Rabindra Ghimire

The government of Nepal introduced a national health
insurance program in 2016 to comply with the
constitution and international commitments to ensure
universal health coverage by 2030. This qualitative
study explores public perceptions and satisfaction
concerning the new health insurance program. The
study is guided by an interpretive worldview using both
in‐depth interviews (IDIs) and focus group discussions
(FGDs). Altogether, 34 (28 IDIs and 6 FGDs) events
were conducted covering both self‐ and governmentsponsored
health insurance enrollees in the new
health insurance program. The study found that
insurees had larger expectations as well as both
favorable and negative perceptions of the program.
Positive perceptions included that the program helped
to lower the gap between the wealthy and the poor,
increase coverage with fewer financial contributions,
and make it easier to receive health services financially.
Negative perceptions included long waiting
times for registration, consultations, laboratory test
results, and pharmacy visits, as well as the lack of
drugs, inadequate coverage (a low ceiling), low‐quality
services, and strict procedures, which combined to
make insurees dissatisfied. We noticed that insurees
had expectations that went beyond the program's
guidelines, such as the expectation that services
would be provided without queues and long waits,
that additional services and coverage would be
provided, and that preference would be shown for
patients who lived far from hospitals. Adequate information, education, and communication‐ and
process‐related interventions that address these issues
may help minimize the insurees' unrealistic
expectations and areas of dissatisfaction.

Despite government’s financial support and promotion by the regulator since its inception, agriculture insurance market is still in the nascent stage in Nepal. The paper examines how awareness level and risk management perception affect the farmers' satisfaction, taking non-financial satisfaction as a mediating factor. The study was conducted in two metropolitan cities, Pokhara and Bharatpur in Nepal. Cluster and purposive sampling design was applied to select the respondents. Opinion was obtained through the structured questionnaire from the 400 farmers having claim experience on agriculture insurance. Descriptive statistics and structural equation modeling tools were used to arrive into conclusion.
The results revealed a number of conclusions, including the idea that farmers' perceptions of risk management and their knowledge of crop insurance contribute to their financial well-being. Although we could not obtain the mediating effect of non-financial satisfaction on financial contentment and awareness level, we did find a partial mediation effect between risk management attitude and financial satisfaction. Financial serenity and non-financial gratification have the strongest association among the several relationships. Expanding risk management capacity and awareness initiatives is something we recommend executives and regulators do to increase client satisfaction and loyalty with crop insurance.

Purpose: Subsidy based agriculture insurance schemes is flagship insurance program of Nepal which was started in Nepal one decade before. This paper aims to identify the factors influencing the satisfaction of agriculture insurance policyholders. Design/Methodology/Approach: Primary data were collected in Bharatpur and Pokhara metropolis of Nepal using structured questionnaire among 400 agriculture insurance policyholders who have already received claims or whose claim was in settlement process or whose claim was rejected by the insurer. Sample was selected using purposive and cluster sampling methods. Data were analysed through Mean, ANOVA, Wilk's Lamda and MANOVA tools. Findings: Age, landholding size, self-reported perception of insurance companies' service quality, and agriculture insurance types are insignificant while location of respondents, education level, food sufficiency of family, size of the farming, and respondents' assets are significant factors for policyholders' satisfaction towards the agriculture insurance. Timely settlement of claims increases the level of satisfaction. Nepal Insurance Authority and the Ministry of Agriculture Development need to review the existing directives to improve the agriculture insurance program. Insurance companies are suggested to offer prompt and quality services to policyholders and carry out educational campaign to increase customer awareness. Originality/Value: The study identified pertinent variables significant and indifference to farmers' satisfaction towards agriculture insurance. It also digs out the role of financial and nonfinancial aspects of insurance services. The study opens the door for further research on similar issues to enhance the existing body of knowledge. Implications: The demand for agriculture insurance is not increased significantly even large amount of subsidy in premium was provided. Present study may be useful to insurance companies, agents, regulators, the Ministry of Agriculture Development, researchers, and practitioners. The study can be used as a reference by managers of insurers to formulate the future strategies to enhance the agriculture insurance market.

