RUPAK D SHARMA
KATHMANDU, Nov 14: The government is all set to create a pooled fund to facilitate implementation of microinsurance program, which is expected to help low income group purchase cheap policies on life, health and sources of livelihood.
Dubbed the Microinsurance Fund, the fund will be formed under the chairmanship of a board member of the Insurance Board (IB) -- the insurance sector regulator -- with representatives of selected insurance companies as members.
This fund will basically provide compensation to policyholders who have bought microinsurance products sold by various insurance companies. It will also take the responsibility of reinsuring the products sold by insurers to divert risk created by settlement of insurance claims.
A draft regulation on Microinsurance Fund that will soon be forwarded to the cabinet for approval says the fund will be created through contributions made by the government and insurance companies.
Currently, the IB is planning to contribute Rs 10 million to the fund. “The IB is also mulling over asking all member insurance companies of the fund to chip in another Rs 15 million,” a senior official of the IB told Republica on Sunday.
According to the draft, all non-life insurance companies are eligible to become members of the fund. “If the fund deems it necessary, it may also direct life insurance companies to accept membership. These members will be asked to deposit certain amount of income generated through sales of microinsurance products at the fund, which will be used to compensate victims and manage other risks,” the draft says. “The members of the fund may also be asked to make additional financial contribution, in case the fund is unable to compensate the victims.”
But in case the government decides to dissolve the fund, all members will have equal right on the fund´s assets, according to the draft.
“We hope these provisions are enough to successfully run the fund that is necessary to launch the microinsurance program immediately,” said an official of the IB, which will monitor the activities of the fund.
To kick-start microinsurance program in rural markets, the government has currently identified six microinsurance products which could be sold for a couple of hundred rupees and provide coverage of up to Rs 100,000. One such product is livestock insurance under which only dairy cattle would be insured in the initial phase. Health insurance is another product identified by the IB, which covers hospital bills of policyholders, whereas personal accident insurance policy provides compensation in case the policyholder dies or becomes disabled because of accidents.
The government has also floated self-employment insurance scheme which provides compensation in case the source of livelihood of policyholders, such as tea shops, are destroyed by fire, floods or earthquake. Other products include endowment and term-life insurance policies that provide a lump sum in case of policyholder´s death or after maturity of the policy.
The government had earlier asked insurance companies in the country to launch these products voluntary. But after they started dilly-dallying, the government is planning to make it compulsory for all insurance companies to have their presence in the microinsurance sector.
Published on 2011-11-14 00:45:02
http://www.myrepublica.com/portal/index.php?action=news_details&news_id=38285
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