Disclosure Practices in Nepalese Insurance Companies

Rabindra Ghimire1
Dr. Prashant Kumar2

Abstract

The objective of this paper is to examine the financial reporting and corporate disclosure practices of insurance
industry in Nepal. Among 25 insurance companies, 22 companies had taken for the study. The paper has been
prepared on the basis of prevailing rules and regulation, annual reports and secondary information. The paper
is descriptive in nature and data has been analysed using both descriptive and inferential statistical tools.
Corporate disclosure index has been prepared on the basis of four disclosure dimensions: submission deadline
of annual report, submission deadline of quarterly reports, completeness of the director's disclosure report and
organising annual general meeting within the prescribed period. The paper concludes that directors' disclosure
practice and organising AGM within the prescribed period have highest score, timely reporting score has
lowest score and quarterly reporting score is moderate. The disclosure practice between life and non-life
insurance company has no significant and there was no improvement on disclosure practice during the FY
2012/2013 as compared to previous year. Overall disclosure practice is not found satisfactory during the study
period.
1. Introduction
Corporate disclosure is prerequisites for good governance of any organisation. Presentation of financial
statements, directors' reports and disclosing the information required by regulatory mechanism helps to protect
the interest of the stakeholders. Studies have shown that good corporate governance practices have led to
significant increase in economic value added of firms, higher productivity and lower risk of systemic financial
failures for countries (World Bank, 2005).
The stable and efficient financial reporting and corporate disclosure practices in the insurance industry will be
supportive for the sustainable economy. The stability of the industry relies on three main factors: stability and
efficiency of the insurance company itself, corporate governance and sound financial reporting. The high quality
accounting standards, good regulatory framework, good governance and ethical framework are basic
requirements for sound financial reporting system. Therefore, it is increasingly important for businesses to be
financially transparent and for government to establish a sound regulatory environment for corporate financial
reporting. Good corporate disclosure can mitigate the adverse selection problem and increase market liquidity
by levelling the playing field among investors (Verrecchia, 2001).
Many efforts have been made to enhance the corporate governance practices in Nepal. After 1990, Central
Bank introduced higher corporate governance standards for banks and other financial institutions as part of
financial sector reform project. Insurance Board was established in 1992 as an autonomous and apex regulatory
authority in insurance sector. The Board issued a numbers of directives, guidelines and revised regulations to
ensure good corporate governance and financial reporting practices since last two decades. As a result, insurance
sector get a momentum for the development of market and compliance of rules and regulations. Now, an
effective regulatory framework has been developed to supervise and regulate the insurance industries.
This paper aims to examine the corporate reporting and disclosure practices of life and non life insurance
companies in Nepal on the basis of regulatory framework and annual reports of insurance these companies.
Furthermore, the paper also compares the disclosure practices between life and non life insurance companies.
Corporate disclosure index has been also formed for life and non life insurance industry separately.
1.1 Evolution of Financial Reporting System in Nepal
Corporate financial reporting history of Nepal is as long as the history of industrialisation which was started
during 1930s. During the initial phase of industrialisation most of the industries were established as
proprietorship, partnership and private limited company. During 1960s and 1970s, more than six dozen public
enterprises were established and after mid 1980s, private sector was allowed to invest in banking and financial
sector. When public limited companies were established with joint venture investment, the importance of fair
and internationally accepted financial reporting system had been realised by stockholders and other concerned
authorities. During 1980s, financial liberalisation policy was gradually adopted by the government. The number
of acts were successfully introduced, amended and implemented till 2000. During 1990 - 2000, statutory and
regulatory reform took place in speed. Accounting Standard Board and Auditing Standards Board were
established. The Regulatory institutions like Nepal Rastra Bank (1956), Securities Board (1983), Insurance
Board (1992) and Institute of Chartered Accountants of Nepal (1997) have been playing vital role. Similarly,
Company Act, 2006; Securities Exchange Act, 2007; Privatization Act, 1994, Income Tax Act, 2002; Insurance

