Nepal’s life insurance sector is facing a dangerous trend. Companies are running aggressive cashback campaigns to attract customers, and experts warn this could lead to serious problems for the industry. If this continues, Nepali insurance companies might even lose the trust of foreign reinsurance partners.
Insurance companies are using cashback offers to steal customers from competitors and grow their business. One CEO told BimaPost, “I tried to stop cashback for three months, keeping it at zero. But during that time, I lost 20% of my business to competitors. My overall business fell by 25%, and I had no choice but to start the old practice again.”
Many top managers share the same frustration. A marketing staff member from another company said, “The insurance market is now controlled by agents and middlemen. You only get business if you pay commissions somewhere.” According to this employee, public companies often require giving commissions to their directors or chairpersons, while private companies’ staff demand commissions or gifts, creating constant pressure.
Cashback practices are no longer limited to just insurance policies they have become widely known across the market. One example shows marketing staff taking commissions from their own company as “snacks and coffee bills.” Another shows employees of insured companies getting caught in this wrong practice.
Some customers now openly demand discounts of up to 20%. One CEO said, “Earlier, only a few asked for gifts, and there was some moral pressure. Now, they openly ask how much discount they will get.”
Nepal Insurance Authority has officially banned cashback offers. A few months ago, it launched a campaign to stop them. However, it has been difficult to track where companies are spending money, so further investigations are ongoing.
Informal market monitoring has confirmed that cashback is still happening. Some companies even provide salaries or allowances to employees of other companies to attract business.
Experts say cashback is a very harmful practice and must end immediately. They urge the insurance authority to take strict action. In the coming days, the authority plans to monitor expenses carefully, including staff salaries, commissions, agent payments, hospitality costs, hotel bills, and event expenses, to ensure transparency.