Foreign Direct Investment (FDI) is an important source of capital for economic growth in developing countries. It provides a package which constitutes new technologies, management techniques, finance and market access for the production and movement of goods and services. However, attracting FDI is a major challenge for host countries as it faces the challenge of identifying the major factors that motivate and affect the FDI location decision. The main FDI location factors are cost, market infrastructure, and technological, political, legal and socio-cultural factors. Despite several conflicting circumstances, Nepal is attempting to sort out overarching issues of FDI concerning with economic development. That’s why Nepal is at a point where from it can excel for economic goals via FDI. The set trends illustrate that various indicators pertaining to FDI in the country has been improving since peace process was begun in 2006. This analysis comes to conclusions that the country owns un...

INTRODUCTION: The government supported SHI is the largest health insurance schemes ever launched in the country since 2016 by Health Insurance Board. Prior to UHI program, small scale community health insurance programs are running in fragmented structure The paper aims to examine the association between the potential policyholder's paying willingness for the social health insurance their characteristics, and tries to predict the willingness to pay for social health insurance schemes and their expected benefits from the SHI run by Government of Nepal. MATERIALS AND METHODS: The study was carried out during Jan-July 2018 in Pokhara Metropolitan city 29, Kaski District, Nepal. RESULTS: Among the 5,000 households residing in the study area 360 households who have not purchased social health insurance schemes till the survey period but interested to buy within one year were selected for the study. Respondents were selected with purposive sampling method. The association between resp...

The paper aims to examine the pattern of premium income, explore market share of the different types of premium income, trend of the income and growth pattern and correlation among the first, renewal and single premium for the five year period based on the secondary data. Trend, average, standard deviation and concentration ratio has been used to interpret the variables. The study concludes that Nepalese life insurance market has satisfactory growth, large variation on market structure among the insurance carriers, renewal premium is major sources of income, the characteristics of the market is oligopoly. The correlation matrix reveals that first premium is more correlated with rest of two kind of premium. Performance of some companies has been found the below the satisfactory level while very few have shown enthusiastic performance. The paper tries to draw attention of the concerned authorities to take the proper initiation on the right time to enhance the capacity of the poor perf...

The paper aims to find out market concentration status of Nepalese life and non-life insurance industry in Nepal based on Herfindahl Hirschman Index and concentration ratios. The data for five years period (FY2011-2014) have been taken for nine life and 16 non-life insurance companies. Based on the gross premium written by the companies for five years period, the HH Index of the of life insurance industry increased more considerably than nonlife insurance industry. The market share of three largest companies of life insurance industry is highest than three largest nonlife insurance industry. It is concluded that life insurance industry is more concentrated than nonlife insurance industry over the five years period.

The purpose of this paper is to estimate the efficiency of the insurance sector of Federal Republic of Nepal for the period 2009-2014. Technical, pure technical and scale efficiency of 8 Nepalese life insurance companies have been measured using Data Envelopment Analysis (DEA), variable return to scale and output-oriented model. The results indicate an increase of the average efficiency during the almost whole observed period. The scale efficiency follows the same trend. When estimating the BCC model, the number of efficient insurance companies and the average efficiency for the sector is higher than in the CCR case, implying that the main source of inefficiency is due to scale inefficiencies. The average technical efficiency score of Nepal indicates relatively high efficiency of the insurance sector. The efficiency problem of each insurance company has been specified particularly.

The aim of the paper is to observe the trend and growth of market share of seven different non-life insurance policies in Nepal and examine business performance of Nepalese non-life insurers in terms of premium written during the study period. Secondary data of twenty companies for FY 2015 to 2019 have been analyzed with descriptive statistic. It has been found that market share of fire and aviation business decreased with fluctuation, marine business remain constant, motor and agriculture insurance fluctuated and increased, engineering insurance increased, and miscellaneous insurance fluctuated and remained constant during five years period. Non-life insurance market experienced slow growth during the study period. Among the seven different segments of business, motor insurance occupied highest share while agriculture occupied lowest share. The growth of aviation market is very slow while agriculture is very high. Out of 17 old companies, Shikhar, Sagarmatha and Neco insurers stood...

Objective of this paper is to explore the existing practices of Bancassurance in Nepalese insurance industries. Secondary data has been obtained from Insurance Board, the official websites, annual report of respective insurance companies. On the basis of available literature, we arrive into this conclusion that out of 83 institutional agencies of insurance, 77 are bank and financial institutions (BFI). All insurers have appointed BFI as insurance agents the concept and practices of bancassurance is not institutionalized compared to the western countries.

