KATHMANDU, March 6, 2013
A plan to raise insurance coverage for every passenger traveling on public vehicles to Rs 500,000 is not likely to see the daylight as transport entrepreneurs have denied to sit for talks unless the government ensures proper enforcement of Motor Insurance Directive 2009.
The Insurance Board, the insurance sector regulator, had some time ago floated the idea of raising passenger insurance coverage from existing Rs 100,000 to Rs 500,000. The proposal was tabled to provide relief to people traveling on public vehicles and curb anomalies taking place in third-party insurance, under which compensation of Rs 500,000 is provided if an insured vehicle causes damage to properties and human lives that are outside of the vehicle.
The regulator then started holding talks with insurance companies and transport entrepreneurs to determine a premium rate for the coverage.
But soon after the talks began, transport entrepreneurs started voicing their objection.
“At a time when the government has not been able to properly implement motor insurance directive launched in 2009, proposal to make amendments to it is simply illogical,” said Dol Nath Khanal, general secretary of the Nepal Transport Entrepreneurs National Federation - an umbrella body of transport entrepreneurs which was leading talks with the Insurance Board.
His main concern was delay made by insurance companies in settling claims. “We have to wait for months to get the compensation and on top of that police make us pay more than the sum insured to settle disputes related to third-party claims,” Khanal claimed.
“If the government is able to effectively implement the directive for at least six months, we will do whatever the Insurance Board tells us to do,” Khanal said.
Talking to Republica earlier in November, Khanal had, however, cited extra amount that transport entrepreneurs will have to fork out to pay annual premium as the reason for their inability to accept the government´s proposal.
Currently, transport entrepreneurs are paying annual premium of Rs 150 per seat to insurance companies to provide passenger insurance coverage of Rs 100,000. Once the coverage is raised to Rs 500,000, per seat annual premium amount is expected to go up to a range of Rs 300 to Rs 400.
“Such a raise will definitely affect our profitability and put us in a tight position,” Khanal had told Republica in November, adding, “We do not want the Insurance Board to raise the premium or the coverage amount for now as we are not in a position to bear such cost.”
The government sources, however, cited different reason for differences expressed by transport entrepreneurs.
“They actually want the accident coverage for drivers and helpers to go up along with hike in passenger insurance coverage,” a person privy to the issue told Republica.
Currently, drivers and helpers of public vehicles are covered with insurance of Rs 500,000 each, as against Rs 100,000 for passengers.
“We are told that entrepreneurs will come under pressure from unions of drivers and helpers if they agree to raise insurance coverage of passengers without making similar changes to insurance coverage of their workers. Raising coverage for drivers and helpers in a similar range is not possible as insurance companies will not agree to subsidize the premium cost for them. That´s why the Insurance Board´s plan has hit a roadblock,” the source said.
Jyoti Baniya, general secretary of Consumer Rights Protection Forum, was of the opinion that consumers should not be affected by the blame game that is going on.
Baniya, who was one of the members of public transport fare fixing committee, said: “Considering the fare that transport entrepreneurs are collecting, they won´t lose anything even if the passenger insurance coverage amount is raised to Rs 1 million.”
Source: Republica
A plan to raise insurance coverage for every passenger traveling on public vehicles to Rs 500,000 is not likely to see the daylight as transport entrepreneurs have denied to sit for talks unless the government ensures proper enforcement of Motor Insurance Directive 2009.
The Insurance Board, the insurance sector regulator, had some time ago floated the idea of raising passenger insurance coverage from existing Rs 100,000 to Rs 500,000. The proposal was tabled to provide relief to people traveling on public vehicles and curb anomalies taking place in third-party insurance, under which compensation of Rs 500,000 is provided if an insured vehicle causes damage to properties and human lives that are outside of the vehicle.
The regulator then started holding talks with insurance companies and transport entrepreneurs to determine a premium rate for the coverage.
But soon after the talks began, transport entrepreneurs started voicing their objection.
“At a time when the government has not been able to properly implement motor insurance directive launched in 2009, proposal to make amendments to it is simply illogical,” said Dol Nath Khanal, general secretary of the Nepal Transport Entrepreneurs National Federation - an umbrella body of transport entrepreneurs which was leading talks with the Insurance Board.
His main concern was delay made by insurance companies in settling claims. “We have to wait for months to get the compensation and on top of that police make us pay more than the sum insured to settle disputes related to third-party claims,” Khanal claimed.
“If the government is able to effectively implement the directive for at least six months, we will do whatever the Insurance Board tells us to do,” Khanal said.
Talking to Republica earlier in November, Khanal had, however, cited extra amount that transport entrepreneurs will have to fork out to pay annual premium as the reason for their inability to accept the government´s proposal.
Currently, transport entrepreneurs are paying annual premium of Rs 150 per seat to insurance companies to provide passenger insurance coverage of Rs 100,000. Once the coverage is raised to Rs 500,000, per seat annual premium amount is expected to go up to a range of Rs 300 to Rs 400.
“Such a raise will definitely affect our profitability and put us in a tight position,” Khanal had told Republica in November, adding, “We do not want the Insurance Board to raise the premium or the coverage amount for now as we are not in a position to bear such cost.”
The government sources, however, cited different reason for differences expressed by transport entrepreneurs.
“They actually want the accident coverage for drivers and helpers to go up along with hike in passenger insurance coverage,” a person privy to the issue told Republica.
Currently, drivers and helpers of public vehicles are covered with insurance of Rs 500,000 each, as against Rs 100,000 for passengers.
“We are told that entrepreneurs will come under pressure from unions of drivers and helpers if they agree to raise insurance coverage of passengers without making similar changes to insurance coverage of their workers. Raising coverage for drivers and helpers in a similar range is not possible as insurance companies will not agree to subsidize the premium cost for them. That´s why the Insurance Board´s plan has hit a roadblock,” the source said.
Jyoti Baniya, general secretary of Consumer Rights Protection Forum, was of the opinion that consumers should not be affected by the blame game that is going on.
Baniya, who was one of the members of public transport fare fixing committee, said: “Considering the fare that transport entrepreneurs are collecting, they won´t lose anything even if the passenger insurance coverage amount is raised to Rs 1 million.”
Source: Republica
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