1
Assistant Professor, Pokahra University
2
Professor, Banaras Hindu University

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Electronic copy available at: http://ssrn.com/abstract=2557021
Act, 1992, Nepal Rastra Bank Act, 2002, Bank and Financial Institution Act, 2006; Nepal Stock Exchange Act,
1993 introduced for further improvement of corporate sector and enhance the financial reporting and corporate
disclosure practices.
1.2 An Overview of Insurance Industry in Nepal
The first financial institution Nepal Bank Ltd. and first non life insurance company Nepal Mal Chalani Tatha
Beema Company were established in 1937 and 1947 respectively. First life insurance company was established
in 1968. At present, there are 253 bank and financial institution 25 insurance companies. are only 25.Still,
reinsurance, health and agriculture related separate insurance companies are not exists. A separate "Insurance
Pool" has been created to reinsure the risk related to terrorist violence and riots. The ownership structure, date
of establishment and paid up capital of insurance companies are presented in Table 1.
Table 1: Insurance Companies in Nepal
Name of Company Date of Ownership Structure Paid Up
establishment Capital (NRs.
Million)
A) Life and Non Life Insurance Company
1. Rastriya Beema Sansthan 12/15/1968 Government and Public 111.83
B) Life Insurance Companies
2. National Life Insurance Co. Ltd. 1/7/1988 98% Domestic 501.33
3. Nepal Life Insurance Co. Ltd. 4/17/2001 100% Domestic 637.5
4. MetLife Alico Insurance Company* 8/2/2001 Branch of MetLife ALICO N/A
5. Life Insurance Corporation (Nepal) Ltd 8/7/2001 45% Domestic 405
6. Asian Life Insurance Co. Ltd 2/27/2008 100% Domestic 506.72
7. Surya Life Insurance Co. Ltd 3/19/2008 100% Domestic 41.13
8. Gurans Life Insurance Co. Ltd 3/31/2008 100% Domestic 383.4
9. Prime Life Insurance Co. Ltd 5/6/2008 100% Domestic 500
C) Non Life Insurance Companies
10. Nepal Insurance Co. Ltd 9/24/1947 100% Domestic 102.7
11. The Oriental Insurance Co. Ltd* 9/15/1967 Branch of The Oriental India N/A
12. National Insurance Co. Ltd* 1/1/1974 Branch of National India N/A
13. Himalayan General Insurance Co. Ltd. 7/21/1993 100% Domestic 100.8
14. United Insurance Co. Ltd 10/22/1993 100% Domestic 100.8
15. Premier Insurance Co. Ltd 4/21/1994 100% Domestic 102
16. Everest Insurance Co . Ltd 5/31/1994 100% Domestic 101.25
17. Neco Insurance Ltd. 5/30/1996 100% Domestic 135.22
18. Sagarmatha Insurance Co. Ltd 6/26/1996 80% Domestic 129
19. Alliance Insurance Co. Ltd. 7/19/1996 100% Domestic 129
20. N.B. Insurance Co. Ltd 1/23/2000 100% Domestic 147
21. Prudential Insurance Co. Ltd 5/3/2002 100% Domestic 100
22. Shikhar Insurance Co. Ltd 10/4/2004 100% Domestic 125
23. Lumbini General Insurance Co. Ltd 7/15/2005 100% Domestic 140.6
24. NLG Insurance Co. Ltd. 10/9/2005 100% Domestic 157.5
25. Siddartha Insurance Co. Ltd. 4/5/2006 100% Domestic 100
Source: Insurance Board of Nepal, Annual Reports of Insurance Companies
* excluded from the study.

Out of 25 companies, 18 companies are established by domestic private investors. One company owned by
government, three are branch of foreign companies, one company has majority share of foreigner and two
have minority share of foreign investors.
2. Review of Legal Framework
2.1 Legal Framework of Corporate Disclosure
The regulatory framework of corporate disclosure of insurance companies comprises of Company Act,
Insurance Act, Securities Act and regulation thereof as well as number of directives and guidelines published by
the concerned authority from time to time.

