Insurance against quake in Nepal still discouraging: report

Despite massive damages caused to individual houses by last year's earthquake in Nepal, there has not been significant rise in insurance coverage of such properties as expected, Nepalese insurers say.

The Post Disaster Needs Assessment (PDNA) report said that the quake caused damages of properties worth 5.17 billion U.S. dollar, but the insurers say they have received only 171 million U.S. dollars in damage claims, according to Insurance Board, the regulatory body of Nepal.

Nepalese insurers say that people have been aware about the need for insurance coverage of their houses after the earthquake but they are still not getting their properties insured as expected.

"Before the quake, people used to get insurance coverage for the house upto the loan amount they received from the banks to build," said Bijaya Shah, President of Nepal Insurers' Association, a grouping of insurers. "But, they are now seeking full risk coverage."

Those building house with bank financing have to insure their properties without which banks don't provide loans. "But, there has been hardly any rise in insurance coverage for the houses which have already been built and those built without bank loans," said Shah, who is also chief executive officer of NLG Insurance, a non-life insurance company of Nepal.

According to Nepalese insurers, they had received high number of inquiries after the deadly quake for possible insurance coverage of their houses but most of them have not been translated into insurance coverage yet.

Krishna Bahadur Basnyat, chief executive officer of Sagarmatha Insurance company, another non-life insurer of Nepal, said only around five percent of those inquires his company received, got translated into insurance coverage.

Officials at the insurance companies and the regulatory body say that the distraction caused by blockade in the country's southern border crossing since September last year might have been another reason behind relatively lower insurance coverage of houses even after the quake.

"People's priority shifted from insurance coverage to managing cooking gas and petrol for vehicles after blockade was imposed in southern border points," said Shah.

Insurance Board Director Sriman Karki also admitted that earthquake could not trigger expected level of insurance coverage. "It is also probably due to Nepalese people's tendency to forget what happened in the past," he said.

According to Nepal's Ministry of Home Affairs, the quake destroyed 6,04,930 houses completely and 2,88,856 houses partially.

Meanwhile, the board said that Nepalese insurers settled 92 percent of the claims against earthquake damages as of April 24 in terms of number of claims. But, in terms of amount paid, 59 percent of claims amount has been settled.

"The settlement of claims by the insurers is encouraging," said Karki. According to insurers, they have settled most of the relatively small claims but it is taking time to settle the bigger amount of claims. Enditem