This paper aims to deal with the status of micro enterprises, cottage and small scale industries in Nepal and observe and analysis their contribution in the economy. Micro and Small Enterprises (MSEs) has contributed to the economy couldn't be underrated. Least Developed Countries like Nepalese, MSEs is contributing to the economy through employment generation, creation of added value, GDP, export activities etc. The paper is based on empirical evidence drawn from the publication of government policies, report of Department of Cottage and Small Industries, Economic Survey, data available from Federation of Handicraft Association of Nepal, and various relevant articles. Government of Nepal also has conducted various income generating program encouraging job. From governmental and non governmental sector some initiatives has been carried out through multifold activities like community development program, micro finance program and cooperative programs. Share in export of Handicraf...

The paper examines the growth, market share and performance of general insurance business based on written gross premium during five years period based on secondary data of 15 companies. There is huge variation on market structure and growth among the Fire, Marine, Motor, Aviation, Engineering and Miscellaneous insurance business. Motor insurance business occupied first place followed by Fire and Miscellaneous insurance. The market share of Fire and Marine increased but Motor, Aviation and Miscellaneous decreased over the study period. Based on five years gross premium, performance of Shikhar has been found best followed by Himalayan and Sagarmatha whereas the performance of NB found poorest followed by Premier and United. Spearman rank correlations shows that there is positive and significant relationship between marine and fire business and miscellaneous insurance business to engineering and aviation business. Aviation insurance market is most concentrated while Fire and Motor ins...

The paper provides a brief overview of the financial efficiency of non life insurance industries of Nepal. The main purpose of this analytical study is to understand the level of soundness of the 16 private sector non life insurers using some popular financial ratios. The paper is prepared on the basis of the secondary data obtained from the annual report of the 16 non life insurance companies for the period of 2007 to 2011. Sixteen different ratios show mix results of financial efficiency of insurers. The paper concludes that most of the legal compliance have been fulfilled by the insurers. Position of some ratios such as Expenses ratio, Return on equity, Return on assets, Retention Ratios, Gross premium to equity ratio, Net premium to equity ratio, Return on Capital during the study period is improving whereas other ratios: Investment Ratio, Investments to total assets ratio, Capital to liabilities ratio is deteriorating in the same period. Claims ratio and Combined ratio performa...

The paper aims to examine the revenue efficiency of Nepalese life insurance companies based on their periods of operation. Secondary data have been used in order to observe the revenue efficiency of companies during five-year period from 2009 to 2013. Major indicators used in the study are Commission paid to Agents, Operating Expense, Death Claim Expense, and Total Assets as input variables and Gross Premium as output variable. The study concludes that companies having longer years of business operation have better efficiency in terms of GPAC and GPOE ratios while companies with shorter period of business operation have better efficiency in terms of GPCE and GPTA ratios. The inferential test shows that there is significant difference on revenue and GPOE ratio between shorter and longer period of operation among the life insurance companies. But the difference is not significant on GPAC ratio, GPCE and GPTA ratio in between shorter and longer-period of operation among the life insura...

The paper aims to analyse the current situation of insurance services offered by different institutions in Nepal and explore the opportunities and challenges of insurance sector. It also discusses the regulatory and development issues in insurance sector. The paper has been prepared based on desk review. The study concludes that Nepalese insurance industry experienced slow growth, limited coverage and low penetration and density over the long period prior to 2001 which is gradually increased thereafter. There is the domination of commercial insurers in insurance industry, domain of social insurance and social security programs also growing immensely but deposit insurance and insurance services by non-insurance organizations is in small scale. The regulatory issues in insurance sector is crucial as the industry has been faced poor corporate governance practices, poor quality of services, rising of fraudulent activities, low insurance coverage and penetration, under insurance, mis-selling and force selling, lack of qualified insurance personnel. Insurance is a pillar of the financial system, permanent sources of fund to banking sector and capital market. For the financial stability and sustainable economic growth, there should be sound coordination among the regulatory authorities and market players. The ultimate goal of these organizations should be to ensure the protection of rights of the customers.