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Electronic copy available at: http://ssrn.com/abstract=2557021
2.2 Insurance Board
Insurance Board, established according to Insurance Act, 1992 is an apex body for insurance regulation.
Number of Directives, Guidelines, Policies and Circulars has been issued by the Board. Some of them,
Directives to Prepare Financial Statements of Life Insurers and Non Life Insurers, Directives of Analysis of
Financial Status and Evaluation of Liabilities of Life and Non Life Insurers, Solvency Margin Directives, 2013
for Life Insurers, Corporate Good Governance Directives, 2012, Investments Directives for Life Insurers and
Non Life Insurers, On Site Inspection Manual, Long Form Audit Report, are comprehensive and ample
guidelines while preparation of financial statements and disclosure of required information.
Insurance companies need to submit annual financial statements along with director's report within six months
after completion of reporting year. After getting the approval from Board, report shall be disclosed to
shareholders at least one month before the holding of general meeting.
2.3 Office of Company Registrar
Office of the Company Registrar is regulating authority of all companies registered under Company Act.
According to Company Act, Board of Director is a prime responsible body to disclose all relevant information
of the company with its financial statements within a stipulated timeframe and submit to concerned authority in
accordance with regulatory framework. The report should include: a) Balance sheet as at the last date of the
financial year, b) Profit and Loss account of the financial year, and c) Description of cash flow of the financial
year and other relevant information to the office (Company Act, 2006). Company having more than or equal to
NRs. 10 million paid up capital are required to disclose additional information as described in Sub-section 4 of
Section 109 as an integral part of the Annual Report.
2.4 Securities Board
Securities Board is an apex regulator of all listed companies inside Nepal. Insurance ccompanies should be
public limited company and require to issue primary share to public. Company listed on capital market are
required to submit their annual financial report within five months of preceding fiscal year. Quarterly financial
statements are required to submit within one month after completion reported quarter. Company which is going
to issue new primary share are required to furnish various information to the Board. Moreover, company should
report to Board instantly after taking major decisions.
2.5 Accounting and Auditing Standards Board
These Boards are responsible to issue the guidelines for accounting and auditing. Accounting Standards Board
had issued 40 Nepal Financial Reporting Standards (NFRS) which are announced for the mandatory compliance
from 2015 to 2017. These standards are converged in line with IFRS. Auditing Standards are the common
guidelines to statutory auditors.
3. Methodology
The paper is descriptive in nature. It explores the current provisions and practices of corporate reporting,
analyses the situation, derive the conclusion and provide recommendations.
3.1 Sources and Nature of Data
The data has been collected through secondary sources: annual reports of insurance companies and Insurance
Board. Official websites of respective companies have been also visited to obtain quarterly report and other
required information. Furthermore, data also has been collected from Economic Survey of Ministry of Finance,
Government of Nepal, Nepal Rastra Bank, Securities Board of Nepal and Nepal Stock Exchange Ltd.
Qualitative data has been obtained through prevailing acts, rules and directives.
3.2 Study Period
The study covers period of two years (FY 2011/12 and 2012/13). Annual reports of FY 2011/12 and quarterly
reports of 2012/13 have been taken for the study.
3.3 Population and Sample Size
The universe size of study is 25 insurance companies among them three insurance companies have not been
included in this study since they are working as the branch office of foreign company and they are statutory not
supposed to disclose annual and quarterly report to public. Remaining 22 companies listed in Nepal Stock
Exchange Ltd. are taken as the sample of the study. Name of sample companies are shown in Table 1.
3.4 Data Analysis
Data has been analysed using the descriptive statistics like: Mean, ratio, percentage, bar, and inferential statistics
such as: Mann Whitney U test and Wilcoxon Singed Ranks Test).
3.5 Variables of the Study
Four broad areas are considered under the study. These are 1. Disclosure of annual reports, 2. Organising of
AGM, 3. Disclosure of quarterly reports an 4. Disclosure of Directors' reports. On the basis of different
variables, disclosure index of life and non-life insurance has been prepared.

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4. Result and Discussion
In this section data has been analysed using descriptive and inferential statistical tools.

