LOCAL NEWS THE RISING NEPAL (DAILY)

Lic eyes on rural market in Life insurance

Each year a whopping amount of nearly 70-80 million Nepalese rupees is being paid as premium to the insurance agents across the border. But insurance companies in the urban areas here are still not aware of a latent market in the rural areas in the country. Having realized this fact, Life Insurance Company of India and Bishal Group of Nepal are joining their hands in the name of Life Insurance Corporation Nepal Ltd. The LFC’s new venture in life insurance sector has targeted to go into mainly rural areas in Nepal.

While talking to Rajkumar K.C of The Rising Nepal about his new business in Nepal, managing director of B.C Bose said that the main focus of the LIC is to generate rural market like in India.

Bose, an M.A in Economics with specialization in International Trade, L.L.B and M.B.A in Marketing Management, has wide rage of experience in insurance. Bose has served as a member to the Executive Committee of Insurance Institute of India and also as Director in the Board of J.K Industries and TEXMACO Ltd (K.K Birla Group) in India. Before joining in the recent venture in Nepal, Bose was Executive Director in the Corporate office of LIC of India in Mumbai and in- charge of Personnel and Industrial Relations. He also has a varied experience of working in Life insurance Marketing and Administration with LIC of India as well as a stint in General insurance with Oriental Insurance Company. Excerpts:

TRN- Though the number of insurance companies here is more than 16/17 today, they are not doing their business in real sense. Instead they are said to be involved in manipulation. How will you create an insurance market in such atmosphere ?

Bose – Well, I have seen plenty of scopes here. Despite having so many challenges, we will be able to create market by generating new schemes in a fair manner. As LIC is dealing only with life insurance sector, I really see a big market in this sector here.

TRN- Do you see any prospects of life insurance market in Nepal ?

Bose - To be precise there are 17 insurance companies in life and non – life sector, but out of that, there are only two which are exclusively dealing with life insurance sector. Before coming to Nepal, we conducted a study of insurance market here. In fact Nepal is compact market, but we do not call it a small. Definitely the prospect is very much there for us to emerge as a dominant insurance company if not a leader. The degree of awareness about life insurance here is very high.

Apart from that LIC deals with life insurance only. And it’s attention is not diverted between life and non –life sectors. Besides, it is a joint venture which will have only two promoters. Multiplicity of promoters is perhaps not strong point of a company. That is what we came to know from our study.

There are some similarities between Nepalese and Indian market as well. One of the promoters of LIC Nepal that is Life Insurance Company India has almost 46 years experience in this sub continent.

It has got agency of eight lakhs fifty thousand agents. Life Fund is one lakh eighty crores and number of policy holders is 12 crores.

And Bishal Group knows the Nepalese market very well. Another feature of LIC is that it is totally techno-driven. The total capital base of the company is 25 crores rupees. And that will be divided among LIC (with 55%), Bishal Group (25%) and the public (20%). Hence its solvency is very credible.

TRN- You are aware of that the Nepalese economy is going into recession and insurance companies across the border are influencing the Nepalese market. Apart from this, chances of capital flight is also high. How confident are you in generating market on your own initiatives ?

Bose – We have made market study on the basis of data. We started accepting deposits from September 17. And agencies recruitment is underway. Not now but later we will be stabilize ourselves. After that we will be getting into market segmentation. And our basic objectives in the long run is to have products specific to market segment and agent specific to market segment. Hence the agent, product and market segment will be there. That is of course not now, but after two years.

If you talk about recession the recesionary trend in Nepal is not to that extent of other countries. There is a brighter aspect in the Nepalese economic policy. There is six per cent growth in GDP, five per cent growth in inflation and 12 per cent in money supply.

On top of that LIC is mainly focused on rural business like Life Insurance Company of India that generates more than 50 per cent market from rural areas.

And rural reconstruction is a sort of priority in Nepal which it, generating deserves.

It is totally a rural reconstruction programme in Nepal. Rural areas have a great potential market.

TRN -How will you generate market in rural areas despite a high degree of poverty and illiteracy ?

Bose – Since poverty alleviation is the main objective of the government in the Ninth and Tenth Five year plan, our schemes in generating economic activities will also be helpful in this regard. Just like the rural sector in India we can generate such awareness here also.

We will definitely go to the rural areas where we will have a greater market and we will explore that potentiality. We have a good experience in the rural sector.

TRN- How do you differentiate yourself from other insurance companies here?

Bose- Ours will be totally techno-driven and we accord top priority on human resource development.

Our vision is not to become the best insurance companies, but to become a best company here by not snatching other’s share, but generating our own.

TRN- What sort of reforms do you expect in the insurance sector here?

Bose – Academics of insurance are very essential so as to develop able manpower in this sector. On top of that corporate agencies should be available for which there should be some amendment in the existing Insurance Act.

TRN- How is global insurance market after the terrorist attack in the USA in September 11 ?

Bose – It’s very pathetic but true.

TRN- Is there any possibility of minimizing the risk in insurance business ?

Bose- I strongly feel that there should be a provision of re-insurance market in South Asian countries.

TRN- Do you have any comment on the Nepalese insurance market ?

Bose – Till, now we do not have any problem. I do not know what will happen in future.

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