Even before death and injury claims, Nepal floods may cost insurers more than $130 million
According to a senior official at one of Nepal's largest insurers, the devastating floods in Nepal could lead to commercial insurance losses in excess of?20 billion Nepali Rupees ($132.3m), with hydropower projects accounting for most claims.
When the insurance is paid, it covers the losses that the operators of power plants have suffered.
As authorities confirm deaths and missing persons, they will expect to receive separate claims for life insurance, personal injury and workers' compensation.
Chief of the Nepalese disaster authority, Mr.?chief, said that the disaster at the border between China's Tibet and Nepal caused $2.56 billion worth of economic losses to the Himalayan nation, which has 30 million inhabitants. The country suffered more than 1,200 deaths, with many others missing.
Toton Chakraborty CEO of Oriental Insurance Company Nepal said that 11 Nepali hydropower plants are located in the affected area. Some are covered by standard commercial insurance policies, which have yet to be assessed.
Oriental Insurance Nepal is a unit of the Indian insurer based in New Delhi. It is one of the top insurers in this region.
The hydropower projects located along the river corridor that was affected have been the most severely damaged. He said that in many cases access roads and above-ground infrastructure were washed away.
He said that projects such as Rasuwagadhi and Upper Trishuli-3A were directly affected. Meanwhile, assessments are being conducted at five other sites.
As of August 31, data from the Nepal Insurance Authority shows that the regulator had received 583 claims for flood damage worth 25,87 billion Nepalese Rupees ($171.13 millions).
Chakraborty stated that these figures reflect insured exposure and not final claims. This will be evident only after detailed surveys have been completed.
He said that claims could increase if repairs delayed project commissioning. Some policies compensate developers for revenue lost due to postponed commercial activities.
Nepal's nonlife insurance market is relatively small by international standards. According to regulatory data, the country's 14 non-life insurance companies generated premiums worth about 5.3 billion Nepali Rupees ($35.06m) between July and August, compared to 314 billion Indian Rupees ($3.3b) by Indian insurers in a similar time period.
International players such as India's GIC Re, and Germany's Han Re are also present.
REINSURERS WARY OF HIMALAYAN RISK
Four industry executives stated that the floods could have long-lasting implications for insurance coverage on Himalayan infrastructure.
A senior U.N. official said this week that the Himalayan region is at risk from future floods caused by glaciers and earthquakes.
Benjamin Ng is the Asia power leader at Aon International Insurance Broker. He said that recent floods in South Asia could lead insurers, especially in high-exposure locations, to review their hydropower and infrastructure risks.
Ng stated that insurers may impose more exclusions, lower limits and narrower coverage, which will result in higher premiums.
Other recent Himalayan disasters include the 2023 'glacial lake outburst flooding in India's Sikkim, and the flash flood that occurred in the northern Indian State of Uttrakhand 2021.
Sanjay Mokashi is the chief underwriting officer of GIC Re, a state-owned Indian reinsurer.
(source: Reuters)
