Life insurance plays a vital role in strengthening household financial security and significantly supports the stability and growth of the national economy. However, despite regulatory reforms and recent efforts to implement digital solutions, Nepal’s life insurance penetration remains among the lowest in South Asia, highlighting deep-rooted structural and policy challenges. This study aims to examine sector-specific constraints that hinder the growth of life insurance in Nepal and to propose reform pathways to expand its reach and effectiveness. The objectives are threefold: to identify structural and regulatory barriers, explore gaps in product innovation and consumer literacy, and suggest practical reforms to improve penetration. Methodologically, the study employs a qualitative desk research approach, relying on secondary data from Beema Samiti reports, annual disclosures from insurance companies, and relevant academic literature. Thematic analysis categorizes challenges into three areas: policy and regulatory environment, product innovation, and consumer behavior. The findings reveal ongoing issues such as limited regulatory enforcement capacity, low levels of insurance literacy, insufficient product diversification, and cultural attitudes that discourage long-term financial planning. Additionally, the industry faces inefficiencies in distribution channels and a lack of adoption of customer-focused innovations. The study concludes that addressing these complex challenges requires coordinated reforms including regulatory improvements, targeted awareness campaigns, and product restructuring that considers Nepal’s socio-economic context. The insights from this research are valuable for policymakers, regulators, and insurance providers, offering evidence-based strategies to enhance financial inclusion and support sustainable growth in Nepal’s life insurance sector.
Khilendra Paudel (Tue,) studied this question.