Final Thesis Of: Premium Collection and Investment Pattern of Nepalese Life Insurance Companies (Madan Raj Pandey) .
Final Thesis Of: Premium Collection and Investment Pattern of Nepalese Life Insurance Companies (Madan Raj Pandey) .
Final Thesis Of: Premium Collection and Investment Pattern of Nepalese Life Insurance Companies (Madan Raj Pandey) .
Submitted by:
Madan Raj Pandey
Balkumari College
Symbol No: 2410014 / 2068
College Roll No. 70 (2066-068)
T.U. Regd. No.: 7-2-241-322-2006
Narayangarh, Chitwan
November, 2016
RECOMMENDATION
Submitted by
Madan Raj Pandey
Entitled
Premium Collection and Investment Pattern of Nepalese Life
Insurance Companies
.............
Dr. Guna Raj Chhetri
Thesis Advisor/Chairperson, Research Committee
................................... ..........
Mr. Baburam Panthi Asso. Prof. Shiva Prasad Poudel
Program Incharge Principal
Date:
i
VIVA-VOCE SHEET
We have conducted the Viva-Voce examination of the
Thesis presented by
Entitled
Premium Collection and Investment Pattern of Nepalese Life
Insurance Companies
and found the thesis to be the original work of the student and written
according to the prescribed format. We recommended the thesis to be
accepted as partial fulfillment of the requirement for
Master Degree in Business Studies (MBS)
VIVA-VOCE COMMITTEE
Date:
ii
DECLARATION
I hereby declare that the work done in this thesis entitled "Premium
Collection and Investment Pattern of Nepalese Life Insurance Companies"
submitted to Balkumari College, Faculty of Management, Tribhuvan
University is my original work. It is done in the form of partial fulfillments
of the requirement of the degree of Master of Business Studies (MBS) under
the supervision and guidance of Dr. Guna Raj Chhetri, Lecturer of
Balkumari College.
Date: .............
iii
ACKNOWLEDGEMENT
iv
TABLE OF CONTENTS
RECOMMENDATION i
VIVA-VOCE SHEET ii
DECLARATION iii
ACKNOWLEDGMENT iv
TABLE OF CONTENTS v-vii
LIST OF TABLES viii
LIST OF FIGURES ix
ABBREVIATIONS x
CHAPTER ONE Page No.
INTRODUCTION 1-8
1.1 Background of the Study 1
1.2 Focus of the Study 3
1.3 Statement of Problems 4
1.4 Objectives of the Study 4
1.5 Research Questions 5
1.6 Significance of the study 5
1.7 Limitations of the Study 7
1.8 Organization of the Study 7
CHAPTER TWO
REVIEW OF LITERATURE 9-27
2.1 Conceptual Framework 9
2.1.1 Meaning of Insurance 9
2.1.2 Types of Insurance 10
2.1.3 Premium Collection 15
2.2 Review Legal Provision 17
2.3 Review of Journals 20
2.4 Review of Previous Thesis 21
2.5 Research Gap 27
v
CHAPTER THREE
RESEARCH METHODOLOGY 28-37
3.1 Introduction 28
3.2 Research Design 28
3.3 Population and Sample 29
3.4 Nature and Source of Data 29
3.5 Data Collection Procedure 30
3.6 Data Processing procedure 31
3.7 Data Analysis Tools 31
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA 38-69
4.1 Ratio Analysis 38
4.1.1 Return on Premium 38
4.1.2 Claim Paid to Premium Collection Ratio 39
4.2 Evaluation of Investment Pattern and Composition 40
4.2.1 Return on Investment 41
4.2.2 Investment to Total Premium Collection 42
4.2.3 Investment on Government Saving Bond to Investment Ratio 43
4.2.4 Investment on Fixed Deposit to Total Investment Ratio 44
4.2.5 Investment on Share to Total Investment Ratio 45
4.3 Statistical Analysis 46
4.3.1 Correlation between Premium Collection and Investment 46
4.3.2 Correlation between Net Profit and Total Investment 47
4.3.3 Correlation between Claims Paid and Total Premium 48
4.4 Trend analysis 49
4.5 Presentation of Primary Data 53
4.5.1 Condition of the Premium Collection at Present Situation 54
4.5.2 Premium collection system of Insurance Company 55
4.5.3 How is the collection from premium at present insurance market?57
4.5.4 Insurance company's satisfaction with the rate of premium 58
4.5.5 Customer Satisfaction with premium rate and provided service 59
vi
4.5.6 Concerned with investment management and portfolio 60
4.5.7 To maintain desired maximum beneficial investment policy 60
4.5.8 Priority in formulating investment policy 61
4.5.9 Suitable sector for investment 63
4.5.10 Able to get desired return from investment 64
4.5.11 Current Investment Situation of Insurance Companies 65
4.6 Major Findings of the Study 66
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION 70-73
5.1 Summary 70
5.2 Conclusion 72
5.3 Recommendation 72
Bibliography 74-75
Appendices 76-86
vii
LIST OF TABLES
viii
LIST OF FIGURES
ix
ABBREVIATIONS
x
CHAPTER ONE
INTRODUCTION
Insurance has the stability and resources to shield you from the volatile risks in
everyday life. For the development of the country, the existence of financial
market and capital market is regarded as an essence. The government and
individuals firms are playing vital role in financial and capital market through
investing the collected resources within the recognized and national sector like
productive industry and financial area yet expecting reasonable benefits
themselves. (Mishra, 2011: 78)
Insurance distributes the cost of the risk over a large group of individuals
subject to the same risk, in order to reimburse the few who actually suffer from
the risk. It is a social service whereby one party, the insurer or insurance
company, agrees to meet certain stated risk in return for a money consideration
paid by number of other parties, the insured; the money consideration is called
premium. A fire insurance company, for example, will in consideration of
payment of a premium, issue a contract called a policy, in which the insurance
agrees to reimburse the insured for a fire loss, but not is excess of amount
stated in the policy and with the provision that the loss occurs during the period
for which the policy runs. The essence of the insurance scheme is that, it is a
1
social device, that it involves the accumulation of funds, that it involves a
group of risks, and that each person of firm who becomes the members of the
group transfers the his risk to the whole group. (Maher, 2010: 58)
The purpose of insurance is to reduce the uncertainty and worry caused when it
becomes aware of the possibility of loss. It does this by spreading the economic
burden of the losses among members of group. Insurance does not prevent the
loss but it relives the financial burden.
2
1.2 Focus of the Study
Insurance companies are one of such financial institutions, which collect their
fund from premium. Premium means a certain charged amount, which paid by
the insured to the insurer for bearing risk and uncertainty. There are two types
of premium: Gross premium and net premium. These two premiums further
subdivided into two parts. They are single premium level premium usually the
insurance companies follow only one types of premium. With accordance to
their nature of corporate objectives.