4.1 Basis of Assigning the Disclosure Score

The annual reports of the companies are required to be submitted within the six months after completion of
fiscal year and in case of quarterly reports, one month lag has given. Reporting and disclosure status has been
rated considering the time taken by the insurers and the completeness of the content to be disclosed. Four
disclosure variables have been discussed and the value has been assigned of each company in Table 2 and 3.
4.1.1 Timeliness of Submission of Annual Report to Insurance Board
According to Section 23 (1) of Insurance Act, 1992; the annual report has to be submitted by the company
within six months (180 days) after completion of the fiscal year (i.e. mid July). Thus, the report of FY 2011/12
has to be submitted on or before January 15, 2013. But, it is observed that most of the companies failed to
submit their annual reports within the prescribed period. Time taken by each company has been presented in
column (2) of Table 2 and Table 3 for life and non-life insurance companies respectively. The value mentioned
in column (2) is difference between the actual reported date and deadline of reporting. The positive value
indicates that annual report was submitted to Insurance Board earlier than prescribed period that means the
disclosure practice of particular company is sound. It is also implied that if a company has more positive gaps, it
has better disclosure practice and vice versa. The negative value means annual report was submitted after
prescribed date which indicates that the company has poor disclosure practice. In other words, the company has
not complied the rule of timeliness of submission of annual report to Insurance Board. In column (2), value 1
has been assigned for the company who had submitted annual reports within deadline and otherwise assigned
value 0. No value has been given in between 1 and 0.
4.1.2 Timeliness of Submission of Quarterly Report to Insurance Board and Securities Board According to
Clause 22 (1) of Securities Registration and Issue Regulations, 2008; all listed companies are required to submit
their quarterly reports to Securities Board within one month after completion of the quarter. The report of first (
mid July - mid October ), second ( mid Oct –mid Jan), third (mid Jan mid April) and fourth (mid April –mid
July) quarter need to be submitted within mid November, mid February, mid May and mid August respectively.
The quarterly report submission date of insurers for four quarter during fiscal year 2012/13 has been obtained
from Securities Board of Nepal. Reports of each quarter has got 0.25 score and multiplied by number of
quarterly report submitted to Board. Column (4) and (5) in table 2 and 3 are related to the quarterly reporting
disclosure and its score. In column (4), numbers of quarterly reports published by company has been recorded
and in column (5) total quarterly disclosure score has been assigned (see table 2 and 3).
4.1.3 Timeliness of Organising Annual General Meeting
The third component of disclosure practice is Annual General Meeting (AGM) practice in time. As per clause
109 (1) of Company Act, annual reports should be disclosed to shareholders at least 30 days before the date of
AGM. According to Insurance Board, the AGM should be organised within 60 days after the date of approval of
its annual reports from Insurance Board. The AGM disclosure score has been assigned on the basis of 60 days
provision of Insurance Board. The prescribed date of AGM by Board to each insurer was different as their
annual report of FY 2011/12 had been approved in different dates (see Annex 1). In column (7) the value of
respective company has assigned either 1 or 0. Company got score 1 if it had conducted its AGM within 60 days
after approval of its annual reports otherwise no value has been assigned. Value in column (6), between 60 to 0
indicates that company has good disclosure practice but if value appeared in negative figure, it is supposed that
the company has failed to organise AGM in time.
4.1.4 Completeness of Directors' Report
According to Section 109 of Company Act, 2006, Directors have to disclose 25 information inside the annual
report as "Director's Report". The major transaction and events that may materially affect the company in long
run and important information of company like: third party transaction, internal control system, remuneration of
CEO and directors etc have to include in the annual report. Unless, insurer includes all information to be
disclosed in annual report, the report would not be approved by Insurance Board. Directors' disclosure score of
life and non life companies has been mentioned in column (8) of table 2 and 3 respectively. In column (8) value
1 has assigned to the company having complete information in annual report otherwise 0 has assigned after
going thorough review of each annual report.
4.2 Disclosure Score of Life Insurance Companies
On the basis of the guideline discussed in section 4.1, the disclosure score of eight life insurance companies has
been shown in Table 2.

