Directive to systematise, promote micro-insurance in offing

POST REPORT

KATHMANDU, OCT 23 -
In a bid to systematise and promote micro-insurance, the Insurance Board (IB) is all set to introduce a directive that will push insurance companies to introduce micro-insurance products to their portfolio. The IB is currently finalising the directive and plans to issue it by the first week of November.

With insurance companies not giving much importance to micro-insurance, the board had formed a taskforce headed by its board member Binod Aryal to define micro-insurance in the Nepali perspective and identify viable products.

The taskforce has identified six micro-insurance products—cattle insurance, health insurance, personal accident insurance, self employment, endowment and term life. It has proposed the upper limit of the insured sum at Rs 100,000. “Once the directive is issued, I request all insurance companies to offer these products to their clients,” said Aryal at an interaction organised by IB to discuss the directive here on Sunday.

The directive will only define micro-insurance, but will not impose it, according to Aryal. “If companies continue to show reluctance to start micro-insurance, IB may also make a forceful provision,” he said.

Insurance companies, however, have concerns that micro-insurance may increase their cost of operation and incidents of false claims. However, all stakeholders, including insurance companies, were supportive to the idea that there is a need for micro-insurance to reach to even the poor people.

But Aryal suggested them to use micro finance institutions, cooperatives and Financial Intermediary Non Government Organisation (FINGO)s as a vehicle to reach to the targeted group given their big presence nationwide.

IB chairman Fatta Bahadur KC said insurance companies could go through NGOs, co-operatives and other financial intermediaries that are providing micro-insurance services in rural areas without being properly regulated.

Harihar Dev Pant, a pioneer in introducing micro-finance, shared a similar view. But he suggested designing products at low premium rates that are affordable

to poor.

Posted on: 2011-10-24 08:21

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