The aims of the paper is to observe the level of awareness on health insurance among the university teachers in Pokhara valley. The study has followed descriptive and cross sectional research design. Primary data have been obtained administering structured questionnaire among the 150 teachers of university and constituent campus of Pokhara University located in Kaski District. Chi Square test, Mann Whitney and Kruskal Wallis Test have been used to test the hypothesis. The study concludes that majority of the respondents are aware about the government health insurance program launched in the country. The opinion regarding the health awareness and knowledge on health insurance is most associated with ethnicity and least associated with sex and marital status, and moderately associated with age and educational level.

The study aims to explore the reason behind of unwillingness of purchasing life insurance policies. It also examines the differences on opinion of respondents and their level of education, income, expenditure, and fixed asset. A structured dichotomous questionnaire was used to obtain the perception of 300 uninsured respondents using purposive sampling method. Mode and Mann Whitney U test have been used to find the perception and difference on perception of respondents respectively. The study concluded that both financial and non-financial reasons affected the respondents. These are reasons likely to be the dependency over the relatives in the time of hardship, low bonus rate of life insurance, and sufficient property they have. Similarly, mistrusting psychology over life insurance, perceiving the low quality services of company, lack of convincing capacity of agents, and complex claims settlement process are seemed to be the non-financial causes. Inferential statistic show that level of education and expenditure do not make difference on perception of respondents but assets and income have shown the greater influence the perception of uninsured significantly. It has been suggested to concerned authority to increase the social faith over insurance by different means like awareness campaign, introducing the investment linked type product, improving the service quality and increasing the financial performance of the companies. Government should offer financial incentives to increase the demand of insurance product.

This article examines long-term relationship between life insurance and economic growth in Nepal. The study includes GDP and money supply as macroeconomic variables and life insurance premium as insurance industry variable. Annual data has been taken for 31 years (1983-2013) and Vector Error Correction Model has been employed to observe the long term relationship. It has been found that time series data has unit root in level but in first difference all three data set found no unit root. The study concludes that GDP, life insurance premium and broad money supply (M2) have long run relationship.

The main objective of this paper was explore historical perspective of the educational issues and to visualize the relation between government spending on education and the economic development process, observing the impacts of this spending on gross domestic product of the nation. From the results obtained, we may reach the central conclusion that education is one of the vital component that effects the country socio economic growth. Government spending over public education is matter of great interest of economists and policy makers. There is no doubt that the economic development is the effects of the educational expansion and education is a tools of development. It has multiple effects to the all aspects of the development. However, it is difficult to establish accurate relationship between the amount of expenditure in educational sector and gross domestic product.

The study aims to explore the real status of investments portfolio structure of both life and non life insurance companies of Nepal. Insurance Board of Nepal has issued modified directives for the safe and secure investments of Insurance fund The paper examines the current investment practices adopted by the insurance companies and compare with the norms of directives. Most of the companies have invested more than required fund in secured sector giving priority to solvency over profitability. Among the 234 cases, 37 cases are non compliances whereas 197 cases are compliances. Out of 37 non compliance cases, 28 cases are more sensitive. Life insurers fail to comply the statutory provision in 5 cases and non life in 23 cases. However, in voluntary category, 1 and 8 cases are not complied by the life and non life insurers respectively. Overall scenario of the investments portfolio is satisfactory ignoring few cases.

The objective of this study is to examine the causal relationship between insurance industry and economic growth of Nepal. The Granger causal relation has been examined among three insurance sector variables: life, non-life and total premium and three GDP related variables: agriculture GDP, non agriculture GDP and total GDP. Data has been taken from Economic Survey published by Ministry of Finance, GoN, Insurance Board of Nepal and Nepal Rastra Bank. The study covered the period from 1983-2013. Various econometric tools: Jarque-Bera test, Augmented Dickey-Fuller (ADF) test and Granger Causality test were employed. The result shows that there is unidirectional relationship between life premium and Agriculture GDP and Non Agriculture GDP; total premium and non agriculture GDP. The study finds that there is the supply leading relationship between financial institutions (insurance) and economic growth as there is no influence of GDP to insurance premium. There is no bidirectional relationship between premium amount and GDP. The paper suggests to examine the causal relationship of insurance with other macroeconomic variables like domestic consumption, investments, gross capital formation, broad money supply etc.