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 Table 2: Disclosure Score of Life Insurance Companies
Components of Disclosure
2.Quarterly 4.Directors'
Name of 1.Annual Report 3.AGM Aggregate
SN Report Report Rank
Company Disclosure* Disclosure Score
Disclosure** Disclosure
No Completeness
Gap Score Score Days Score Score
.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1 Rastriya Beema N 0 0 N N N 0.00 5
Sansthan 0.00
2 National Life -35 0 2 +27 1 1 0.63 4
0.50
3 Life Insurance + 106 1 3 0 1 1 0.94 1
Corporation
(Nepal)
0.75
4 Nepal Life -68 0 2 +21 1 1 0.63 4
0.50
5 Asian Life + 28 1 2 +19 1 1 0.88 2
0.50
6 Surya Life -40 0 3 +24 1 1 0.69 3
0.75
7 Gurans Life -23 0 3 +6 1 1 0.69 3
0.75
8 Prime Life -40 0 3 +22 1 1 0.69 3
0.75
Average 0.25 0.56 0.87 0.87 0.64

Source: Annual Reports of LICs, http://www.sebon.org.np

*Annual Report for the FY 2011/12, **Quarterly report for FY 2012/13, #Note: Gap = Gap between Deadline and Actual Reporting Date,
No= No of Reports Disclosed, Days=Days taken for AGM, N = Not available till Oct, 2013.

Among eight companies, LIC obtained highest disclosure score (94%) followed by Asian (88%) and Surya,
Gurans and Prime (69%). National and Nepal obtained lowest score (63%). Rastriya Beema Sansthan had not
disclosed anything so that it got 0 score. Among four disclosure dimensions, highest average score reported 87
percent in AGM and Directors' report disclosure, lowest score (25%) obtained in Annual Report Disclosure and
56 percent obtained in Quarterly Report Disclosure in aggregate.
4.3 Disclosure Score of Non-Life Insurance Companies
The disclosure score of non-life insurance companies has been tabulated according to the guideline discussed in
section 4.1. The score of 14 companies has presented in Table 3.

Table 3: Disclosure Score of Non-Life Insurance Companies

Components of Disclosure
Annual Report Quarterly Report Directors' Report
Name of AGM Disclosure
SN Disclosure Disclosure Disclosure Aggregate Rank
Company
Completeness Score
Gap Score No. Score Days Score
Score
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
17
1 Nepal 30 1 1 0.25 1 1 0.81 1
3
2 Himalayan -38 0 2 0.5 1 1 0.63 3
36
3 United -72 0 3 0.75 1 1 0.69 2
40
4 Premier -123 0 0 0 1 1 0.50 5
5 Everest 0 0 0 0 0 0 0 0 6
6
6 Neco -72 0 1 0.25 1 1 0.56 4
27
7 Sagarmatha -116 0 2 0.5 1 1 0.63 3
24
8 Alliance -6 0 0 0 1 1 0.5 5
9 N.B. 0 0 0 0 0 0 0 0 6
25
10 Prudential -35 0 0 0 1 1 0.50 5
33
11 Shikhar -103 0 0 0 1 1 0.50 5
8
12 Lumbini 24 1 1 0.25 1 1 0.81 1
13 NLG -130 0 1 0.25 -118 1 1 0.56 4
43
14 Siddhartha -9 0 1 0.25 1 1 0.56 4
Average
0.14 0.21 0.86 0.86 0.52
Source: Annual Reports of LICs, http://www.sebon.org.np
*Annual Report for the FY 2011/12, **Quarterly report for FY 2012/13, #Note: Gap = Gap between Deadline
and Actual Reporting Date, No.= No of Reports Disclosed, Days=Days taken for AGM, N = Not available till
Oct, 2013.

