Insurance Board plans micro-insurance pool

KATHMANDU, APR 05 -

After re-insurance companies abroad refused to provide coverage to micro-insurance policies, the Insurance Board (IB) is preparing to establish a micro-insurance pool which will carry out the job.

Re-insurance companies refused to give coverage due to the lack of adequate and necessary data regarding such policies. That’s why IB’s plan to make micro-insurance compulsory for insurance companies has not materialised.

“We felt necessity of a micro-insurance pool for the expansion of insurance coverage to underprivileged people through the introduction of micro-insurance,” Binod Aryal, Executive Director at IB.

The board has introduced six products under the micro-insurance policy—cattle insurance, health insurance, personal accident insurance, self employment, endowment and term life. IB plans to make it mandatory for all insurance companies to have their exposure to micro-insurance of at least 4 percent of their total portfolio after the formation of the pool.

The proposed pool will have a paid-up capital of Rs 50 million. As per the IB proposal, insurance companies will contribute 50 percent of the paid-up capital, while the government will inject the remaining amount.

The proposal is currently under discussion at the Finance Ministry. “Once the ministry gives is nod, we will establish the pool,” said Aryal.

The proposal has not specified the size of the pool’s board. However, it has been proposed that insurance companies will have three representatives, IB will have one and the rest has not been decided.

The board has fixed the upper limit of insurance coverage for micro-insurance policies at Rs 100,000. The maximum limit of coverage for cattle insurance, personal accident insurance, self employment and term life insurance will be Rs 100,000.

The upper limit of coverage for health insurance and endowment insurance will be Rs 30,000 and Rs 50,000, respectively, according to the IB directive.

Source: The Kathmandu Post