Money
Pvt properties left with little or no compensation
Munich Re report says the quake had caused the total damages valued at $4.8 billion but only $210 million of that have been insuredPrithvi Man Shrestha
A low insurance coverage of private properties in Nepal has left many with little or no “recovery of losses” at times of major natural disasters.
Non-life insurance companies in Nepal have received only 3.53 percent of the claims against the total damages caused by the earthquakes on April 25 and May 12, 2015.
The Post Disaster Needs Assessment (PDNA) report suggests the quakes caused damages worth Rs517billion, but the insurers say they have received only Rs18.29 billion in damage claims.
The fact is corroborated by a report published by Munich Re, a leading reinsurance company based in Germany. Only 4.3 percent of the properties devastated by the April 25 earthquake were insured, it says. Identifying the April 25 quake as the most devastating natural disaster of 2015, the company report says it had caused the total damages valued at $4.8 billion (Rs513.21 billion). “But, only $210 million (Rs22 billion) of the damaged properties, have been insured,” the report says.
The quake killed nearly 8,900 lives, injuring 22,307 people while causing damages to over 60,000 public and private buildings. “The insurance claims against damages caused by earthquake shows that there has been very low insurance coverage in Nepal,” said Fatta Bahadur KC, chairman of the Insurance Board.
“While people could not get their insurance claims, the quake has served a lesson on the need for a better insurance coverage. It would boost the insurance business in Nepal.” Insurers point out the lack of public awareness about insurance as a major reason for a “very low” insurance coverage. “There is a trend among people to seek insurance coverage by compulsion rather than by choice,” said Bishwo Timila, chief executive officer of Neco Insurance Company, a non-life insurer. “For example, banks don’t give home loans before a borrower insures the house. Only then will the borrower approach an insurance company.”
After the major earthquakes, more people are approaching the insurance companies, Timila noted. “But the Tarai unrest and the India’s undeclared blockade have now put brakes on that.”
Despite facing the biggest natural disaster last year, the insurance companies in Nepal have faced limited liabilities. On the contrary, a series of winter storms that hit the north-eastern US and Canada in February was the costliest single event for the insurance industry. They generated insured losses of $2.1 billion and total losses of $2.8 billion, according to Munich Re.