Small Insurance Claims for Bhotekoshi Flood Victims to Be Paid Within a Month

Kathmandu — Birendra Badhuwaal Chhetri, president of the Nepal Insurers’ Association and chief executive officer of Siddhartha Premier Insurance, has said that the payment process for small insurance claims will be expedited to provide relief to people affected by the recent disaster.

According to Chhetri, claims of NPR 500,000 to NPR 1 million related to fatalities, small vehicles and agricultural insurance are being prioritized for settlement. He said there is a plan to pay such claims within a month if the necessary legal procedures can be streamlined.

Speaking at an event organized by the Independent Power Producers’ Association, Nepal (IPPAN), Chhetri said the requirement to wait for a long period under existing legal provisions before a missing person can be legally declared dead has made it difficult to provide immediate relief to disaster victims. He said a separate, simplified claim-settlement procedure is therefore needed for extraordinary circumstances, and that initiatives are being taken with the Nepal Insurance Authority and the Ministry of Finance on the matter.

However, Chhetri said the extensive damage to hydropower projects could pose a more serious challenge to the non-life insurance sector than individual and small claims. Based on preliminary estimates, around four to five major projects, including RasuwaGadhi, Upper Trishuli and Langtang, may have suffered losses estimated at between NPR 15 billion and NPR 23 billion. As the actual extent of the damage is still being assessed, it has not yet been determined whether the projects have sustained partial structural damage or whether major damage has occurred from the main structures to the powerhouses.

According to Chhetri, if the full extent of the damage is confirmed, the resulting insurance claims could be significantly larger than the size of claims currently handled by Nepal’s non-life insurance sector under normal circumstances. This is expected to put additional pressure on insurers’ financial capacity and risk-management systems.

He indicated that the process for Upper Trishuli, which has foreign investment and is insured by a foreign company, may be somewhat different, while settling the large claims involving other projects could take time. He said assessment and claim settlement would be advanced through effective coordination among the affected projects, insurance companies and surveyors.

Chhetri also linked the declining interest of international reinsurance companies in Nepal’s hydropower insurance market to the sector’s growing risks. He said hydropower projects in Nepal are increasingly being viewed as high-risk due to climate change, glacial lake outburst floods and the extreme flooding that can result from such events.