Non-Life Insurers on Edge as Heavy Rain and Flood Warnings Raise Fresh Concerns

Kathmandu — Nepal’s non-life insurance companies, already facing substantial claims from the recent Bhotekoshi floods, are now bracing for further losses amid warnings of heavy rainfall and flooding.

Severe flooding in the Bhotekoshi River, which flows through Rasuwa, caused extensive damage to property and loss of life across districts stretching from Rasuwa and Nuwakot to Dhading and Chitwan. The disaster also inflicted billions of rupees in damage on around a dozen hydropower companies. With most of the related insurance claims still unpaid, the government and meteorologists have urged the public to remain alert as the risk of heavy rain, floods and landslides rises again.

“We have already suffered huge losses from the Bhotekoshi floods. Now, with warnings of further flooding, we fear that non-life insurers will face an even greater burden,” said the CEO of an insurance company.

Industry sources say non-life insurers are now struggling partly because of inadequate reinsurance arrangements and what they describe as questionable practices, including offering cashback and commissions to secure insurance business in Nepal. As rainfall intensifies, companies are left hoping that losses can be kept to a minimum.

According to a senior insurance official, the Bhotekoshi disaster exposed several weaknesses, including cases in which insurers had not adequately insured against natural disasters and had retained the full risk on some motor vehicle policies.

Sources say that commissions paid out of insurance premiums have left companies with limited capacity to spend on reinsurance. In their competition to secure business, insurers have reportedly maintained high management expenses while purchasing reinsurance at comparatively low levels.

With heavy rain and the possibility of floods and landslides now raising fresh concerns, the question is whether insurers should continue to face such risks with uncertainty or secure reinsurance in line with the widely accepted principles of insurance and the level of risk involved. Shouldn’t the Nepal Insurance Authority, as the regulator, take responsibility for determining the sector’s direction in the days ahead?