As significant differences in the nature of insurance, mainly there are two types
of insurance life and non-life. Life and non-life premium is non refundable. For
life insurance companies, they have to refund the premium that collected to
insured with bonds. However, general insurance does not have such burden.
That is why the premium collection of both businesses in different headlines.
Investment is one of the major parts of all financial institutions. All financial
companies invest their excess fund to the desirable sector with profit motive.
Investment means to outflow of the fund at adjustable return. For investing,
investment pattern is the formulation of the investment strategy based upon the
organizational and financial character of the particulars firm itself. Investment
policy will be the preliminary decision of selecting the proper investment
sector based upon single or joint consideration of safety, liquidity,
marketability, profitability, and stability or else. Usually, such investment
pattern aims at arriving to the optimized or agreed mix of risk return from the
investment. Investment fund for the insurance companies are the excess
amount after claims paid and managerial expenses.
The investment fund should be used in such sector that they could maximum
return. But insurance company's investment portfolios are regulating by the
Insurance Board of Nepal. Under the rules and regulation, every insurance
company must invest their 75% investigable fund declared as compulsory
sectors and rest 25% in other sectors.
3
1.3 Statement of Problems
4
ii. To examine the relation between premium collection & investment,
net profit & investment, claim paid & premium collection of life
insurance companies in Nepal.
iii. To examine the trend of premium collection, investment and net
profit of life insurance companies.
iv. To analyse the views & opinion of insurer and clients of life
insurance companies.
All the insurance companies of Nepal are less because of the following
reasons.
ii. What is the relation between premium collection & investment, net
profit & investment, claim paid & premium collection of life
insurance companies in Nepal?
iii. What is the trend of premium collection, investment and net profit
of life insurance companies?
iv. What are the attitudes of life insurance insurer and clients towards
life insurance companies?
5
do not get suitable and steady sectors to visit their fund for more return.
Now, they are investing their fund in traditional sectors only. So a new
study is required on the topic of premium collection and investment.
The study is needed to frame out the premium collection and investment
position of Nepalese insurance industry. Insurance companies need
soundly mobilized its collected fund. Thus, it would be better to evaluate
the condition of Nepalese insurance companies. It is also needed to
disclose the utility of insurance in Nepalese prospects. The study focuses
the insurance market and probability of future expansion in Nepal and is
concerned to trace the weak area to suggest fund, policy of insurance and
scenario of premium collection and investment too. It is the study on
collected premium under various policies and suggests what the
weaknesses are and how to improve them. The study is important itself
because it is the researcher's study of the heart of insurance system.
6
1.7 Limitations of the Study
The study aims at findings the facts and the trend of the investment and
premium collection within the Nepalese life insurance company.
Therefore, the scope is limiting within the insurance companies
operating. Every activity has its own boundary, as the same way this
study has also some boundaries, which cannot be ignored. These
boundaries are called as limitations of this study. The limitations of the
study are:
1. The whole study has been deal with some selected life insurance
company's premium collection and investment pattern.
This study has been organized into five chapters, which are as follows:
1. Introduction
2. Review of Literature
3. Research Methodology
4. Presentation and analysis of data
5. Summary, Conclusion and recommendation
7
First chapter contained introduction of the study. It is all about the
background of the study, focus of the study, statement of the problems,
objectives of the study, significance of the study and limitations of the
study.
Fourth chapter deals with data presentation, tabulation and analysis of the
study. In this chapter the study are presented and these data are analyzed.
Based on these analyses data, major finding of the study are confined.
8
CHAPTER TWO
REVIEW OF LITERATURE
It covers the theoretical review of terms and items used in thesis writing.
The main source of this part is from review of books, booklets, annual
reports etc. The following studies have been undertaken on conceptual
framework:
The general legal requirement of insurance as, the rights and obligation of
the parties to an insurance agreement are determined largely by reference
to the general laws, which govern contracts. The agreement by which
insurance is effected is contract in which the insurer in consideration of
the payment of a specified sum by the insured agrees to make good the
losses suffered through the happening of the designated unfavorable
contingency. The insurance contract need not be in writing, but as a
matter of business practice, such agreements are ordinarily written. Even
social insurance, such as workers compensation are written through the
terms appear in a state law rather than in private agreement. In its most
basic form, the insurance mechanism is simply a process in a group agree
to share the losses that may occur to various members of the group in
advance and the fund so created, augments by interest, and is used for the
purposed of paying losses and expenses. Further, the conditions
9
surrounding the transfer of risks from individuals to the group are
carefully set forth in detail, in a formal contractual agreement. The
organization that brings the group together and manages its affair is
called an insurer, and it is typically a stock or mutual corporation.
(Bicklhaupt, 2010:13)
All the insurance companies provided certainty against the risk. When
they can define in the generic concept, it will take the form like social
insurance and private insurance. But, we have divided the insurance in
10
two parts as life and general insurance. Life insurance may be defined as
the certain sum of money either on the death of the insured or on the
expiry of the fixed period. Life insurance concerned only about physical
and mental accident risk. General insurance considers all insurance
except life insurance. However, we can classify the insurance as the life
insurance and non life insurance. Some of experts and writers separator
the insurance in different viewpoint i.e. forms the potential insurers view
and other. When viewed form professional use insurance will take two
board forms as life and non life insurance. We can to see all the insurance
under the view of risk point.
1. Life Insurance
11
measures in amount of various risks and provide sum of amount in
accordance to policy. Life insurance plays a vital role in the society.
Therefore, it is also known as the social insurance too. Life insurance can
be defined as "a contract by which the insurer, for a certain sum of money
or premium proportionate to the age, health and other circumstances of
the person. Whose life is insured if such person shall die within the period
limited in the policy, will pay the sum specified to the persons in whose
favor such policy is guaranteed.
Nepalese Insurance Act, 2048 (section 2-1) has defined life insurance as
the contract of insurance, effected on human life on the basis of age to
pay a fixed sum to the assured or his nominee, on death or on the
happening of any contingency, dependent on human life in consideration
of payment of a fixed installment premium by the insured. Insurance
company provides various policies in accordance insured interest and
desire. We can see following policy in life insurance commonly:
12
Endowment policy, whole life policy annuity, term insurance and
survivorship policy.
13
the risk. Insurer and insured may agreed to accept every kind of risk
under their contract and the risk transfer through the insurance. But the
coverage written by the property and liability insurance insurers may be
divided into five types, physical damage or loss, loss of income and extra
expenses resulting from physical damage to property, liability, health and
collateral. We can classify the insurance into life insurance and non- life
insurance. Nowadays, under life insurance also many types of policies are
provided.
