Insurance companies to provide a compensation of Rs 100,000 to those infected with coronavirus
KATHMANDU, June 5: After suspending it for a day, Beema Samiti - the insurance regulatory authority - has decided to instruct non-life insurance companies to resume selling corona insurance policies.
The Beema Samiti’s new circular has now paved the way for non-life insurers to resume their insurance services providing coverage against the financial losses from the coronavirus infection.
Earlier on Thursday, Beema Samiti had directed all non-life insurance companies to stop issuing COVID-19 insurance policies until further notice amid worries of insurers about the potential losses they may face due to the outbreak.
However, Beema Samita decided to roll back its decision and decided to allow companies to sell COVID-19 insurance policies following widespread criticism for siding with insurance companies who were avoiding insurance policies due to the rising risk.
Under this policy, non-life insurance companies were providing coverage of up to Rs 100,000. However, there were two plans under this term insurance. Under Plan A, insurance companies were charging a one-time premium of Rs 1,000 per person for an individual and Rs 600 per person for a family for the coverage of Rs 100,000. Similarly, the coverage of Rs 50,000 would cost Rs 500 per person if it’s for individuals and Rs 300 per person for policies bought for a family.
Insurance companies say that anybody covered under this policy can claim the compensation if it is provided the insured is infected with the coronavirus through PCR Test.
The COVID-19 insurance policy has been receiving overwhelming responses as many people worried about the financial losses from COVID-19 infection are finding the policy attractive.
According to the Beema Samiti, insurance companies have collected Rs 170 million in premiums by selling the COVID-19 insurance policies to provide coverage to nearly 309,000 people so far.
“We had not closed the COVID-19 insurance policy scheme as has been reported in the media. Following concerns from insurance companies that such coverage could be unsustainable as reinsurance companies were not taking risks of pandemic, we had asked them to put on hold the scheme,” Raju Raman Paudel, executive director at the Beema Samiti, told Republica Online. “We have instructed insurance companies to resume issuing their COVID-19 insurance policies after settling the issue related to pooling of losses,” he added.
According to Poudel, first 10,000 claims for the compensation will be borne by insurance companies themselves. If the number of claims exceeds 10,000, Nepal Reinsurance Company — the sole reinsurance company of the country — will chip in for reimbursement of the next 10,000 claims. Similarly, for additional 5,000 claims, the insurance companies will be using their catastrophic reserve funds. The Beema Samiti will itself use its fund for the compensation for up to 10,000 claims, according to Poudel. “If there are more than 35,000 claims, the government could shoulder the remaining risk,” he added.
Insurance executives say that they will resume the COVID-19 insurance service.
“First we introduced it as a microinsurance product. But, our exposure started to rise as many companies also started to buy this policy to provide coverage to their staffs. This has also increased the risk which we also need to offload,” said Dip Prakash Pandey, CEO of Shikhar Insurance Company.
“We had asked the Beema Samiti to put it on hold until we had a mechanism of risk management. Following discussion with the Beema Samiti, there has been some agreement on the pooling of losses. Now, we are resuming it,” he added.
How much COVID-19 insurance cost?
Rs 1,000 per person (Insured amount Rs 100,000)
Rs 500 per person (Insured amount Rs 50,000)
Insurance valid till: mid-April, 2021
Pooling of losses:
For first 10,000 claims: insurance companies themselves
For additional 10,000 claims- Nepal Reinsurance Company
For additional 5,000 claims- Catastrophic funds of insurance companies