Insurers stop settling insurance claims after they fail to get subsidies from government

Published On: April 25, 2024 08:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, April 25: Non-life insurance companies have stopped settling the claims against the insured farm products after they failed to get premium subsidies from the government.

Chunky Chhetry, president of the Nepal Insurers’ Association, said the insurers were compelled to stop paying the claims of the farm insurance after the government delayed payment of premium subsidies amount to the companies concerned. “As the financial liabilities of the non-life insurers have escalated, they are not in a position to assume further risks,” he said. 

The non-life insurers have declined to pay the insurance claims to farmers after they stopped selling their policies citing the dilly dallying by the government to release the subsidy amounts. Since last one and a half months, the non-life insurers have not been issuing farm insurance policies to pressurize the government to settle all the outstanding dues.

Raju Raman Paudel, executive director of the Nepal Insurance Authority (NIA), termed the move of insurance companies inappropriate. According to him, the regulator has been lobbying the government to provide the outstanding dues on the premium subsidies.

With much hype, the government introduced crops and livestock insurance in January 2013.  The NIA 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 80 percent.

Chhetry of the association said the government released Rs 560 million to insurers three weeks ago. According to him, the government is yet to clear around Rs 2 billion under the heading.

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