Kathmandu,
Nov. 8:
Insurance
companies in Nepal are to implement micro-insurance services within a couple of
weeks in coordination with micro-finance institutions (MFIs).
A
meeting of insurance companies on Tuesday discussed the issues related to the
implementation of micro-insurance.
Past
president of Nepal Insurers' Association (NIA) Deep Prakash Pandey said that the
insurance companies have been mulling over strategies for the effective
execution of micro-finance which is targeted at people of the lowest rung in
society.
Meanwhile,
some companies have begun to sell the micro-insurance products targeted to the
socially, economically and geographically marginalised people.
According
to the Insurance Board (IB), Himalayan General Insurance has informed the Board
that it had started implementing such insurance policies to the rural and
deprived population.
Pandey,
who is also chief executive officer of Shikhar Insurance Company Ltd., informed
that the companies had been working on their own in order to implement the
micro-insurance, but a coordinated effort was needed as the NIA had signed a
memorandum of understanding (MoU) with the MFIs to collaborate in the effort.
Saksham,
an initiative of the Department of International Development (DFID) Nepal, had
coordinated to prepare the MoU.
Till
now, about two dozen organisations including community-based organisations,
micro-finance service providers, non-government organisations and development
partners, have been selling micro-insurance product.
The
government had decided to involve the insurance companies in this sector, and former
Finance Minister Bishnu Prasad Poudel, through his budget speech for the
current fiscal year, had directed the companies to distribute at least 5 per
cent of their insurance services to micro-insurance.
Following
the government's announcement, the IB had designed three life insurance and two
non-life insurance products.
"The
life insurance products for micro-insurance are endowment and term insurance
while non-life products are household, personal accident and health
insurance," said Kundan Sapkota, deputy director of the Board.
However,
insurance companies are free to design their own product according to the
market need which they can sell after IB's approval.
The
IB has asked each insurance company to implement micro-insurance in the
districts where they had been issuing policies for agricultural insurance.
According
to Sapkota, the MFIs would perform a marketing function for micro-insurance.
"The micro-insurance companies have good relations with the public in the
villages and remote areas. Therefore, their network will help the insurance
companies to implement the micro-insurance," he said.
But
Pandey said that along with the reach to the rural people, publicity of
micro-insurance products was equally important.
"The
insurance companies have to face many challenges while implementing the
micro-insurance. However, this sector will create a huge opportunity for them 5
to 10 years from now," he said.
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