This paper critically reviews the micro health insurance practices in Nepal practices by governmental and nongovernmental sectors. The purpose of this paper is to review the existing community based health insurance practices, assess the opportunities and challenges of micro health scheme and suggest the better alternatives in Nepalese context. The paper has prepared based on available literature and it is qualitative in nature. The micro health insurance intervention nominal in Nepal is in infant stage.Government health post and hospital provides limited health services to public. Most of the Nepalese are far from the health insurance services. Six community based health insurance schemes have been initiated by government in 2003. These schemes are running by hospital, health centre, NGOs, Cooperatives, Business Association and Trade union. Some schemes are self sustained economically whereas most of the schemes are supported by government and international donor agencies. Micro Health Insurance Schemes are running in different parts of Nepal which covers almost 50,000 people. From 400 to 18000 clients are covered by different micro health insurance schemes. are getting health insurance facility. The paper concludes that the impact of community based social health schemes in Nepal is not significant but it is essential for poor and marginalized group.

The paper aims to delve the impact of duration of operation to profitability in life insurance companies in Nepal. Eight private sector life insurance companies which were established in different phases have been compared on the basis of five years data. Six different ratios have been taken under consideration. The descriptive analysis proved that there is difference between the average of five years ratio between the four old and four new companies. The independent t test illustrates that there is significant difference between the financial performance of old and new companies in terms of GPPE and APE ratios however, in terms of IIIA, ROE, ROA, and EPE ratios there is no significant difference between the financial performance of old and new companies. The findings may be useful to insurers, policymakers and investors. It has been suggested to new companies that they should increase GPPE, APE, ROE and EPE ratio which are significantly lower as compared to the old companies.

This paper assesses the financial performance and soundness of Life insurance companies in Nepal on the basis of CARAMEL parameters during 2007/08 to 2011/2012. Analysis shows the mix results but this is not enough to obtain the true and fair picture of the financial health of insurers since qualitative factors also play vital role on its financial soundness. The study provides detail summary of financial performance of each company for 2011/12 and brief and aggregate overview over the five years period under the different dimensions: Capital adequacy, Assets quality, Reinsurance and Actuarial issues, management soundness, Earnings and profitability and liquidity.

Purpose: This paper has two objectives: first it explores the income structure and their trend. Second, it aims to confirm whether the income structure and financial performance have any significant difference on younger and older firms.Methodology: This paper obtained data from the financial statements of eight life insurance companies for five years period (2007/08 to 2011/12). Seven parameters of sources of income and four parameters of profitability and earnings analyses and arrives into conclusion using descriptive statistics, Pearson's correlation and t test along with descriptive statistics.Findings: This study concludes that age of firm influence the income structure but it is indifferent in profitability and earnings. Similarly types of income sources and Net Profit Margin and Return on Asset have negative but Return on Equity have positive correlation.Implication: The main implication of this study is that it contributes additionally to understand the income structure of the life insurance companies and their relationship with profitability in general and to explore differences on financial performances between younger and older firms in particular.

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.

Energy is a basic requirement of the development and it has played very important role in macro economy. Hydropower generation and its use in a wide range expected that Nepal can accelerate its pace of economic growth. During the 100 years history of hydro power development, we are harnessing only 1.5% of 43000 MW technically water resources and welcoming 18 hours of load shedding in dry seasons in spite of numbers of policies, rule and regulation, strategies and report have been prepared. Past two governments envisioned clear picture on hydro power - production of 10 GW to 25GW within ten years to 20 years has bring a new momentum. The ambitious plan can implement and achieve the goal if country has political stability, transparent and committed accountable mechanism and create suitable investment environment.

The paper discusses on role of insurance industries in economic development of Nepal and analyses its contribution in Nepalese economy. The paper is prepared based on secondary data. Insurance, lately recognized its activities by UNCTAD since 1964 however, the contribution of insurance is not less than banks and other financial institutions. Insurance shares the risk, provides financial protection, reduces the financial distress and accelerates the pace of economic growth. Insurance mobilizes resources collecting small amount of scattered fund in terms of premium and provides large amount of fund to government and private sector. Insurance address the requirement of medium and high income class people, but large portion of low income and poor people are excluded from the insurance services. Microinsurance products address the marginalized and poor income people which is currently in practice more than 100 countries in the world. Nepal, recently has introduced Crop and Livestock Insurance schemes which is going to be implemented through 17 commercial insurers. Government provides 50 percent premium subsidy for clients who purchase the agriculture insurance policy. The paper concludes that insurance has played positive role in economic development of Nepal.

