| July 23, 2019

Insurers settle 88% of quake-related claims

KATHMANDU, June 8: Insurance companies have settled 87.97 percent of insurance claims related to losses caused by last year's devastating earthquakes till May-end.

According to Beema Samiti, 16 non-life insurance companies have settled 15,625 claims out of 17,761 made by their clients who suffered losses from the devastating earthquakes.
Non-life insurance covers financial losses incurring from damages in earthquake which are insured under broad insurance policy categories like fire, motor, transit and engineering, among others. While fire insurance policy covers damages in homes and vehicles because of catastrophes like earthquake, fire and storms, motor insurance covers losses in damages of vehicles. Transit insurance policy covers losses during shipping and transportation of goods and commodities. Similarly, engineering policy covers losses in major infrastructure projects like hydropower projects.

Officials of Beema Samiti - the financial sector regulator - told Republica that insurance companies have almost completed settlement of all claims related to earthquake made by their clients. "Insurers have almost completed settlement of all non-life insurance claims made in the aftermath of the earthquakes," Shreeman Karki, director of Beema Samiti, told Republica. "Claims, which are yet to be settled, are pending either due to dispute over claim amount or companies are awaiting report from surveyors who are studying claims made by clients."

Data of Beema Samiti shows a total of 17,761 claims worth around an estimated Rs 16.7 billion have been made after the earthquake. Total settlement in terms of amount stands at only 68.23 percent of the total claims. This means that insurance claims worth Rs 11.4 billion has been settled till May-end.

Settlement of 88 percent claims does not necessarily mean that all claimants received compensation for the financial losses they incurred in the earthquakes. Insurance companies have processed only 12,467 of the claims for disbursement of insurance payment, making nearly one-third of total claims ineligible for compensation.

Fire insurance policy drew the highest claims, according to the data. Insurers got a total of 15,175 claims with an estimated compensation of Rs 10.05 billion toward this sector.

Nepal Insurance Company Ltd (NICL) received the highest number of claims, while Everest Insurance Company Ltd (EICL) received the lowest. While NICL received 1,713 claims, EICL got only 162 claims.

In order to protect people from financial losses during the earthquakes, Beema Samiti had issued a directive couple of years ago, making it mandatory for insurance companies to make fire insurance policy cover risks arising from earthquakes.

Beema Samiti officials also told Republica that insurance companies have received a total of Rs 5.6 billion from reinsurers to pay compensation to the insured.

Insurance companies pass a certain percent of the risk of the insured to the reinsurance companies so that they do not have to face financial loss during the time of catastrophe or when they are overwhelmed by the claims.
Sagar Ghimire

Ghimire is associated with Republica, English National Daily, since November 2013. He reports and writes on banking, financial, cooperatives, labor and foreign employment issues.


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