Contribution of Insurance Industries in Economic Development of Nepal

Abstract

The paper discusses on role of insurance industries in economic development of Nepal and analyses its contribution in Nepalese economy. The paper is prepared based on secondary data. Insurance, lately recognized its activities by UNCTAD since 1964 however, the contribution of insurance is not less than banks and other financial institutions. Insurance shares the risk, provides financial protection, reduces the financial distress and accelerates the pace of economic growth. Insurance mobilizes resources collecting small amount of scattered fund in terms of premium and provides large amount of fund to government and private sector. Insurance address the requirement of medium and high income class people, but large portion of low income and poor people are excluded from the insurance services. Microinsurance products address the marginalized and poor income people which is currently in practice more than 100 countries in the world. Nepal, recently has introduced Crop and Livestock Insurance schemes which is going to be implemented through 17 commercial insurers. Government provides 50 percent premium subsidy for clients who purchase the agriculture insurance policy. The paper concludes that insurance has played positive role in economic development of Nepal.