SC issues a show cause order against government for delay in settlement of the COVID-19 insurance claims

Published On: September 10, 2024 10:10 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, Sept 10: The Supreme Court (SC) has issued a show cause order against the government for the delay in the settlement of the COVID-19 insurance claims.

Responding to a writ petition on Monday, a single bench of the SC Justice Abdul Aziz Musalman issued the show cause order and allowed the government to exercise discretionary power with priority. The SC has sought a written explanation from the government on why there has been a delay in payments.

The apex court has come up with the order in response to the petition filed by the Nepal Insurers’ Association (NIA) against the government for its apathy to settle payment for COVID-19 insurance claims.

The government had initiated the coronavirus insurance in April 2020 after the start of the COVID-19 pandemic in Nepal. By the time the scheme expired in mid-July 2021, the non-life insurance companies had sold 1,758,343 COVID-19 policies in one year.

During the period, the insurance companies even collected Rs 1.5 billion in premium from the sale of these insurance policies. In the aftermath of the spread of the coronavirus pandemic, the insurers paid only a total of Rs 4.78 billion, while the government has not settled Rs 11 billion for the insurance claims of coronavirus.

The COVID Insurance Directive stipulates that the insurance companies will be liable to cover insurance up to Rs 1 billion under this scheme, reinsurance companies Rs 1 to 2 billion, the companies’ catastrophe fund Rs 2 billion to 2.5 billion, and the Nepal Insurance Authority (the then Insurance Board) Rs 2.5 billion to Rs 3.5 billion. The guidelines state that the government will have the liability to cover insurance if the liabilities exceed Rs 3.5 billion.

The Ministry of Finance however has been dilly dallying to clear the liabilities of the government regarding the insurance claims for the past three years. According to the NIA, the MoF has been reluctant to release the amount on the pretext of not having a source to clear the financial liabilities.