14
2.1.3 Premium Collection
15
death of person and interest directly affect on the premium amount to
calculating under net premium method. Similarly, the assumed interest
rates the expenses of organization and the mortality rate directly affected
calculation of premium under gross premium method. "The net premium
is based on the mortality rate, the assumed interest rate, the expenses and
the bonus loading". (Mishra, 2011:203)
To make easier calculation of the premium amount, the two premiums are
further subdivided into two parts.
1. Single Premium
2. Level Premium
16
to charge a flat premium that would compensate for the rising mortality
costs. The first insurance policies were issued of one year only and were
renewable at the end of this year at a higher rate, if the insured was still in
good health. These contracts are still available and are known as yearly
renewable policies. Usually, the level premium is suitable for the life
insurance policies and for the purpose of limited income able person.
Therefore, the level premium ideas are considered one of the most basis
advances ever made in the development of the life insurance. With this
concept, it becomes possible to issue policies for longer and longer period
until finally whole life contracts were made a regular part of the business.
Actuaries using refined mortality statistics could calculate exactly how
much had to be charged during the yearly years to the contract in order to
make up for the rising mortality const of the later years.
Level premium is easily converted by the net single premium. Hence, the
single premium of a given policy can be easily converted into level
premium by establishing ratio between net level premium and net single
premium. Because the net single premium is the present value of all net
level premiums is also equal to the total of present value of all claims. It
means present value of all net level premium is equal to the net level
premium is equal to the net single premium.
17
Insurance Act, 2049 (1992)
(Act No. 42 of 2049 B.S.) Date of the Royal seal and the publication:
2049.9.2 B.S. (16 December, 1992)
Only related terms and conditions are reviewed form insurance act 2049
as:
Preamble:
Definition
c) Member means the member of the board and the word includes the
chairman.
18
e) Insurance business means life insurance business or non life insurance
business and the word includes the re-insurance.
g) Non life insurance business means other insurance business other than
life insurance business.
Provided that, if any practical difficulty arises due to any reason for
paying the amount in a lump sum, this section shall not be deemed to be
prohibited to issue an insurance policy on the guarantee of a bank or the
Nepal Government relating to the payment of the outstanding amount
within a specified period.
19
2.3 Review of Journals
Businesses that are profitable and unprofitable are both under the tariff
regime. Motor business that is contributing to huge losses is still under
tariff. Why not remove the tariff barriers and permit the industry to adopt
a realistic rating for motor business that each company feels is good for
it? By adopting a flexible rating, each company for its survival will learn
how to treat good drivers with benefits and bad drivers with penalties.
Companies are however, afraid that a non tariff regime will let loose
forces of indiscipline in the own den which they will not be able to
control. It is a management problem and not customer made issue. Unless
challenges are thrown and tougher market, conditions created for progress
and survival. The industry cannot grow with sled maturity.
20
2.4 Review of Previous Thesis
i. HGIC and NIC have not been following better policy to keep
sound liquidity position.
iv. The profitability ratio of both companies shows that the change in
insurance premium collection of HGIC ranged about 6.6% to
196.84% where as the same of NIC ranged about 9.7% to 34.54%
high fluctuations is found in HGIC than NIC.
21
Recommendations by Mr. Pathak
ii. The total assets ratio can be improved by proper, effective and
optimum utilization of total assets and avoiding unnecessary
investment in total assets.
iii. HGIC is suggested to increase total revenue and gross profit for its
sustainability and meet the competition.
22
To conduct these researches, both primary and secondary sources of data
have been used. The time period was six years. In that study, Mr.
Adhikari has pointed out various findings and recommends action. Mr.
Adhikari used different financial and statistical tools like ratio analysis,
cash flow, co-relation, standard deviation etc. The main findings and
recommendations of Mr. Adhikari's study were as follows:
ii. The portfolio falling within the compulsory sector had uniform
return rate. However, in an average, the return form the
government securities were highest and the return from the policy
loan was lowest.
iii. Net investment income of the life assuror and the industry was
around three fourth of the net premium collection and net
investment income of the non life insurer with the industry was
around two fifth fo the net premium collection.
iii. While investing within the particular sector, the insurer needs to
consider the mutual inter link, age of transaction too.
The relationship between Mr. Adhikari's study and this study is that both
focus on investment. Investment policies and position are related in each
other. Both studies use financial and statistical tools. There is more than
23
seven years gap between these two studies and Mr. Adhikari study for
whole insurance industry and this study like only three specific
companies. Mr. Adhikari focused on investment policy only while this
study is based on premium collection and investment pattern.
ii. To analyse the relationship between the major variables in relation with
the investment & premiums of NICs.
ii. Claim paid ratio is increasing according but the percentage increase is
very low in respect to increase in premium collection.
iii. Interest earned on total investment is also not satisfied. Interest earned
on investment is lower that is only 5.85% in an average.
iv. Investment on premium shows that more than 50% of premium amount
is investment in different sector. The percentage is up to 111% due to
investment from other source like capital and share.
24
v. The test of hypothesis of total premium of five sampled insurer has
significantly different. It indicates that the premium amount of
companies has differed.
i. To find out the position of National Life and General Insurance co.
ltd. in the insurance industry of Nepal.
Mr. Shrestha used both primary and secondary data to analysis his study.
Like this, he uses different financial and statistical tools like ratio
analysis, trend analysis, co-efficient of correlation, mean, standard
deviation and T test etc. Based on the analysis Mr. Shrestha finds many
conclusions. His main findings are as follows:
25
ii. Fire premium collection to total general premium collection ratio
was varied from 23% to 34% and it indicates that fluctuation rate
was not so diversified.
i. The company should collect more first life insurance premium and
issue new policy.
ii. The company should diversify its life investment and increase
investment in policy loans.
26
2.5 Research Gap
There is long gap between the previous researcher's and this study. This
study uses three life insurance companies which was selected different
from previous researcher's. Previous researchers focused on investment
policy only while this study based on premium collection and investment
pattern of life insurance companies. They used only financial tools and
ignored statistical tools but this study used both financial and statistical
tools. Previous researcher's study based on descriptive way only but this
study used descriptive and analytical basis. This study takes primary data
while previous researcher's studies are based only in secondary data.
27
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
These study aims at presenting, evaluating and finding about the premium
collection and investment pattern, along with investment return of
insurance companies. The study will draw an actual scenario of premium
collection and investment pattern of Nepalese insurance industry. This
chapter describes research design population and sample nature and
source of data, data collection procedure and data processing procedure
and analysis tools.
28
field study research, analytical research, true experimental research and
so on. This study mainly concerned with historical research as secondary
data collected through published and unpublished materials. However, the
primary data and information are also used whenever and wherever
necessary. This study follows descriptive and analytical research design.
