Resta Jha is the CEO of Prime Life Insurance. Since its establishment in 2008, Prime Life Insurance has developed a network of 20 branches and 65 sales offices and has enlisted over 300,000 policy holders. Under Jha's leadership, the company has been able to increase its market share from 5 to 13 per cent over the last two quarters. Jha also serves as the chairman of KFA, a financial training, research and consultant firm.
Resta Jha: Life insurance began in Nepal with the National Insurance Corporation of Nepal in the early 1970s but private players did not enter the market until a decade ago. Now there are nine life insurance companies, and approximately six per cent of the population is insured. The industry is in its nascent stage, which means there is a lot of opportunity. People started questioning the credibility of life insurance companies after the recent Unity scandal. But the market is picking up, as shown by the premium collection of Rs 2.25 billion in the last quarter, up from Rs 1.5 billion collected in the same period a year before.
Why should an individual be insured?
When you insure yourself, the money you put in is not just an investment. Life insurance is firstly for the security of your family, who will be taken care of if anything unfortunate happens to you. Secondly, it is a mode of forced saving, and will give you returns in the form of bonuses. Lastly, insurance gives you tax benefits.
Which market is the industry primarily catering to?
The market for life insurance is still a push market; the insurance suppliers seek consumers rather than the other way round. Only 15 per cent of the insured population lives in urban areas, the remaining 85 per cent is based in rural areas.
What does the insurance sector need to do to attract urban residents?
There is still a need to raise awareness about life insurance among the urban population. While direct marketing has worked well in rural areas, different methods will have to be used to change the attitude of urban consumers. We need to introduce differentiated products that are customised to the urban lifestyle. On the other hand, agents also have to be trained to allow clients to make informed choices.
How can the growth of the industry be facilitated?
Right now, there is an asset-liability mismatch in the life insurance industry. The average period of a policy is 13.75 years – our liabilities are long-term. Meanwhile, our investment options are mostly short-term. There needs to be a regulatory change that will allow us to invest in real sectors such as health and education. Also, the government needs to increase the tax benefit insurance can provide, which at present is just Rs 20,000.
As part of KFA, can you tell us about the International Management Conference the institution is organising?
KFA is collaborating with the Nepal Academy of Management to organise this conference and we have invited more than 100 international delegates from academic and business backgrounds. We expect that during this three-day conference, the participants will not only learn about international management practices but establish international linkages that will help the business community here. We are trying to ensure that the right people attend the conference so that the talks will transform into actions.
Adieu, ARTHA BEED