The objective of the paper is to review the existing microinsurance regulatory framework and practices in Nepal and suggest appropriate delivery model of agriculture insurance in the context of Nepal on the basis of existing resources and structure. Furthermore, it discuss on potential agriculture products and opportunities and challenges to implement the agriculture insurance in Nepal. This paper, further gives snapshot of agriculture economy of Nepal and risk associated in agriculture sector. Agriculture is backbone of Nepalese economy. The sector provides employment to almost two third population. Agriculture is becoming subsistence rather than commercial since two third portion of total household have less than 1 hector area of land. The share of agriculture in GDP is almost one third. Most of the farmers are poor and the intensity and severity of poverty is much higher in rural area. The history of Nepalese insurance industry is almost seven decade long but agricultural insurance still has not introduced in massive scale with systematic and organized way. Government agency in cooperation with international donor agency, NGOs, cooperatives and financial institutions have been practicing health, crops, livestock and credit linked life insurance in limited area as a pilot project. These schemes are either mutual or voluntary in nature and they are not regulated by regulatory body. The objective of such insurance is to support the poor and vulnerable community but there is lack of reinsurance back up and these schemes do not follow insurance principles. Agricultural insurance is a complex line of business that requires highly technical expertise from beginning to end of insurance cycle. There are two basic approach of agriculture insurance: activity based approach and institution approach. Activity base approach allows to all commercial and non commercial insurers to sell the agriculture insurance products along with other products. But, separate institution to be established only to sell agricultural insurance products is called institution base approach. In Nepalese context, institutional base approach would be better in different grounds. First, Nepalese commercial insurers have not financial and technical capabilities to cover the large agriculture sector. They have focused their institutional network in cities and semi urban area. Lack of reinsurance support discourages them to enter the agriculture insurance. A separate entity need to establish to provide agricultural insurance nationwide. The entity can establish as joint venture of government and private sector which can be said "Public Private Partnership Model". The new mechanism delivers the insurance services in cooperation with government line agencies and institutional agents. Subsidy is essential to marginalized and poor farmers. On behalf of government, Ministry of Agriculture and Cooperative provides technical expertise, subsidy fund and guidance. Cooperation from international organizations related to microinsurance also essential in establishment phase. The amount of subsidies may be varied farmers to farmers based on their level of income and risk associated with insured property.There is immense market possibility of crop insurance in Nepal since more than 3.7 million of household are engaged in any sorts of farming and almost all households have any sorts of livestock. Farmers are eagerly waiting insurance service since long period. Financial inclusion is gradually increasing through the massive activities of Microfinance institutions, cooperatives and multiple of NGOs. Experience of neighboring countries can be replicated in local context.Obviously, challenges are ahead but these can be minimized through strong regulatory framework, clear vision and policies, government commitment and strong motivation of insurer. Basically challenges can be pointed out as institutional challenge, technical challenge, operational challenge, geo-climatic challenge, diversity in risk exposure, lack of trustworthiness, high operating cost are some challenges may face by the all stakeholders of the agriculture insurance industry.

The objective of this paper is to discuss the micro insurance practices in Nepal, review the existing Crops and Livestock Insurance Directives, 2013 (CLID) and regulatory framework in Nepal. The paper has prepared on the basis of secondary data. Available literature and relevant documents were reviewed and analyzed to arrive in to conclusion. We have discussed 7 different insurance schemes in practice in different parts of country and further suggested appropriate delivery model on the basis of existing resources and structure. There are two basic approach of agriculture insurance: activity based approach and institution approach. Activity base approach allows to all commercial and non commercial insurers to sell the agriculture related insurance products continue with the products which are already sold. In contrast, in institution base approach, only agricultural insurance product is sold. In Nepalese context, institutional base approach would be better in different grounds. First, Nepalese commercial insurers have not financial and technical capabilities to cover the large agriculture sector. They have focused their institutional network in cities and semi urban area. Lack of reinsurance support discourages them to enter the agriculture insurance. Obviously, challenges are ahead but these can be minimized through strong regulatory framework, clear vision and policies, government commitment and strong motivation of insurer. Basically challenges can be pointed out as institutional challenge, technical challenge, operational challenge, geo-climatic challenge, diversity in risk exposure, lack of trustworthiness, high operating cost are some challenges may face by the all stakeholders of the agriculture insurance industry.