29
and secondary data for the historical performance assessment and the
future prediction of planning and upcoming policy and implementation
among the insurers. Hence, in the study primary as well as secondary data
will be used to collect necessary data and information.
Primary Data
The sources of primary data are the opinion survey. The primary data can
be collected from various insurance companies for the opinion on
investment of insurance fund, its policy and premium and other relevant
factors. Primary data can be collected through questionnaires, field visit
and information received from the respondents. Altogether, views of 60
respondents including staff, experts and concerned persons of sample
insurance companies, insurance board and Rastrya Beema Sansthan are
taken in preformatted questionnaire sheets.
Secondary Data
30
3.6 Data Processing procedure
The information or data obtained from the different sources are in raw
form. From that information, direct presentation is not possible.
Therefore, it is necessary to process data and converts it into required
form. After then only, the data are presented for the study. This process is
called data processing. For this study, only required data are taken from
the secondary source and presented in the study. For presentation
different tables are used. Similarly, in some case graphical presentation is
also is made. As far as the computation is concerned, it has been done
with the help of scientific calculator and computer software program.
In order to get the concrete results from this research the various collected
data from primary sources and secondary sources have been coded and
tabulated in required form. Tabulated data has been processed and
analyzed in descriptive way by using mathematical tools, statistical tools
and financial tools wherever necessary. Graphs and charts have also been
presented to interpret the finding of the study. As per topic requirements,
emphasis is given on statistical tools rather than financial tools. So for
this study like ratio analysis, trend analysis, percentage indices, standard
deviation, coefficient of variation, coefficient of determination etc are
going to use.
Generally, the financial analysis tools were used for the purpose of the
assessment of the financial position to a particular organization. For the
purpose of this study, ratio analysis are performed in the study. Certainly,
31
ratio analysis showed the position of premium collection, investment
return and their contribution on overall performance.
a) Ratio Analysis
As for this study, ratio analysis is used to present the position of the
investment and its performance as compared with the overall position and
performance of the insurer. In order to analyze the investment pattern and
performance of premium collection followings ratios are used.
Net Income
Return on Investment =
Total Investment
Total Investment
Investment to Total Premium =
Total Premium
Fixed Deposit
Fixed Deposit to Total Investment =
Total Investment
32
Investment on Share
Investment on Share to Total Investment =
Total Investment
Claim Paid
Claim Paid to Premium Collection =
Total Premium
Investment on EF
Investment on Emergency Fund to Total Investment =
Total Investment
Total Interest
Interest Earned to Total Investment =
Total Investment
Generally, the statistical tools are used for attaining accuracy on analysis
and study. According to this study's objectives, here following tools are
used.
X
X =
N
33
Where,
N = Number of Observations
X = Sum of observations.
b) Standard Deviation
The standard deviation is the best tools to study fluctuation in any data. It
is usually denoted by the letter sigma ( ). Karl Pearson suggested it as a
widely used measure of dispersion and is defined as the positive square
root of their arithmetic mean of a set of value. It can be computed by
using following formula
Standard Deviation ( ) = ( x x) 2
N 1
C.V. =
X
A project, scheme, or company with low CV has less risk per rupee than
having high CV.
34
d) Coefficient of Correlation
When ' r ' lies between 0.7 to 0.999 (or -0.7 to -0.999), there is high
degree of positive or negative correlation.
35
Nxy xy
rxy =
Nx 2 (x) 2 Ny 2 (y ) 2
Where,
f) Trend Analysis
36
Y = a + bx
The above trend equation can be calculated using following two normal
equations:
Y = na + bX (i)
XY = a X + bX2........... (ii)
Where,
Y = Variable
X = Time span
37
CHAPTER FOUR
For the purpose of study and analysis, secondary and primary data are
used. Based upon the data, interpretation and analysis are done for
findings and conclusion. All the theoretical concept of premium is
mentioned in the above chapter, which may be enough for the theoretical
idea. Therefore, here, only quantities analysis are described, which is
related to the premium collection and investment pattern and their
composition.
It is the rate of average premium income. This ratio shows the portion of
income or return on total premium collection. Return shows the
performance and the earning capacity of an insurer in comparison to the
premium collection.
Source: Appendix IV
From the above table, it is clear that the claim paid ratio of most
insurance companies is fluctuated every year except Asian Life insurance.
Prime Life insurance paid higher claim while Asian Life insurance is in
low position in comparison to other insurance companies. Looking at five
39
years performance the lowest claim paid is 8.53 by Asian Life insurance
while highest by Prime Life insurance i.e. 56.99 in 2012/13. The above
table shows that the Asian Life insurance company has the higher
standard deviation and variance of risk also i.e. 16.57. From the
calculation of C.V. all insurance companies are in moderate risk except
Asian Life insurance. From the above table Prime Life insurance pay the
average 38.14% yearly, in respect to premium collection; this is sign of
good performance and success.
40
very important to evaluate in investment policy and pattern, which are
mentioned below.
For meeting the objective, every financial institution has to invest capital
and get certain return on it. Return on investment shows the success and
failure of company. It is the rate of average investment income. It shows
the proportion with respect to investment. This ratio shows the
performance of the investment and it indicates whole investment portfolio
performance. Here the total investment consist the investment optional
and compulsory sectors and the net income carried from profit and loss
account.
Source: Appendix V
The table show that the return on investment varies between companies
and differ year to year. The lowest return 3.03 percent was of Asian life
insurance in 2013/14 and the highest was 18.73%, of Prime Life
insurance in 2011/12. The return of Prime Life insurance is 8.75 in
2010/11 and increased to 18.73 in 2011/12 and after that decreased and
reached to 6.23% in 2013/14 and again increase and reached to 9.54 in
2014/15. Asian Life insurance has return of 14.98 in 2010/11 and fall
down to 3.03 in 2013/14 and after that it increase and reached to 15.32 in
2014/15. National Life has decreasing trend from year 2010/11 to year
2012/13 and after that it has increasing trend and reached to 13.59 in
41
2014/15. From the mean value calculate, it is shown that the return of all
companies is not satisfied as it varies from 10.21 to 11.69. The standard
deviation shows that there is low variation in return. CV show that Asian
life insurance has low return in high risk where as other has medium
return in moderate risk. Thus from the calculated and analyzed data, it is
clear that the net profit on investment was not satisfied. Insurance
companies should invest on the sector that is secure and give more return.
