Insurance to be extended to rural areas

KATHMANDU: Bima Samiti (Insurance Board - IB) — the insurance regulatory authority of Nepal — is going to expand insurance services in rural areas through micro-insurance.

IB is including micro-insurance as a key sector along with life, non-life and others, said IB spokesperson Shekhar Kumar Aryal.

IB has included micro-insurance in the proposed ‘Insurance Act-2009’ under clause 59 (C).

The draft act is under discussion by stakeholders since January, he said adding that the board will develop micro-insurance regulation after the promulgation of the Act.

Micro-insurance is not a new concept for the Nepali insurance sector but it has not developed institutionally. Microfinance institutions, village-based cooperatives and non-governmental organizations have been practicing micro-insurance since 1995.

They are providing livestock, crop and health insurance to rural people at the grass-root level.

Insurance experts hesitate to accept such practices as micro-insurance. “They are providing social security to people, not insurance,” said Dr Anil R Bhattarai, director at IB.

According to Bhattarai, such services can be tied up with insurance if these

institutions take a step ahead. “They can open an insurance company

targeting micro-insurance,” he suggested.

Existing insurance does not bar insurance companies from innovating and selling micro-insurance policies as insurance products. However, there is no provision for separate micro-insurance institution.

There is another way out to promote micro-insurance where institutions can

be agents of insurance company and sell policies. “It will be a better practice for us and IB is ready to promote it for now,” he said.

Around 25 insurance companies — eight in life insurance, 16 in non-life insurance and the state-owned Rastriya Bima Sansthan is working in both sectors — providing insurance services in Nepal.

Those companies are centred in cities and towns and over 70 per cent of the rural population has no access to insurance facility.

Around 1.3 million Nepalis are in the net of insurance, so far.