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Among 14 non-life insurance companies, Nepal and Lumbini (81%) obtained highest disclosure score followed
by United (69%) and Himalayan and Sagarmatha (63%) stood in third position. Four companies stood in last
position obtaining 50% score whereas Everest and NB obtained zero disclosure score. Among four disclosure
dimensions, highest average score reported 86 percent in AGM and Directors' report disclosure, lowest score
observed 14 percent in Annual Report Disclosure and 21 percent score obtained in Quarterly Report Disclosure.
4.4 Composite Disclosure Score of Insurance Companies
Composite disclosure score of life and non life insurance companies has been presented in Table 4.
Table 4: Composite Disclosure Score of Life and Non-Life Insurance Companies
Types of Company Disclosure Dimensions and Score Composite
Annual Quarterly AGM Directors' Score
Report Report Report
Life Insurance 0.25 0.56 0.87 0.87 0.64
Non-Life Insurance 0.14 0.21 0.86 0.86 0.52
Average Score 0.19 0.39 0.87 0.87 0.58
Difference (Life – Non life) 0.11 0.35 0.02 0.02 0.12
Source: Annual Reports of LICs, http://www.sebon.org.np
Table 4 shows that life insurance sector had better disclosure than non life insurance in all dimensions. The
aggregate disclosure score of life and non life insurance found 64 and 52 percent respectively. The overall
disclosure score of insurance industry is 58 percent.
4.5 Trend of Disclosure Practices
The quarterly disclosure score has been calculated on the basis of quarterly reports submitted by insurers (see
Annex 1). The score of each quarter for FY 2012/13 has presented in Table 5. The trend of disclosure practice
between two years has been compared on the basis of annual report disclosure score of 2011/12 and fourth
quarters' disclosure score during FY 2012/13. Trend of quarterly report disclosure practice during the FY
2012/13 also has been observed.

Table 5: Quarterly Reports Submission Score

Quarterly Report Disclosure Score
Category of Annual Report
During FY 2012/13
Insurance Disclosure score of
1st 2nd 3rd 4th
Company FY 2011/12
Life insurance 0.25 0.88 0 0.75 0.63
Non Life insurance 0.14 0.43 0 0.43 0.07
Source: Annual Reports of LICs, http://www.sebon.org.np
The aggregate disclosure trend of life and non life insurance companies from FY 2011/12 to end of each quarter
of FY 2012/13 has shown in Figure 1.

Figure 1: Trend of Disclosure Score

1
0.9
0.8
Disclosure Score

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2011/12 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Life Non Life

Source: Annual Reports of LICs, http://www.sebon.org.np

Figure 1 pointed out that there is no significant progress on disclosure practices of both life and non life
insurance companies. During second quarter no one company submitted their quarterly report. However, life
insurance can be seen better (from 25 percent in previous year to 63 percent in last quarter).

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4.6 Inferential Analysis
In this section further analysis has done to examine the differences on disclosure practices between life and non
life insurance companies and any significant changes taking places between two years and between first and last
quarter. Mann Whitney U test has been applied to find the difference on disclosure practices between life and
non life companies whereas Wilcoxon Singed Ranks Test has applied to find the progress on disclosure
practices between two years and between first and last quarter.
Following assumptions have formulated and tested using Wilcoxon Singed Ranks Test.
H01: Disclosure practices between two years have no significant difference
H02: Disclosure practices between first and last quarter have no significant difference
Disclosure status of two periods has been compared between year (FY 2011/12 and FY 2012/13) and between
quarters (first and last). The result of Wilcoxon Singed Ranks Test has been presented in Table 5.
Table 5: Disclosure Practice Between Two Years
Period Between Z p value Remarks
1st and 4th Quarter -2.646a 0.01* negative change
b
FY 2011/12 and 2012/13 -.707 0.48
Source: Annual and Quarterly Reports and Researchers' calculation
a based on negative rank. b based on positive rank,
* 5% level of significance
The p value of difference between the quarters is less than 5 percent ( i.e. 0.01) which indicates that the t change
is significant but this is the negative change. This result suggests that the disclosure status had deteriorated in
FY 2012/13. But the disclosure practice between first and fourth quarter has no significant difference as p value
is more than 5 percent (i.e. 0.48).
The disclosure practice between life and non-life insurance companies has been tested administering Mann
Whitney U Test. The assumption is as follow:
H0: Disclosure practices between the life and non-life insurance companies has no significant difference
The Mann Whitney U test value has been exhibited in Table 6.

