Insurance Companies in Nepal

There are altogether 25 insurance companies established under Insurance Act 1992. Among these, 8 offer life insurance services, 16 perform non-life insurance services and one company rendered both life as well as non-life Insurance services.

List of Insurance Companies

Life Insurance Companies:
1. National Life Insurance Company Ltd
2. Nepal Life Insurance Company Ltd
3. Life Insurance Corporation (Nepal) Ltd
4. American Life Insurance Company Ltd
5. Gurans Life Insurance Company Ltd
6. Surya Life Insurance Company Ltd
7. Prime Life Insurance Company Ltd
8. Asian Life Insurance Company Ltd

Non-Life Insurance Companies:
9. Nepal Insurance Company Ltd
10. The Oriental Insurance Company Ltd
11. National Insurance Company Ltd
12. Himalayan General Insurance Company Ltd
13. United Insurance Company (Nepal) Ltd
14. Premier Insurance Company (Nepal) Ltd
15. Everest Insurance Company Ltd
16. Neco Insurance Company Ltd
17. Sagarmatha Insurance Company Ltd
18. Alliance Insurance Company Ltd
19. NB Insurance Company Ltd
20. Prudential Insurance Company Ltd
21. Shikhar Insurance Company Ltd
22. Lumbini General Insurance Company Ltd
23. NLG Insurance Company Ltd
24. Siddhartha Insurance Ltd

Life and Non-life:
25. Rastriya Bima Samsthan

According to the ownership structure, 3 insurance companies are operating under foreign investment and 3 insurance companies are in joint ventures with foreign insurance companies. Likewise, 18 insurance companies are in private sectors whereas one company is under the government ownership. Based on the financial statistics received from the insurance Board, total assets/liabilities of these companies increased by 28.2 percent from last year to Rs. 47.46 billion in mid-july 2010. Total premium collection of these companies is estimated at Rs. 15.40 billion by mid-july 2010. Such collection was Rs. 10.90 billion previous year.

Insurance Companies

Insurance Companies provide various forms of insurance and investment services to individual and charge a fee (called a premium) for this financial service. In general, the insurance provides a payment to the insured (or a named beneficiary) under conditions specified by the insurance policy contract.These conditions typically result in expenses or lost income, so the insurance is a means of financial protection. It reduces the potential financial damage incurred by individuals or firms due to specified conditions.

Common types of insurance offered by insurance companies include:
Life insurance,
Property and Casualty insurance,
Health insurance and
Business insurance.
Many insurance companies offer multiple type of insurance.

An individual's decision to purchase insurance may be influenced by the likelihood of the conditions that would result in receiving an insurance payment. Individuals who are more exposed to specific conditions that cause financial damage will purchase insurance against those conditions. Consequently, the insurance industry faces an adverse selection problem, meaning that those who are most likely to need insurance are most likely to purchase it. Furthermore, insurance can cause the insured to take more risks because they are protected. This is known as the moral hazard problem in the insurance industry.

Insurance companies employ underwriters to calculate the risks of specific insurance policies. The companies decide what types of policies to offer based on the potential level of claims to be paid on those policies and the premiums that they can charge.

Money Market Funds

Money market funds are also known as money market mutual funds in the U.S Money market funds are not in practice in Nepal. These instiutions issue shares that are redeemable at a fixed price (usually 1$) by writing checks. For example, if you buy 5000 shares for $5000, the money market fund uses these funds to invest in short term money market securities (treasury bills, certificates of deposit, commercial paper) that provide you with interest payments. In addition, you are able to write checks up to the $5000 held as shares in the money market fund. Although money market fund shares effectively function as checking account deposits that earn interest, they are not legally deposits and so are not subject to reserve requirements or prohibitions on interest payments.
For this reasons, they can pay higher interest rates than deposit at the banks. The first money market mutual fund was created by two Wall Street mavericks, Bruce Bent and Henry Brown in 1971. In 1977, money market mutual fund has assets under $4 billion; in 1978, their assets climbed to close to $10 billion; in 1979, to over $40 billion. And in 1982, to $230 billion. Currently, their assets are around $2 trillion. To say the least, money market mutual funds have been a successful innovation, which is precisely that we would have anticipated to happen in the late 1970s and early 1980s when investment rates took off past Regulation Q roofs.