EDITORIAL: Make it mandatory

People should feel that the mandatory insurance scheme is for their secure future, and not take it as an additional financial burden

Learning lessons from last year’s devastating earthquake of 7.6 magnitude that destroyed as many as half a million houses in the country the government is mulling a “mandatory insurance scheme” for all residential private houses.

The scheme will be implemented in all metropolitan, sub-metropolitan cities and municipalities of the Kathmandu Valley to cover damage of private houses from fire, natural disasters and other incidents such as theft as well as losses of household items kept inside the houses.

The government will introduce the mandatory insurance policy through the Insurance Board (IB) which will start implementing it from the next fiscal year as per the government plan.

It was found that most of the residential houses were built without buying an insurance policy against natural disasters, fire, theft or other incidents not specifically mentioned in the insurance policy.

The mandatory insurance policy is being introduced to protect every household from such damage or loss so that they can rebuild their residences with the money to be received from insurance companies.

IB officials will be discussing the issue with officials of the Kathmandu Metropolitan City, Lalitpur Sub-Metropolis and other recently declared municipalities.

IB has a plan of introducing it in other parts of the country, including the rural areas, once this policy is successfully implemented in the Valley. All non-life insurance companies are selling the insurance policy for Rs. 1.75 per Rs 1,000 of sum insured which means that Rs. 1.75 will cover the losses worth Rs. 1,000.

IB is also planning to make the mandatory insurance policy fairly affordable so that all the households will be happily ready to purchase the scheme. However, the mandatory insurance policy will cover the house property worth Rs. 10 million only.

This means that even the mandatory insurance will not cover the damage exceeding Rs. 10 million. But the insurance policy made against fire which is common covers unlimited amount.

The Rs. 10 million ceiling fixed by the IB is impractical as it generally costs more than Rs. 10 million to build a residential house in the Valley. IB is also planning to stop the practice of the insurance companies to deduct certain amounts of insurance claim settlement process.

However, an insurance policy allows deduction of 2.5 percent of the loss amount or Rs. one million, whichever is lower, during the claim settlement process.

Although the government plan of introducing the mandatory insurance scheme may be a good idea in view of protecting all families from damage such as earthquake and fire, it will be a Herculean task for the IB and municipalities to get it fully executed as most of the people are not fully aware of the importance and benefits of such scheme.

Most of the people do not fully trust the non-life insurance companies as they often create bureaucratic hassles at the time of claim settlement; and they do not properly assess the property lost and deduct the loss amount claimed by the insurers.

It is better to come up with this plan only after discussing it with the stakeholders and launching a massive awareness campaign across the country.

People should feel that the mandatory insurance scheme is for their future, and not take it as an additional financial burden.

Another chance

The country at present lacks skilled human resources which is impeding the development endeavours.

Therefore, the Ministry of Education (MoE) wants more students to take up technical and vocational education which is not being adequately pursued.

The Council for Technical Education and Vocational Training (CTEVT) is the institution where students apply to study these disciplines.

The CTEVT has set the criteria for students wishing to pursue these studies.

Only students who score a minimum 1.6 GPA and C in English, Maths and Science and D Plus in Social Studies and Nepali in the School Leaving Certificate examination are qualified to pursue technical and vocational subjects.

Meanwhile, it has been clarified that students who score D and E in a maximum of two subjects would be allowed to appear for the exams again, and they would be able to join these classes if they score the required grades.

Technical and vocational education is taking a back seat as far as this country is concerned. Now the MoE hopes more students will join these classes as we are in dire need of competent human resources.