Insurance Companies May Provide Advance Payments for Flood Damage in Rasuwa
Insured individuals affected by the devastating floods in Rasuwa district have the potential to receive up to 50 percent advance payments under the Insurance Claim Payment Guidelines 2081. Sushildev Subedi, Executive Director of the Nepal Insurance Authority, stated that the advance payment process will be further simplified once the Council of Ministers approves the relevant decision. Sunil Ballabh Pant, Secretary-General of the Non-Life Insurers’ Association, informed that damages have been observed to hydropower projects, access roads, motor vehicles, transit, and other vehicles, although detailed damage assessments are still pending.
Kathmandu, 14 Bhadra – Following the catastrophic flood on 10 Bhadra, insured parties affected by the damage are likely to receive advance payments. Stakeholders emphasize the necessity of advance payments to begin reconstruction of damages caused by this unnatural disaster. During the protests on 23 and 24 Bhadra, insurance companies acknowledged losses and provided 50 percent advance payments after the government directed such measures through the Council of Ministers. At that time, Swadeshi Reinsurance Company enabled insurance companies to disburse advance payments to victims. According to Sushildev Subedi, the Council’s immediate decision facilitated a smooth advance payment process.
Subedi said, “There will be no issues in providing advance payments to insured victims of the Rasuwa flood. According to Section 10 of the Insurance Claim Payment Guidelines 2081, insurance companies can pay up to 50 percent of the estimated liability as advance payment and can initiate this process accordingly.” He also added that the authority is ready to provide necessary support during the advance payment procedures. He mentioned that once the government endorses the decision through the Council of Ministers, the process will become even more streamlined.
Since the government invests in Nepal Reinsurance Company and there is a mandate for reinsurers to take on 20 percent of insurance business from insurance companies, government decisions can exert pressure to facilitate advance payments.
Sunil Ballabh Pant of the Non-Life Insurers’ Association stated that damage has been identified in hydropower projects, road access to these projects, motor vehicles, transit, and other vehicles due to the Rasuwa flood. However, clear and detailed evaluations of the damage to insured properties are yet to be compiled. The condition of livestock remains unclear. The insurance coverage for agricultural and other assets financed by banks is also under consideration. Furthermore, comprehensive information related to accident insurance for workers and employees is still awaited. He explained that damage assessments will be conducted following regular procedures, with cooperation between insurance companies and surveyors essential to progress efficiently. If required, support from reinsurance can also be sought to facilitate this process.
Due to the current focus on minimizing human casualties and conducting rescue operations, complete details of the losses have yet to be fully documented. Decisions regarding claim payments will depend on inspections of machinery and equipment at hydropower projects. Claims will be paid based either on partial or total loss of the facilities. Pant added, “Insurance companies and surveyors will promptly reach the affected areas to start damage assessments.” Recalling that the Rasuwa flood is not the insurance companies’ first encounter with such an event, he emphasized, “Insurance companies require proper evidence and adhere strictly to procedural compliance, so documentation and procedures must be in order.”
The Insurers Reinsurance Directive 2080 mandates insurers to cede 20 percent of their risk to Nepal Reinsurance Company. Under the insurance policy provisions, an insurer’s maximum per-risk retention in Nepal is capped at 0.5 percent of its net worth for life insurers and no more than 5 percent for non-life insurers. In the case of catastrophic reinsurance, life insurers may bear risk up to NPR 100 million, while non-life insurers can take on risks up to 10 percent of their net worth, as specified in the directive. Insurance companies retain the remaining 80 percent of risks themselves or reinsure these risks with various domestic and international reinsurers. Consequently, foreign reinsurers are expected to play a significant role in claims related to damage from the Rasuwa floods to hydropower projects and other sectors.