Insurers stop issuing farm insurance policies after govt fails to settle dues for premium subsidies

Published On: March 26, 2024 09:30 AM NPT By: Republica  | @RepublicaNepal

Govt yet to pay more than Rs 3 billion to insurers  

KATHMANDU, March 26: At a time when the government has been announcing its plans to prioritize farm insurance through the budget for the next fiscal year, the insurers have stopped selling farm insurance policies citing the delay in getting the subsidy that the government has promised to provide them.

Speaking at a discussion regarding the preparation for the budget for the next fiscal year, Minister for Agriculture and Livestock Development Jwala Kumari Sah said the government aims to expand and promote farm insurance through the budget for 2024/25. “The government will be assigning more priority to farm insurance in the next year’s budget,” Sah said.

On the other hand, the insurers since the past few weeks have stopped selling their policies in the farming sector. According to the insurers, they are compelled to take the measures as the government has not paid them subsidies worth more than Rs 3 billion promised in the past.

Chunky Chhetry, president of the Nepal Insurers’ Association, said the government is yet to clear the premium subsidies that have remained due for a long time. “We will not be issuing farm insurance policies until the government settles all the outstanding dues,” Chhetry said.  

With much hype, the government introduced crops and livestock insurance in January 2013.  The Nepal Insurance Authority permitted the insurance companies to issue policies to cover six types of insurance under this category including various types of crops, vegetables, cereals, fruits, poultry, fishery, cattle and other farm animals.

The regulator even made it mandatory for both life and non-life insurers to sell at least five percent of their policies in micro insurance including the farm insurance. For its effectiveness, the government announced a 50 percent subsidy on insurance premiums, which was later increased to 75 percent.

An official of thecMinistry of Agriculture and Livestock Development (MoALD) said the ministry has been unable to settle the amount due to lack of budget. “Although the MoALD has already sent a letter to the Ministry of Finance, we have not received any reply in this regard,” the official said.

As of now, the insurers have not received Rs 3.10 billion for the subsidies of the premium values. Of the amount, Rs 350 million is due for crop insurance while Rs 2.75 billion is for livestock premium.

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