The Insurance Board (IB), in a bid to attract more house owners to purchase insurance policies for their assets, is working to revise threshold and premium rates on household insurance.

Currently, buyers of homeowners’ insurance are mostly home-building companies and homeowners who build houses with bank loans. Homeowners who do not finance their houses from these sources do not have insurance against natural disasters, fire, theft or other mishaps. IB Officiating Executive Director Raju Raman Paudel said the sector’s regulator is thinking of increasing the threshold limit along with reducing the existing premium rate.

According to the board, currently, insurance outreach—including insurance policies purchased from migrant workers, which the government has made mandatory—has expanded to around 14 per cent of the total population. “Of these, very few are related to home insurance,” Paudel said.

As per the government’s rule, structures of valuation up to Rs10 million are considered as household where as structures sold for more than this amount are considered as ‘commercial building’. Paudel said the board is likely to increase the threshold rate for household insurance to Rs20 million. Similarly, the premium rate for household insurance at present stands at Rs16,000 annually, which is likely to reduce soon.

Paudel said the regulator has formed a five-member panel under the IB’s Deputy Director Sushil Dev Subedi for the purpose. “In the first phase, the board is implementing new policies in urban areas, for which it is coordinating with the concerned municipalities all over the country,” said Paudel, adding that the board sought the need for revising the category due to significant rise in property valuation of late.

According to the board, the household insurance policy at present also covers fire insurance. In the revised policy, the board is considering to develop it as ‘property insurance’, by expanding it as insurance for all the utensils used in the household, which also covers loss in property due to natural disasters and theft.

Earlier, the IB’s initiative towards increasing market penetration for household insurance had come forth mainly after the 2015 earthquakes. Following the tremors that damaged around 800,000 houses, only 17,658 claims, worth Rs18.40 billion, were filed with non-life insurance companies.

Following the incident, the regulator also floated the idea to make the insurance policy for private residences mandatory, which it has failed to implement as of now.