KATHMANDU, JUL 11 - 2013
The Insurance Board (IB) has made it mandatory for insurance companies to bundle earthquake and fire insurance policies into a single package. Until now, there was no separate legal provision on earthquake insurance coverage.
Issuing a directive, the IB has also slashed fire and earthquake insurance premiums by 10 percent each. “As those buying fire insurance policies will also have to pay an additional amount for earthquake coverage, the premium has been slashed,” said IB Director Sriman Karki.
In the one and half months, Nepal witnessed half dozen earthquakes, according to the Department of Mine and Geology.
As damages caused by earthquake are usually high, beneficiaries of earthquake insurance have to share the cost of damage — whichever is low among 2.5 percent of the insurance amount or Rs 1 million. Rest of the cost is borne by the insurers. “The cost of damage to be borne by the beneficiaries has been kept as low as possible,” said Karki.
The board has also made it mandatory the inclusion of coverage of damages caused by strikes, civil unrest and hooliganism (risk group) in accident insurance policies. Earlier, insurance coverage for risk group was voluntary and only a few bought such coverage.
As the inclusion of the risk group insurance would increase the cost for accident insurance, the insurance sector regulator has also slashed the risk group insurance premium. For the insurance amount up to Rs 1 million, the premium has been slashed to 10 paisa per Rs 1,000. Earlier, it was 50 paisa per Rs 100,000.
In the case of the insurance amount exceeding Rs 1 million, the premium has been fixed at 25 paisa per Rs 1,000. “The premium has been kept a little higher for bigger insurance amounts as those who seek coverage of higher amount usually have higher capacity to pay the premium,” said Karki.
The board has also made it mandatory for banks and financial institutions (BFIs) to cover risk group while giving accident insurance coverage facility to their depositors. They have to pay an additional Rs 5 in accidental insurance premium for insurance amount up to Rs 500,000. It has been put at Rs 10 for insurance amount up to Rs 1 million.
For the insurance amount exceeding Rs 1 million, BFIs have been told to take approval from the board. In case of the coverage of the risk group under the fire insurance, the premium has been slashed by additional 20 percent through the new circular. After the end of the Maoist conflict, the IB had earlier slashed the premium by 35 percent.
The board has also fixed the premium for insurance coverage of optical fibre which is laid for telecommunication services. The rate has been fixed at Rs 15 paisa per Rs 1,000 insurance amount.
“It is the first time that we have fixed premium rate for optical fibres as per the insurance companies’ demand,” said Karki.
Nepal Telecom, NCell, United Telecom Limited and few internet service providers have laid optical fibres.
The IB has also directed insurance companies to slash insurance premium by 10 percent provided any individual or institution (including risk group) comes directly to take insurance coverage. In such a case, insurance agents should not be given commission.
Source: The Kathmandu Post
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