Table 6: Disclosure Practice Between Life and Non-Life Insurance Companies

Annual Quarterly AGM Held Director's Overall Score
Report Reports Report
Mann-Whitney U 50 55.5 55 55 28.5
Z -0.612 -0.035 -0.115 -0.115 -1.898
p value 0.54 0.97 0.91 0.91 0.06
Source: Researchers' calculation based on Annual and Quarterly Reports
The p value of four disclosure score and aggregate disclosure score is more than 5 percent so that it can be
inferred that there is no significant difference between the disclosure practice of life and non life insurance.
5. Findings and Conclusion
The aim of this paper is to explore the corporate disclosure practices of insurance industry in Nepal and to
examine whether the practices between life and non life insurance companies has significant differences and
whether the disclosure practices has been improving over the study period.

On the basis of descriptive statistics, only 17 percent firms had submitted their annual report within deadline and
13 percent had not submitted ever. Rest of the companies submitted between 60 to 130 days. The disclosure
practice of life insurance companies was better than non life companies.
The annual general meeting of life companies had organized their annual meeting in time than non life and 11
percent life and 21 percent non life companies had failed to organize their AGM on time. Quarterly report
submission practices of life insurance companies have found 89 percent over the period which seems better than
non life companies. During the FY 2011/12, only four companies had reported their status within the time frame
and three companies had not made their report public. Rest of the insurers made public their reports after
deadline. Twenty companies had disclosed required information through their annual reports. The overall
disclosure index during FY 2012/13 has found 58 whereas score of life and non life 64 and 52 percent
respectively. However, inferential statistics suggests that the difference what we have observed between life and
non life insurance companies is not significant.

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Many continuous efforts on improvement on corporate reporting of insurance sector had been made but present
study come across the fact that there is lack of improvement on corporate disclosure and financial reporting
practices.
6. Recommendation
Corporate disclosure is the prerequisites for the healthy and sound development of the economic sector.
Insurance companies are financial intermediaries and they have been hold large amount of public fund. They
should be always under the close surveillance of regulatory authorities. Insures should follow the prevailing
regulatory framework while disclosing the information to its shareholders, policyholders and public. Further
research can be done in the same issue taking more years data. Impact of corporate disclosure on firm's
profitability and market value may be another topic of research. Similarly, primary research can be done to
explore the views of public, insurers, regulators regarding the corporate governance practices in insurance
industries.

Annex 1: Quarterly Report Disclosure Score of Life and Non-life insurance Companies
a) Life Insurance Company
SN Disclosure of Report during FY 2012/13
Name of 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Company

1 Nepal Life 1 0 0 1
1
2 Na1ional 1 0 0
1 1 1
3 LIC 0
1 0 1 1
4 Surya
1 0 1 1
5 Prime
1 0 1 1
6 Gurans
1 0 1
7 Asian 0
0 0 0 0
8 RBS
Total 7 0 6 5
Average Score 0.88 - 0.75 0.63

b) Non-life Insurance Company

Disclosure of Report during FY 2012/13
SN
Name of 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Company

1 Nepal 0 0 0 0
2 Pruden1ial 0 0 0 0
3 Lumbini 1 0 1 0
4 Himalayan 1 0 1 0
5 United 1 0 1 1
6 Neco 0 0 1 0
7 Alliance 0 0 0 0
8 Shikhar 0 0 0 0
9 Siddhartha 1 0 0 0
10 Premier 0 0 0 0
11 Sagarmatha 1 0 1 0
12 NLG 1 0 0 0
13 Everest 0 0 1 0
14 NB 0 0 0 0
Total 6 0 6 1
Average Score 0.43 - 0.43 0.07
Source: Securities Board of Nepal, 2013, www.sebon.gov.np
Note: 1= Disclosed report within prescribed time, 0= Not disclosed report within prescribed time.

Page 8 of 9
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Insurance Board(2008) Directives of Analysis of Financial Status and Evaluation of Liabilities of Life and Non
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Websites cited

http:// www.bsib.org.np/
http:// www.nlg.com.np/ http://www.ican.org.np
http:// www.suryalife.com/
http://www.allianceinsurance.com.np/
http://www.asianlife.com.np/
http://www.beema.com.np
http://www.everestinsurance.com/
http://www.hgi.com.np/
http://www.lgic.com.np/
http://www.licnepal.com.np/
http://www.metlifealico.com.np
http://www.nationalinsuranceindia.com/
http://www.nationallife.com.np/
http://www.nbinsurance.com.np/
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