Source: Appendix VI
The above table shows the investment to total premium ratio of insurance
companies. The table show the mean ratio of investment to premium ratio
of all companies is above than 50%. NLIC has highest investment ratio
i.e. 85.94 in average. The lowest ratio is 55.34 of ALIC in average. Asian
Life insurance and National Life insurance have not much fluctuate in the
ratio as it varies from 41.8 lowest in 2010/11 and 63.5 in 2012/13 of
Asian Life and for National Life it varies from 96.0 in 2010/11 is highest
and lowest of 81.9 in 2011/12. Prime Life insurance has highest ratio of
42
111.8 in 2012/13 and lowest ratio is 60.3 in 2011/12. The standard
deviation and CV of companies has fluctuated from 5.11 to 19.62 and
5.95 to 23.49 respectively. National Life insurance has low SD and CV
i.e. 5.11 and 5.95 respectively. Similarly Prime Life insurance has high
SD and CV i.e. 19.62 and 23.49 respectively. It means National Life has
low variation at low risk and Prime Life has high variation with high risk.
From the investment policy published by insurance board in 2060, it has
been stated that all insurance companies must keep 50% of the collected
premium amount in saving fund for payment of claim. So, companies
could invest only 50% of their premium collection and other investment
through shares and capital.
43
According to table Prime Life insurance has decreasing trend and start
from 15.94 in 2010/11 and fall down to 8.18 in 2013/14 and after that
little bit increase to 9.59 in 2014/15. Asian Life insurance has almost
constant level of government saving but fluctuating little high 26.58 in
2013/14 and decreased to 17.26 in 2014/15. National Life insurance has
almost same ratio of government saving bond. The low value of standard
deviation and CV shows the investment in government saving bond has
low or little variation and low risk.
The above table shows that Prime Life insurance has increasing trend and
reached from 4.84 in 2010/11 to 36.13 in 2013/14 and after that little
decrease to 33.47 in 2014/15. Asian Life insurance has almost same in
year 2010/11 to 2011/12, after that it has decreasing trend and reached to
1.15 in 2014/15. National Life has almost decreasing trend and reached
from 10.64 in 2010/11 to 8.72 in 2013/14 and after that increased to 9.92
in 2014/15. The standard deviation and CV of different insurance are low
values except Prime Life insurance which has high CV. From the table of
share investment to total investment we can see that almost all insurance
has same amount of investment in share. The variation of percentage is
due to the increase or decrease of total investment amount.
45
4.3 Statistical Analysis
Uses of financial tools only are not considerable for analysis and
evaluation of this study. So, some statistical analysis tools should also to
use for analysis. Under this term various statistical mathematics likes,
trend analysis and coefficient of correlation are used for the purpose to
find out tendency, relation and distinguish between premium collection
and investment pattern. For this purpose, following measures are
analyzed.
From the above table, Prime Life insurance has correlation of 0.7401,
which is high degree positive correlation. Coefficient of determination is
0.5486 and 6 times probable error is is 0.8169. Hence, the relation is
insignificant in case of Prime Life insurance. Asian Life insurance has
high degree positive correlation i. e. 0.9025 and it has 6 times probable
error is 0.3356, it means there is significant relation between premium
and investment. Similarly National Life insurance has high degree
positive correlation i.e. 0.9757 and 6 times probable error is 0.0869. It
46
means that NLIC has significant relation with the premium and
investment. So from the above table we conclude that only Prime Life
insurance has the insignificant relationship while other remaining
insurance has significant relations.
From the above table there is adverse relation between net profit and
investment of Prime Life insurance because there is low degree negative
correlation i.e. -0.1255 and 6 times probable error is 1.7814, it means that
there is insignificant relation among them. Similarly Asian life insurance
has moderate degree positive correlation i.e. 0.4981. ALIC has 6 times
probable error are 1.3608, it means that there is insignificant relationship
between net profit and investment among this insurance company.
Similarly National life insurance has coefficient of correlation is 0.8551,
which means that there is high degree positive correlation between net
profit and investment among this insurance. In the case of 6 times
47
probable error the value of National Life insurance is 0.4863. It means
that there is significant relationship of National life insurance.
The above table shows that the relationship between premium collection
and claim paid of three insurance companies. The coefficient of
correlation of Prime Life insurance company is 0.7493 which has high
degree positive correlation. The 6 times probable error of Prime Life
insurance is 0.7938. It means it has insignificant relation between claim
paid and premium. All other remaining two insurance companies have
high degree positive correlation i.e. the value are 0.9621 and 0.8498 of
Asian Life and National Life insurance companies respectively. They all
have significant relationship between claim paid and premium because
the value of correlation coefficient of these insurance is higher than their
6 times probable error values.
48
4.4 Trend Analysis
Premium collections are the important part in insurance sector hence its
trend for next five years will be forecasted for future analysis. This is
calculated by the least square method. Here the effort has been made to
calculate the trend values of premium collection of PLIC, ALIC and
NLIC for further five year.
Table 4.11
Trend analysis of Premium Collection (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
117.65 126.60 274.31 202.03 140.81 152.83
2011/12
162.52 138.71 207.04 250.33 183.55 173.14
2012/13
96.06 150.82 222.98 298.63 201.64 193.45
2013/14
236.82 162.93 338.96 346.92 214.23 213.76
2014/15
141.03 175.03 449.83 395.22 227.03 234.07
2015/16
187.14 443.52 254.38
2016/17
199.25 491.81 274.70
2017/18
211.35 540.11 295.01
2018/19
223.46 588.40 315.32
2019/20
235.57 636.70 335.63
Source: Appendix II
49
Above table and below figure shows that premium collection of PLIC,
ALIC and NLIC. All insurance companies were increasing trend. The rate
of increment of premium collection for ALIC seems to be higher than that
NLIC and PLIC.
Figure 4.1
Trend analysis of Premium Collection
700 PLIC ALIC NLIC
600
500
Rs. in Millions
400
300
200
100
0
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Fiscal Year
50
Table 4.12
Trend analysis of Investment (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
86.09 83.72 114.56 94.82 135.18 137.58
2011/12
97.98 102.10 113.85 129.76 150.38 151.29
2012/13
107.40 120.47 141.68 164.71 170.42 165.00
2013/14
167.85 138.84 214.48 199.65 180.20 178.72
2014/15
143.01 157.21 238.96 234.59 188.84 192.43
2015/16
175.58 269.54 206.15
2016/17
193.95 304.48 219.86
2017/18
212.32 339.42 233.57
2018/19
230.69 374.36 247.29
2019/20
249.06 409.31 261.00
Source: Appendix II
Figure 4.2
Trend analysis of Investment
PLIC
450
ALIC
400 NLIC
350
300
Rs. in Millions
250
200
150
100
50
0
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Fiscal Year
51
Above table and figure shows that investment pattern of PLIC, ALIC and
NLIC. All insurance companies were increasing trend. The rate of
increment of investment pattern for ALIC seems to be higher than that
NLIC and PLIC.
C) Trend Analysis of Net Profit
Under this topic, an attempt has been made to analyze trend analysis net
profit of PLIC, ALIC and NLIC for further five years.
