Only 22% of the estimated losses from landslides triggered by heavy rain in late September have been covered by insurance, according to the National Disaster Risk Reduction and Management Authority (NDRRMA). Preliminary data from NDRRMA reveals that landslides have caused damages amounting to Rs 46.68 billion across the country. However, data from the Nepal Insurance Authority (NIA) indicates that as of Wednesday, non-life insurers have received claims worth only Rs 10.53 billion.
These claims cover just 22.56% of the estimated damage, yet this proportion could be even lower. The NDRRMA report has not accounted for individual household and personal property losses, suggesting the actual insured portion might be smaller.
According to the NDRRMA, approximately 19,000 homes across Nepal sustained damage, with 5,000 completely destroyed. Financial evaluations of these losses are still pending. NIA Chairman Surya Prasad Silwal noted that public infrastructure generally lacks insurance coverage, and individual property insurance remains minimal.
In Nepal, third-party insurance is currently mandatory for foreign employment and vehicles. The government also subsidizes 80% of insurance premiums for agriculture and livestock. Mortgaged properties and projects funded by banks and financial institutions require insurance, but most public infrastructure and private property are uninsured, leading to low insurance coverage in disaster situations.
Nepal ranks high in disaster vulnerability, being fourth globally for climate change risk, fifth for lightning, eleventh for earthquakes, and twentieth overall. Yet, only 42.84% of Nepalis had access to insurance by August 2024. Low insurance penetration forces the government to allocate billions for recovery and reconstruction following natural disasters. A United Nations Insurance and Risk Financing study estimates that the government spent an average of Rs 50 billion annually on disaster recovery from 2012 to 2020.
To increase insurance accessibility, NIA Chairman Silwal recommended that insurance be mandatory for those who can afford it and subsidized for those who cannot. He also suggested tax incentives for home insurance and mandatory property insurance for map approvals, but these recommendations remain unimplemented.
Most claims so far have been for property insurance covering damage from floods and landslides, including personal and public buildings, infrastructure projects, and assets like commercial goods. Claims were also filed in agriculture, crop, and community insurance for transportation-related damages. While government structures are insured during construction, coverage ceases after project completion, leaving substantial public infrastructure vulnerable to uninsured damages.
Following the floods, NIA instructed insurers to expedite claims settlement, yet only Rs 471.1 million has been paid out as of Wednesday.
