Insurance cover for rural poor
Kathmandu, November 24:
Beema Samiti, the insurance regulatory body of Nepal, is initiating a regulation on micro insurance in order to cover the poorest of the poor in rural areas.
The first draft on micro insurance, prepared by the Samiti was presented at the International Association for Insurance Supervisors’ (IAIS) conference in Cape Town on Thursday. The IAIS, which comprises of 130 insurance regulators from across the world, has devised an action plan on the core principles of insurance and micro insurance.
Beema Samiti, on its part, claims to be in the process of drafting a final regulation to be implemented by various commercial insurers in the country. “The regulation should come about by 2007,” informed Madhav Prasad Upadhyay, executive chairman of Beema Samiti.
“By then, insurance companies would have developed the infrastructure required for micro insurance while we will ensure that the premium remains low enough to benefit the poor.”
Upadhyay conceded covering small risks for the poor is going to be an expensive proposition which most commercial insurers would be reluctant to undertake. But that is where the role of the community would come in, just as in the case of micro finance schemes.
The community or social organisations working with, say, small-time labourers in a village, can collect the premium which will be divided into easy installments.
The idea of micro insurance germinated when the Samiti participated in a series of international conferences on the concept of micro insurance at Bangalore and Shanghai earlier this year.
“Micro insurance has been successfully implemented in India not by just LIC but even private players because the Insurance Regulatory and Development Authority (IRDA) has imposed it effectively,” said Ramesh R Bhattarai, the executive director of the Samiti. “We will need to have a close supervision in order to contain the moral hazards to this scheme,” he added.
Welcoming the idea of micro insurance in Nepal, LIC Nepal claimed that although not a very profitable business proposition for insurance companies, it will help in spreading the concept of insurance to every nook and corner of the country.
“LIC had initiated the practice in India even before any regulator imposed it because we are bound by our social obligations,” pointed out assistant general manager, Manish Mishra. Even in Nepal, LIC Nepal had tied up with an NGO, Centre for Micro Financing, last year itself and had till now sold over 500 such policies.
“The total amount of business may be very low, but it has served our basic objective of reaching out to the lower sections of the society,” maintained Mishra.
Succour for poor:
• Beema Samiti preparing a regulation on micro insurance.
• First draft presented at an international conference.
• LIC Nepal have already sold 500 similar policies.