Nepal Faces High Risk of Natural Disasters; Insurance Plays a Key Role in Mitigation: Chunky Kshetri

Nepal Faces High Risk of Natural Disasters; Insurance Plays a Key Role in Mitigation: Chunky Kshetri

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Kathmandu – Chunky Kshetri, President of the Nepal Insurers’ Association, has emphasized that Nepal is a high-risk country prone to natural disasters. Speaking at the inaugural session of the 2nd National Insurance Discourse, Kshetri highlighted the critical role of insurance in mitigating such risks.

“Nepal faces significant risks, and mitigating these risks is a major challenge. The 2015 earthquake was a stark reminder of the devastation disasters can cause,” Kshetri said. Recalling the earthquake, he noted, “Over 9,000 lives were lost, and damages amounted to $7 billion, yet insurance claims during that time totaled only NPR 16 billion.”

He also mentioned the recent floods in October, which caused substantial damage. However, insurance claims related to the floods stood at just NPR 12 billion. Kshetri pointed out that even these claims may decrease after verification processes. “Insurance is a necessity, and we must raise awareness about its importance among the general public,” he stated.

Addressing allegations that insurance companies delay or dispute claims, Kshetri clarified that out of NPR 40 billion in claims submitted last year, NPR 28 billion were settled. Annually, 60-65% of claims are paid out, with delays often caused by various factors, he explained.

While insurance companies have started to adopt innovative approaches, Kshetri noted challenges arising from the government’s lack of understanding about the industry. He emphasized that government properties remain uninsured and bringing them under the insurance framework would ensure their protection.

Regarding reinsurance, Kshetri highlighted that Nepal mandates using domestic reinsurance companies to ensure business remains within the country. While this prevents capital outflow, retaining all risks domestically poses challenges. “Risks in reinsurance must be distributed across multiple entities. Concentrating them within Nepal increases vulnerability,” he warned.

Kshetri also stressed the high risks associated with Nepal’s hydropower sector, which has become a national priority. He called for comprehensive risk mitigation strategies to protect this critical industry.

In his remarks, Kshetri underlined the urgent need for insurance awareness and risk management to safeguard Nepal’s economy and people from the devastating impacts of natural disasters.