Even before death and injury claims, Nepal floods may cost insurers more than $130 million
According to a senior official of one of Nepal's largest insurers, the devastating floods in Nepal could lead to commercial insurance losses that exceed 20 billion nepali rupees (US$132.3 million). Hydropower projects are responsible 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.
According to the country's chief disaster authority, more than 1,200 people were killed and many others are missing in the disaster that occurred on Nepal's border between China's Tibet area and Nepal.
Toton Chakraborty CEO of Oriental Insurance Company Nepal said that 11 Nepali hydropower plants are located in the affected region. Some are covered by commercial standard insurance policies, which is still being assessed.
Oriental Insurance Nepal is a subsidiary of New Delhi based Indian insurer Oriental Insurance. It is one of the top insurers in this region.
The most significant damage has been caused to hydropower projects located along the river corridor. He said that in many cases, the access roads and above ground infrastructure were washed away.
He said that projects such as Rasuwagadhi and Upper Trishuli-3A were directly affected, while five other assessments are still ongoing.
As of August 31, the Nepal Insurance Authority reported that it had received 583 claims for flood damage, totaling 25.87 billion Nepalese Rupees (171.13 millions dollars).
Chakraborty stated that these figures reflect largely 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 non life insurance market is relatively small by international standards. The 14 non-life insurance companies in Nepal generated premiums worth about 5.3 billion Nepali Rupees ($35.06million) between July and August, according to regulatory data. This compares with the 314 billion Indian Rupees ($3.3billion) that Indian insurers wrote during the same period.
International players such as Hannover Re of Germany and GIC Re in India, along with domestic reinsurers Nepal Re & Himalayan Re are also present.
REINSURERS WORRIED OF HIMALAYAN RISK
Four industry executives have said that the floods may have long-lasting implications for the insurance coverage of 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. This week, a senior?U.N.
Benjamin Ng is the Asia power leader at Aon International Insurance Brokerage. He said that recent floods in South Asia could lead insurers, especially in areas with high exposure, to review their hydropower and infrastructure risk.
Ng stated that insurers may impose more exclusions, lower limits and narrower coverage. This could lead to higher premiums as well as more selective underwriting.
Other recent Himalayan disasters include the 2021 flash flood and the 2023 glacial lake eruption flood in India's Sikkim.
Sanjay Mokashi is the chief underwriting officer of GIC Re, a state-owned Indian reinsurer.
(source: Reuters)