Table 4.13
Trend analysis of Net Profit (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
7.54 12.25 17.17 9.54 15.79 14.50
2011/12
18.35 12.68 10.12 13.06 16.95 16.95
2012/13
15.58 13.12 12.54 16.59 16.90 19.40
2013/14
10.46 13.55 6.50 20.11 21.68 21.85
2014/15
13.65 13.98 36.61 23.64 25.68 24.30
2015/16
14.42 27.17 26.75
2016/17
14.85 30.69 29.20
2017/18
15.28 34.22 31.66
2018/19
15.71 37.74 34.11
2019/20
16.15 41.27 36.56
Source: Appendix III
Above table and below figure shows that net profit of PLIC, ALIC and
NLIC. All insurance companies were increasing trend. The rate of
increment of net profit for ALIC and NLIC seems to be higher than that
PLIC.
52
Figure 4.3
Trend analysis of Net Profit
PLIC
45
ALIC
40 NLIC
35
30
Rs. in Millions
25
20
15
10
0
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Fiscal Year
53
most prioritized and the last number imparted for the query was assumed
as last prioritized. Where the ranking was not possible or necessary, a
simple objective (yes/no) question was used. For classification of the
views, percentage method was used, considering the total number of
respondent as 100%. Further, such classification was supported with the
graphical and tabular presentation, wherever necessary. The number of
respondents for the queries has differed due to the differentiation
regarding the formation of the insurers. So, the number of respondents for
each query is shown in sample questionnaire separately. The focus of
study is on premium collection and investment pattern of life insurance
companies, so questionnaires are prepared for fulfilling the objectives.
4.5.1 Condition of the Premium Collection at Present Situation
This query was intended to find out the condition of premium collection
of Nepalese insurers. Nowadays, there is high competition in every field
of business, so insurance is not far from this. Therefore, because of high
competitive market, every insurance company has to labor more. The
competition has directly affected the premium collection. The following
chart shows the number of person and percentage in the favor of options
given in the opinion survey.
54
Figure No. 4.4
Condition of Premium Collection
Excellent
Good
Satisfactory
25% 0%
75%
55
Table No. 4.15
Premium Collection System
Options No. of Respondents %
Right 30 50
Some what right 26 43
Satisfactory 4 7
Total 60 100
43%
50%
Among the entire respondents, 50% are in the favor of first option 'Right,
around 43% are in the favor of 'Somewhat right' and about 7% are in the
favor of 'Wrong'. From this view, it can be concluded the premium
collection system of insurance companies is not in good stead, it should
be made corrective so that companies can collect more premium through
best system and method.
56
4.5.3 How is the collection from premium at present insurance
market?
This query was intended to find out the collection trend and present
collection ratio of premium at Nepalese insurer from market. This
opinion gives us the position of premium collection of Nepalese
insurance company and whether they are able to meet their target or not.
The following chart shows the number of person and percentage in the
favor of options given in the opinion survey.
33%
67%
57
Among the respondents, around 67% of the viewers have found that they
are able to collect the target premium in between expected, that is they
are just to meet the target. Other 33% found that their target of collection
of premium is less than expected. No one is in the view of premium
collection more than expected.
4.5.4 Insurance company's satisfaction with the rate of premium
In order to find out the views of insurer regarding the premium rate on
different heads or policy, this question is included in the query. As
insurance board directly regulate and fixed the rate of premium under
different policies, this query is forwarded to know the opinion about
whether they are satisfied or not. The following chart shows the number
of person and percentage in the favor of options given in the opinion
survey.
Table No. 4.17
Insurer Satisfaction with premium rate
Options No. of Respondents %
Yes 6 10
No 11 72
In between 43 18
Total 60 100
Source: Field Survey 2016
From the above table and below figure, it is clear that more than 72% of
the respondents are not satisfied with the present rate of premium. Only
10% in the favor of present rate and 18% of the persons think that they
are in between. So, with the above data collected, we can conclude that
most of insurer wants change in premium rate which should be fixed by
formulating a committee including them.
58
Figure No. 4.7
Insurer Satisfaction with premium rate
Yes
No
18% In Between
10%
72%
Premium is the amount that the customer has to pay for being insured.
The rate of premium varies between the same nature of company not
exceeding and below the range fixed by the insurance act. In order to find
out whether customer or clients are satisfaction with premium rate and
service provided by insurance companies this query is included. This type
of question is verbally asked to the persons coming for service to the
concerned companies. The following chart shows the number of person
and percentage in the favor of options given in the opinion survey.
59
Figure No. 4.8
Clients Satisfaction with premium rate
Good
Satisfactory
25% Bad
35%
40%
The above figure and chart shows that about 35% of the respondents have
good experience of service provided by the companies and the premium
rate while more than 40% have satisfactory level. More than 25% people
are badly responses by the insurance companies and are not satisfy with
the present rate of premium and trend of collecting premium.
4.5.6 Concerned with investment management and portfolio
For success, plan, policies and effective management must be well
designed and applied. To find out how well insurance companies are
aware about it, this query is intended. Through this question, the weight
given by the insurer to their functioning is, as financial institution through
investment management can be known. Here, 100% of insurers are in the
favor of option 'significant concern'. It means all of the companies invest
their fund according to the investment management and portfolio.
4.5.7 To maintain desired maximum beneficial investment policy
This question was intended to find out the present status of the insurer
related to the investment policy and their perception regarding the present
environment. Here the opinions of the respondents are segregate in term
of maintaining desired level of investment policy. The following chart
60
shows the number of person and percentage in the favor of options given
in the opinion survey.
47%
20%
61
policy, this query is mentioned in questionnaires. The following chart
shows the number of person and percentage in the favor of options given
in the opinion survey.
35%
42%
62
4.5.9 Suitable sector for investment
38%
30%
63
The above table and chart shows that the investment sector is different for
different insurance companies. About 38% of the respondents are
interested to invest the collected premium and fund in fixed deposit while
30% wants to invest in government saving bond, 32% in share. The upper
three sectors are the use to insurance companies, which get more weight.
Choosing the best method and sector of investment only does not fulfill
the objective of the companies. To determine the success, one should
look into the return of investment that the company. Thus, this query is
intended to find out whether insurance companies are able to get the
desire return from the investment or not.
Among the observed query around only 32% of the respondents, think
that they are getting the desired level of return from present return.
Besides these about 30% of respondents are in against and suggest
improving the investment policy or sector as they have seen that the
return from the investment in present context is not sufficient. About 38%
of the respondents give opinion that only little return is gaining from
present investment so need to improve this situation.
