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Former Executive Director of Nepal Rastra Bank Shibnath Pandey Pandey, who is also a chartered accountant, is currently the CEO of Sanima Reliance Life Insurance Company. Sanima Reliance Life, which was formed by the merger of the former Sanima Life and Reliance Life, has been aggressive in business expansion recently. An edited excerpt from an interview conducted for Insurance Talk, which covers his journey from the responsibility of a regulatory body of a bank and financial institution to the CEO of a life insurance company:
You finished your working life at Nepal Rastra Bank and came to lead a life insurance company. What is it like to be a regulator of the banking sector and play a role in growing the insurance market by leading an insurance company?
There is a huge difference. I had the opportunity to work in a high position in the central bank, especially at the policy-making level. Since the National Bank is a regulatory body, an institution that formulates banks and financial institutions and monetary policies, it had to formulate policies, work for financial stability, and work to provide financial access to banks and financial institutions across the country, and instill public confidence in banks and financial institutions. With the recent development of the payment system, we worked to organize the payment system in a safe, reliable and transparent manner. When we look at policy-making there, we look at the sustainable development of the country, for the growth of growth. After working at the policy-making level, its impact is not immediately visible. Its results are visible only later.
I have left that field and come in the exact opposite direction. Insurance has remained a separate subject. I had to fall into the financial sector, but from my personal perspective, I have a different feeling. On the other hand, our regulatory body is the Insurance Authority. Now we are result-oriented. Now, we are focusing on selling insurance products, seeing how the premium growth is, how to pay claims easily, easily and quickly, and how much return will be given to shareholders in the form of dividends? The focus is on how to give it.
Some individuals who have left the National Bank as executive directors say they will become bankers, prepare to become governors, or go to other regulators. Even if that does not happen, they are running around saying that they will work in commercial banks. They even go there and sit on the board. But why did you choose the insurance sector? Is there any special reason or logic in choosing the insurance sector?
I did not have such a logical reason for choosing the insurance sector. I also thought that if you work in a new field, you can understand that field, increase your knowledge, and if you work hard in a different field, you can give good results. Along with this, there was a situation behind coming to this field, where senior friends were on the board and they were saying that let’s work together to work in this new field. After such a request from seniors, it is a situation where we have to accept our culture or not. When such a request is made, we cannot say no.
After that, you are working as a market player today. After leaving there and coming here, you must have come to the point where you said that I am doing something or the other?
That is for you to judge rather than me. I think I have done well in this field. I have had the opportunity to learn in this field.
Where can banks and insurance be combined to improve the prosperity of the country and the standard of living of its citizens?
My opinion is that insurance especially leads to the path of economic prosperity. Because everyone understands that it transfers risk and provides financial security. Now, in our context, if insurance is given priority to all people living in remote areas at the state level, people will feel insecure about what will happen to me tomorrow morning. What will happen to my condition? How will my health be? People are feeling insecure about this. Insurance works to boost morale in this regard. I have also been at the policy-making level and am currently working in the insurance sector. As you said, if we can connect the areas, especially its distribution channels, to the lower level, if we can increase awareness about insurance and increase the ability to attract people to insurance, we can do a lot of things.
You were talking about distribution channels. We are still going in the traditional way, right?
When it comes to the distribution channel, Nepal Rastra Bank became the regulator. The network of banks and financial institutions is very large throughout the country. That channel was developed as bancassurance in the middle. Later, the Rastra Bank stopped it. The reason for stopping it is not known. But it is said that it would be good if we could use that area as a platform to sell products. But we could not convince. It seems that it would be good if we could discuss this in detail and move forward.
There was also a dilemma in this, right? We are in a country where almost 40 percent of the economy is informal. That is the nature of the economy, insurance should go down and play a role in formalizing it. The expectation of the National Bank and the banking sector is that the money on the citizens’ heads will be brought to the formal channel through insurance policies. And you, who have already come to the bank, should not sell policies. Don’t you get a little ‘rhythm’?
How do we say that there is an informal sector economy? Some of it is informal. Right now, we are using the agent channel more. Digitalization has not reached that level. It cannot be said that it is only about people in the bank through the banking channel. It is not a medium or platform. If policies are sold through the bank, people’s confidence in the bank is also higher. If sales can be made through that, it will be transparent and the insurance business will grow. Therefore, it is not meant to use the medium of banks to bring money from the informal sector into insurance. The aim is to keep everyone within the scope of insurance.
We can look at the neighborhood, the market size of aggregators is very good. They are doing insurance business better than through agencies. That concept has not yet taken shape here. Has it not started?
Maybe gradually.
How much role does it play? Looking at today’s market, technology, etc., what happens when the concept of aggregators is brought in?
Very good. It is developing slowly. Our regulatory body is also just moving to the left. It is just moving forward from the Insurance Committee to the authority. In the recent past, work is being done to organize policies and regulations, issue licenses, etc. We see visible development in this. Therefore, the distribution channels or channels are gradually changing, and aggregators are coming. Due to which it is certain that the insurance business will continue to grow.
We say that we have reached around 40 percent insurance access, what is this situation for a country like ours? How to analyze it?
If we analyze the data, it is said that about 45 percent of the citizens are covered by insurance. There are some wealthy people in this, for whom insurance is necessary or not. Because they are financially wealthy, if they can withdraw it when necessary, that would be different. If a population is like that, the problem of food and shelter is more than insurance. One aspect is whether we can bring those people under the insurance coverage or not. Such citizens should be brought under insurance. For which the state should pay special attention. They should be brought under insurance to boost morale. They should also be brought under insurance to lead them towards prosperity. This can be a matter of debate. What remains is the middle class. When only they are covered by insurance and the situation reaches 45 percent, it seems that there is a need to include those living at the lower levels.
When you plan for insurance, what kind of plan do you make for the upper, middle or lower levels as mentioned above?
If it is said that the lower level people do not have regular income, then it is not enough to just issue an insurance policy. The top level people can be told not only all the financial security but also what will happen tomorrow. If they buy it, a kind of ‘vibes’ will also go out in the market. Therefore, we have to convince them too. Programs are being introduced to create attraction towards insurance for the middle class as well. Agents are playing a role in that.
The government has licensed microinsurance companies to insure the poor. You have also set a limit for big companies. It sounds very popular. How easy is it to insure the poor? What should be done to use it in their best interests and move forward?
The concept of microinsurance is not bad. Its concept was brought because of the lack of access to insurance among citizens below the absolute poverty line. There is a problem of not being able to eat daily, not being able to meet daily expenses. Microinsurance should also see whether the citizens can pay or not. Small products should be brought for them. In this, the state should provide insurance to citizens living below the poverty line, at least by providing concessions.
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