Only 3% of quake-damaged structures insured

Kathmandu, June-22 The earthquake of April 25 and aftershocks thereafter damaged properties and infrastructures worth Rs 517 billion, but only 3 percent of the damage was insured, data shows.

The Post Disaster Needs Assessment (PDNA) published by National Planning Commission on Friday says the damage of assets and properties, both private and public, stands at Rs 517 billion. But non-life insurance companies in the country have received claims worth only Rs 16 billion.

Average insurance coverage of damages to natural disaster is 8 percent in Asia, according to Swiss Re — a Swiss reinsurer company.

Officials of government agencies as well as insurance companies attribute the reason behind low coverage of risks to people's negligence toward possible damages.

"Even marketing officials of insurance companies have not insured their assets and properties," Shreeman Karki, director of Beema Samiti, the insurance sector regulator, said.

Even urban people, who are aware of the benefits of insurance, have not insured their assets and properties. The earthquake made major damages in rural areas where people either do not have access to insurance service or are not aware of the benefits of insuring their properties.

Dip Prakash Pandey, CEO of Shikhar Insurance Company, however, does not agree with suggestions that Nepalis are not aware of the benefits of insuring their assets and properties. "The main reason is low purchasing capacity of people. Many Nepalis cannot even think of insuring risks despite being aware of the benefits," he added.

Pandey also said many people insuring their properties because of compulsion. "As banks do not accept uninsured properties as collateral, many people are compelled to insure their properties," he said.

Beema Samiti had incorporated earthquake component in fire insurance policy two years ago after finding that people were not buying earthquake insurance policy. "Had we not incorporate earthquake in fire insurance policy, the insurers would not have got any claims at all," Fatta Bahadur KC, chairman of Beema Samiti, said.

The government provides 75 percent subsidy on premium for livestock and crop insurance policy. But only few farmers have bought these policies.

"Farmers are not insuring their livestock and crops even though the government has provides subsidy on insurance premium. The budget earmarked for the purpose in the last fiscal year went unspent," said Karki.

Following the quake, however, insurance companies are getting more enquiries on earthquake insurance policy. But company officials say they are not sure whether or not the number of policy buyers will increase.

"Insurance sector has received claims worth more than Rs 16 billion. Though a large share of this has been re-insured abroad, local liability remains substantial," the PDNA report states.

Karki believes number of policy buyers will increase gradually in the coming days.

Source: Republica