64
Figure No. 4.12
Able to get desire return from investment
Fixed Deposit
Gov. Saving Bond
Share
32%
38%
30%
This question intended to find out the weight given by the insurers to the
current investment system of Nepalese insurance companies. Now a days
we are facing critical crises and worse situation in national economy
which directly affects the insurance companies also. For finding how well
companies are taking this situation, this query is forwarded. The
following chart shows the number of person and percentage in the favor
of options given in the opinion survey.
65
Figure No. 4.13
Current Investment Situation of Nepalese Insurance Companies
Excellent
Good
Satisfactory
7%
20%
73%
66
ii. Claim paid ratio is increasing according but the percentage increase
is very low in respect to increase in premium collection.
ix. Premium collection, investment and net profit of PLIC, ALIC and
NLIC were increasing trend. The rate of increment of premium
collection, investment and net profit for ALIC seems to be higher
than that NLIC and PLIC.
67
The major findings of primary data were as follows:
ii. However, almost, of the insurer can collect the premium under
their target. Only 33% of the insurer cannot collect under target and
67% are able to collect in between target. However, more than 72%
of the insurance are not agree with the premium rate that is issued
by Beema Samittee (Government of Nepal).
68
beneficial investment policy among the insurer. Among the
investment sector 33% of the insurer addressed their importance in
fixed deposit, 20% are in side of government saving bond and rest
of favor to make combination of investment sectors. Their view
shows the higher preference to bank fixed deposit of insurer.
vi. Giving priority while forming investment policy, more than 35%
are inside of portfolio, 42% concerned with the return from
investment and 23% give priority to objectives. So, most
companies now are focusing on the return from the investment.
vii. From the data collected from the all respondents, 7% think that
current investment system of insurance companies is excellent
while 20% think of good and remaining 73% are only satisfied
with present investment system.
69
CHAPTER FIVE
5.1 Summary
70
As significant differences in the nature of insurance, mainly there are two
types of insurance life and non life. Life insurance premium is non
refundable. For life insurance companies, they have to refund the
premium that collected to insured with bonds. However, general
insurance does not have such burden. That is why the premium collection
of both businesses dealt in different headlines. Insurer charges the
premium differently accordance to nature of risk. Thus, the judgment and
personal evaluation play vital role in rating/fixing premium.
Among the 25 insurance companies, the study has been taken to evaluate
the premium collection and investment pattern of industry through the
sample basis. The study analyzed the annual report of five years starting
from 2010/11 to 2014/15 of Prime life insurance company, National life
insurance company and Asian life insurance company are taken for the
purpose of the study. Primary and secondary data are collected from
relevant sources and to reveal the problems, financial as well as statistical
tools are applied. The recommendation is provided based on findings
from analysis.
71
5.2 Conclusion
5.3 Recommendation
72
i. All insurance companies must take some steps to decrease the
inconsistency. To take any proper decision, to run the organization
smoothly, each ratio should be consistent. Therefore, the
companies must start research and development programmed train
their work force effectively and scientifically.
ii. The entire insurer should follow the investment policy and
improves its management. In addition, should maintain and make
uniformity on premium collection under all insurance policies.
iii. The entire insurer should improve their premium collection system
and investment systems too and try to increase customer service by
providing different facilities and to withdraw unnecessary process
of insurance and followed scientific insurance system.
73
BIBLIOGRAPHY
74
Williams, S. (1995). Risk Management and Insurance, New York: Mc-
Grew Hill Book Company.
B) Unpublished Thesis:
Adhikari, N. D. (2013). Insurance Industry in Nepal, A study on
investment policies and practices, An unpublished Master
Degree Thesis, T.U. Kathmandu.
C) Annual Reports:
http://www.bm.com.np
http://www.bsib.org
http://www.bsib.org.np
http://www.nepalstock.com
75
Appendix-I
Questionnaires for Research
This questionnaire is prepared only for assist the research conducted for
the partial fulfillment of requirement of the Master of Business Studies
(MBS) Degree. The collected views will be used for the purpose of the
study and will not misuse anywhere. Therefore the views and opinions
will be kept confidential and will not be published anywhere.
Name of Insurance Company ........................................................
Name of Representing Personnel: ..................... Designation : ..................
Schedules of Questionnaires:
1. What condition is of the premium collection (of insurer) at present
situation ?
Excellent
Good
Satisfactory
2. How is the premium collection system of yours insurance company?
Right
Somewhat Right
Wrong
3. How is the collection from premium, at present insurance market?
Less than expected
In between expected
More than expected
4. Are you firms satisfied with the various rate of premium under
different insurance policy?
Yes
No
In Between
76
5. How well are you/your firm concern with the investment management
and portfolio?
Significant concerned
Somewhat concerned
Not concerned
6. Do you feel that your firms are able to maintain the maximum
beneficial investment policy?
Yes
No
In Between
7. While forming the investment policy, what will be you / your firm's
preferences among these?
Portfolios of investment
Return from investment
Objective of investment
8. Which sectors are suitable for the purpose of invest to the insurer?
Fixed deposit
Gov. saving bond
Share in market
9. Is the present investment able to gain desired return?
Yes
No
Little
10. How is the current investment system of Nepalese insurance
companies?
