KATHMANDU, Sept 26: Minister for Finance Yuba Raj Khatiwada has said that the weather, particularly climate change, has become a big challenge for insurance companies.
Addressing the 21st Association of Insurers and Reinsurers in Developing Countries (AIRDC) Conference 2018 in the capital on Tuesday, Khatiwada said that climate change has given a lot of shocks to the society, to the economy, and to the environment, which directly or indirectly influences the insurance business.
“The risk of climate change is growing and this is more challenging for developing countries like ours which do not have sufficient capacity and financial resources to adapt or to be resilient to disaster,” said Khatiwada.
He said that the insurance industry can play an instrumental role in protecting people from financial losses and damages resulting from natural disasters and the adverse impact of climate change. However, the lack of service providers and high cost of insurance has made it hard for people to get insurance coverage, he added.
“We know some of the losses from disasters could be insured and some of them could not be insured. And even if all of them could be insured, there are no service providers to insure them at an affordable cost or premium to the service seekers. So this is the challenge that we are facing at the present moment,” said Khatiwada.
The two-day conference that has brought together 400 delegates, including 88 foreign delegates from 20 countries, aims to discuss building financial resilience, disaster risk financing, and insurance.
Yassir Albaharna, president of the AIRDC, underlined the government's role in strengthening financial resilience. “Given the impact of the natural disasters in developing economies, the need of risk management as an alternative to post-disaster response becomes paramount,” he said.
“While disasters present broader range of social and economic impact, causing damages on infrastructures and economic activities, ensuring that the economy has necessary resources to recover, rebuild and resume economic growth is critical for effective risk management,” he added.
Also speaking on the occasion, Chiranjibi Chapagain, chairperson of Nepal's Beema Samiti, said that the effects of catastrophes are more severe in the underdeveloped or developing countries.
"The most affected and vulnerable are those having low income and living below the poverty lines. Once affected, they cannot come out easily from the consequences of disaster,” he said. “Hence, it is our concern to find out insurance solutions to enable the affected people to restore their economic status to the pre-disaster level,” he added.
While speaking at a roundtable session, insurance experts from developing countries shared about the disaster risk financing experiences in such countries. Jagath Alwis, an insurer from Sri Lanka, said that the Sri Lankan government has introduced a scheme to protect the vulnerable people. "The government provides free insurance coverage for them up to the limit of 2.5 million Sri Lankan Rupees. The National Insurance Trust Fund created by the Sri Lankan government provides the insurance service to the people including fishermen who are vulnerable to disasters."
Shah elected new AIRDC President
Vijaya Bahadur Shah has been elected as the new president of the Association of Insurers and Reinsurers in Developing Countries (AIRDC). The Annual General Meeting of the association held in Kathmandu on Tuesday unanimously elected Nepal Insurance Company Ltd's CEO Shah as its new president for a two-year term. Similarly, the AGM also elected nine-member executive board of trustees of the association. AIRDC is an international organization composed of insurance companies, reinsurance companies and other insurance groups that have bonded together to develop and expand international collaboration and cooperation in the fields of insurance and reinsurance among them. It has a total of 124 members. The AGM has also decided to hold its next conference in Ghana in 2020.