interviewee 1 further added:

“Banking sector is already in saturation stage. Demand exists in the market which will
maintain present stat, but there is no extra demand.”

There are total 40 number of insurance companies to provide insurance services to Nepali market.
Despite so many insurance companies the market coverage is lesser than what one would expect.

Interviewee 1 added:

“18 percentage of the total population are the policyholders. This shows the rest of the
market i.e. 82 percentage of the total population remain uninsured.”

This reflects the untapped market of insurance industry. Other interviewee also agreed about the
prospect and scope in insurance industry both Interviewee 2 and Interviewee 3.

Interviewee 1 highlighted that:

“There is intense and unhealthy competition in the market. Insurance is complicated

compared to banking. There are certain things that general public won’t understand easily
like; perils, coverage and so on. Within insurance, non-life is more complicated than life
insurance. Even employees and agents of insurance companies lack adequate knowledge
about it. And there is wrong belief among employees as they believe that insurance is all
about selling insurance products, creating several incidents of mis selling.”
 Interviewee 2 further added that:

“Market concentration is high in Kathmandu, creating less awareness outside Kathmandu

valley.”

This shows there is lack of competent human resource in insurance industry. Likewise, inadequate
knowledge, skills and awareness about insurance among the potential employee, is another
problem insurance sector has to face. Interviewee 2 and Interviewee 3 agreed with Interviewee 1
only on the aspect of intense & unhealthy competition and general public awareness about perils,
coverage and so on.

Expectations
There can be several expectations from employers and employees from potential candidates. The
skills that they look or search in a candidate

Interviewee 2 highlighted that:

“Based on department we expect certain skills in a candidate like; underwriting

department look mainly at the typing skills of candidate both English and Nepali,
marketing department look mainly at the public relation, presentation skills and
communication skills of candidate. We expect commitment and patience from new
employees. Performance of employees with master’s degree level of academics are better
performer in the sense that they are open to change, proactive, try to explore more and are
good at decision making.”

Interviewee 1 insisted that:

“Today’s generation is full of ambition and hope for quick return, handsome salary,
expect to work in high position without knowing the basics. They even lack patience and
attitude. Yes, academic qualification is important, but we seek positive attitude and less
selfish behavior. I can help develop skill through trainings to normal employees that is
seen in MBA graduates.”
Answer to problem
As mentioned by Interviewee 1 which is also supported by Interviewee 2 and Interviewee 3,
insurance industry lacks employee with knowledge, skills, attitude and competence. As an MBA
graduates one can gain insurance related knowledge by taking training programs organized by life
and non-life insurance companies. Likewise, MBA graduates can work on their skills, sharpen
their skills based on their interest like; presentation, communication and so on.

Value addition
MBA graduates need to add value to the industry or else the problem will persist in the market. As
mentioned by Interviewee 1 agreed both by Interviewee 2 and Interviewee 4 there is a huge gap
between what customer needs and what the insurance companies are offering. So, if MBA
graduates could carry out a research on need assessment and come up with some models that could
help companies and agents to avoid mis selling of policy this could add value to the industry.

Interviewee 1 said that:

“We lack creativity in insurance industry. There still exist a gap between customers
expectation and products offered by insurance companies.”

Furthermore, as pointed out by Interviewee 1 non-life insurance products are more complicated
than that of life- insurance, so this another aspect where MBA graduates can add value by creating
innovative operations and marketing strategies that would:

 Minimize duration of claim settlement procedure

 Increase awareness about insurance in citizens

Candidates need to be open learning, exploring and should be capable enough to look at the
situation from another aspect where others often fail. Openness to change, positive attitude, utmost
good faith, loyalty and proactiveness in MBA graduates would help insurance industry to reach
step by step closer to a day where 100 percentage of population are policyholders.

Suggestion
All three Interviewees suggested that this generation needs to keep one thing clear in their mind
that there is no problem in starting from the basics. This would rather improve graduate’s
knowledge about mechanism and practices that exists in insurance industry. Furthermore,
candidates with field related trainings and before hand knowledge and involvement would give
extra edge over other normal candidates.

Interviewee 1 suggested that:

“Don’t over rely on internet and acquire knowledge about the insurance, follow
organization rules and culture. Graduates should never forget that learning is never
ending process.”
Reference
“Nepal - GDP Distribution across Economic Sectors 2017 | Statistic.” Statista, World Bank, Apr.
2019, www.statista.com/statistics/425750/nepal-gdp-distribution-across-economic-
sectors/.

Pant, S., & KC, F. (2018). Contribution of Insurance in Economic Growth of Nepal. Journal of
Advanced Academic Research, 4(1), 99-110. https://doi.org/10.3126/jaar.v4i1.19523