Excellent
Good
Satisfactory
77
Appendix II
A) Trend analysis of Premium Collection (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
117.65 126.60 274.31 202.03 140.81 152.83
2011/12
162.52 138.71 207.04 250.33 183.55 173.14
2012/13
96.06 150.82 222.98 298.63 201.64 193.45
2013/14
236.82 162.93 338.96 346.92 214.23 213.76
2014/15
141.03 175.03 449.83 395.22 227.03 234.07
2015/16
187.14 443.52 254.38
2016/17
199.25 491.81 274.70
2017/18
211.35 540.11 295.01
2018/19
223.46 588.40 315.32
2019/20
235.57 636.70 335.63
Let trend line be
Y = a + b x. (I)
Where x = X - Middle year
Here,
a=
Y b=
xY
N x 2
78
B) Trend analysis of Investment (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
86.09 83.72 114.56 94.82 135.18 137.58
2011/12
97.98 102.10 113.85 129.76 150.38 151.29
2012/13
107.40 120.47 141.68 164.71 170.42 165.00
2013/14
167.85 138.84 214.48 199.65 180.20 178.72
2014/15
143.01 157.21 238.96 234.59 188.84 192.43
2015/16
175.58 269.54 206.15
2016/17
193.95 304.48 219.86
2017/18
212.32 339.42 233.57
2018/19
230.69 374.36 247.29
2019/20
249.06 409.31 261.00
Let trend line be
Y = a + b x. (I)
Where x = X - Middle year
Here,
a=
Y b=
xY
N x 2
Where as
Yc = 120.47 + 18.37 X of PLIC
Yc = 164.71 + 34.94 X of ALIC
Yc = 165.0 + 13.71 X of NLIC
79
C) Trend analysis of Net Profit (Rs. in Millions)
Year(x) PLIC ALIC NLIC
Actual Trend Actual Trend Actual Trend
Value Value Value Value Value Value
2010/11
7.54 12.25 17.17 9.54 15.79 14.50
2011/12
18.35 12.68 10.12 13.06 16.95 16.95
2012/13
15.58 13.12 12.54 16.59 16.90 19.40
2013/14
10.46 13.55 6.50 20.11 21.68 21.85
2014/15
13.65 13.98 36.61 23.64 25.68 24.30
2015/16
14.42 27.17 26.75
2016/17
14.85 30.69 29.20
2017/18
15.28 34.22 31.66
2018/19
15.71 37.74 34.11
2019/20
16.15 41.27 36.56
Let trend line be
Y = a + b x. (I)
Where x = X - Middle year
Here,
a=
Y b=
xY
N x 2
Where as
Yc = 13.12 + 0.43 X of PLIC
Yc = 16.59 + 3.53 X of ALIC
Yc = 19.40 + 2.45 X of NLIC
80
Appendix-III
Return on Premium Collection on Insurance Companies
Insurance
Amount 2010/11 2011/12 2012/13 2013/14 2014/15
Company
Prime Profit 7,536,119 18,347,181 15,582,928 10,464,171 13,645,472
Life
Insurance
Company
Premium 117,650,311 162,518,942 96,062,278 236,824,438 141,034,038
Percentage 6.41 11.29 16.22 4.42 9.97
Asian Life Profit 17,165,038 10,121,927 12,542,403 6,497,829 36,607,924
Insurance
Company
Premium 274,313,926 207,039,326 222,975,659 338,964,494 449,834,061
Percentage 6.26 4.89 5.63 1.92 8.14
National Profit 15,791,022 16,949,364 16,902,350 21,680,122 25,676,528
Life
Insurance
company
Premium 140,808,000 183,551,000 201,637,000 214,230,450 227,025,000
Percentage 11.21 9.23 8.38 10.12 11.31
Source: Annual Report of Concern Life Insurance Companies
81
AppendixIV
Claim Paid to premium Collection Insurance Companies
Figure in Million
Insurance Amount
2010/11 2011/12 2012/13 2013/14 2014/15
Company
Prime Life Claim 23.69 36.93 54.75 105.76 65.15
Insurance Paid
Company Premium 117.65 162.52 96.06 236.82 141.03
Percentage 20.13 22.73 56.99 44.66 46.19
Asian Life Claim 23.39 19.77 28.13 137.45 210.67
Insurance Paid
Company Premium 274.31 207.04 222.98 338.96 449.83
Percentage 8.53 9.55 12.62 40.55 46.83
National Claim 22.50 24.72 46.18 95.69 103.29
Life Paid
Insurance Premium 140.81 183.55 201.64 214.23 227.03
company Percentage 15.98 13.47 22.90 44.67 45.50
Source: Annual Report of Concern Life Insurance Companies
82
Appendix V
Net Return to Total Investment of Insurance Companies
Insurance Amount
2010/11 2011/12 2012/13 2013/14 2014/15
Company
Prime Profit 7,536,119 18,347,181 15,582,928 10,464,171 13,645,472
Life
Insurance
Company
Investment 86,087,429 97,976,663 107,404,419 167,853,929 143,006,429
Percentage 8.75 18.73 14.51 6.23 9.54
Asian Life Profit 17,165,038 10,121,927 12,542,403 6,497,829 36,607,924
Insurance
Company
Investment 114,564,700 113,852,800 141,679,797 214,479,797 238,959,284
Percentage 14.98 8.89 8.85 3.03 15.32
National Profit 15,791,022 16,949,364 16,902,350 21,680,122 25,676,528
Life
Insurance
company
Investment 135,181,410 150,383,060 170,423,029 180,196,200 188,840,000
Percentage 11.68 11.27 9.92 12.03 13.59
Source: Annual Report of Concern Life Insurance Companies
83
Appendix VI
Premium Collection and Investment of Insurance companies
Figure in Million
Insurance Amount
2010/11 2011/12 2012/13 2013/14 2014/15
Company
Prime Investment 86.09 97.98 107.40 167.85 143.01
Life Premium 117.65 162.52 96.06 236.82 141.03
Insurance Percentage 73.17 60.29 111.81 70.87 101.39
Company
Asian Life Investment 114.56 113.85 141.68 214.48 238.96
Insurance Premium 274.31 207.04 222.98 338.96 449.83
Company Percentage 41.76 54.99 63.54 63.28 53.12
National Investment 135.18 150.38 170.42 180.19 188.84
Life Premium 140.81 183.55 201.64 214.23 227.03
Insurance Percentage 96.00 81.93 84.52 84.11 83.18
company
Source: Annual Report of Concern Life Insurance Companies
84
Appendix VII
Investment Portfolio of Insurance Companies
Prime Life Insurance Company Ltd.
FY Amt. Fixed Govt. Share Emgc. Total
Deposit Security Inc.
Bond Fund
NRs. 64,626,019 13,725,000 4,164,981 3,571,429 86,087,429
2010/11
% 75.07 15.94 4.84 4.15 100
NRs. 76,515,253 13,725,000 4,164,981 3,571,429 97,976,663
2011/12
% 78.10 14.01 4.25 3.65 100
NRs. 81,907,009 13,725,000 8,200,981 3,571,429 107,404,419
2012/13
% 76.26 12.78 7.64 3.33 100
NRs. 89,907,500 13,725,000 60,650,000 3,571,429 167,853,929
2013/14
% 53.56 8.18 36.13 2.13 100
NRs. 77,850,000 13,725,000 47,860,000 3,571,429 143,006,429
2014/15
% 54.43 9.59 33.47 2.49 100
Source: Annual Report of Prime Life Insurance Company
85
National Life Insurance Company Ltd.
FY Amt. Fixed Govt. Share Emgc. Total
Deposit Security Inc.
Bond Fund
NRs. 98,500,000 22,300,000 14,381,410 - 135,181,410
2010/11
% 72.87 16.50 10.64 0.00 100
NRs. 113,700,000 22,300,000 14,383,060 - 150,383,060
2011/12
% 75.61 14.83 9.56 0.00 100
NRs. 133,861,595 22,300,000 14,261,434 - 170,423,029
2012/13
% 78.55 13.09 8.37 0.00 100
NRs. 139,874,560 24,600,000 15,721,640 - 180,196,200
2013/14
% 77.62 13.65 8.72 0.00 100
NRs. 146,946,000 24,600,000 17,294,000 - 188,840,000
2014/15
% 77.82 13.03 9.92 0.00 100
Source: Annual Report of National Life Insurance Company
86