Only 11pc of post-quake insurance claims settled

Kathmandu, July-23 Non-life insurance companies have settled only 11.12 percent of the claims received in the three months following the April 25 earthquake. The value of the claims settled as of the end of the last fiscal year amounted to Rs1.86 billion against the total claims worth Rs16.8 billion.

There are 17 non-life insurance companies operating in the country. According to the Insurance Board (IB), they received 16,351 claims related to damage caused by the earthquake and have settled 5,249 out of them.

In terms of the amount of claims, Himalayan General Insurance led the list with 515 claims worth Rs3.22 billion. The company has settled claims worth Rs426.6 million. It was followed by Siddhartha Insurance with Rs1.7 billion, Shikhar Insurance with Rs1.54 billion and Sagarmatha Insurance with Rs1.3 billion.

Shikhar Insurance has settled claims valued at Rs284 million which is 18.44 percent of the total claims, making it the largest performer among insurers.

Insurers were inundated with insurance claims in the aftermath of the earthquake, prompting the IB to direct the companies to settle them on the basis of the preliminary reports submitted by surveyors citing the need to provide immediate compensation to earthquake victims. The IB had even mobilised monitoring teams to inspect claims settlement by the insurers. However, very few claims have been settled so far.

Raju Raman Paudel, director of the IB, said procedural delays in collecting the required paperwork had slowed the claims settlement process. “However, we have been putting continuous pressure on the insurers to settle the claims as soon as possible,” said Paudel. The IB’s monitoring teams are still conducting inspection visits to make sure policy holders have not been denied compensation despite fulfilling the legal process, he added.

According to the IB, the insurers will have to maintain provisioning of 115 percent of their liability in their annual financial statement if they had not paid out the claims amount. “This will lower the profits of these insurers in their book value.”

Meanwhile, in terms of sector-wise claims, fire insurance claims accounted for the largest number and value. The IB’s records show that there were 13,831 fire insurance claims worth Rs12.78 billion. Among them, claims worth Rs818 million, or 6.4 percent of the total, have been settled. The insurance companies have received Rs1.53 billion from their reinsurers under this heading which includes claims for damage to houses.

Likewise, life insurance companies have settled 85.23 percent of the 352 claims they received. The nine life insurance companies in the country have paid out compensation amounting to Rs75.5 million. Among them, Nepal Life Insurance has settled the largest amount of claims worth Rs21.4 million.

Insurance Claims

Type    No of claims    Claims amount    No of settled claims    Settled amount

Non-life insurers    16,351    Rs16.8 billion    5,249 (32.10%)    Rs1.86 billion (11.12%)

Life-insurers    352    —    300 (85.23%)    Rs75.5 million

Top claims recipient (non-life)

Company    Claims amount    Settled amount    Settled %

Himalayan General Insurance    Rs3.22 billion    Rs426.6 million    13.23

Siddhartha Insurance     Rs1.70 billion    Rs169.5 million    9.93

Shikhar Insurance    Rs1.54 billion    Rs284 million    18.44

Sagarmatha Insurance    Rs1.30 billion    Rs233.7 million    17.85

Premier Insurance    Rs1.22 billion    Rs118.6 million    9.71

Source: The Kathmandu Post