Kathmandu. At a time when Nepal’s micro, cottage, small and medium enterprises (MSMEs) are vulnerable to climate change, natural disasters and various economic risks, the existing insurance market fails to address their real needs. <\/p>\n
The report titled Risk Management in Nepal’s MSMEs: The Insurance Protection Gap, prepared by the United Nations Development Programme (UNDP) Nepal in collaboration with the Nepal Insurance Authority and the Institute for Integrated Development Studies, has revealed that there is a huge insurance safety gap between Nepal’s insurance market and the real risks of entrepreneurs. <\/p>\n
Small entrepreneurs in Nepal are looking for integrated and flexible insurance products compared to traditional and limited coverage insurance plans. According to the report, the following insurance products have high potential and business opportunities for small enterprises in Nepal: <\/p>\n
Small entrepreneurs have pointed out the need for an integrated insurance policy that covers seasonal risk, livestock, business continuity, equipment and credit risk instead of buying separate policies for different risks. <\/p>\n
Insurance has a high potential to cover the loss and liability of direct or indirect income due to natural calamities, epidemics or closures and strikes. <\/p>\n
There is a huge potential for transparent parametric insurance in the agriculture and tourism sector to automatically and quickly pay the damage caused by adverse weather, flood and drought through the use of technology. It is necessary to insure the damage caused by the breakdown of agricultural production, damage caused by the breakdown of electricity or equipment in the storage cold store, and damage during transportation. <\/p>\n
There is a demand for insurance products that protect against the risk of defaulting or running away from small businesses. Policies designed specifically for trekking, high altitude risk, tourist health and accidents, and hotels and homestays are also needed. <\/p>\n
According to the report, small enterprises, which account for 84 percent of Nepal’s non-farm employment and account for more than 25 percent of GDP, are highly vulnerable from a climate and economic perspective. <\/p>\n
Farmers and agri-entrepreneurs are not only suffering from physical damage to crops and livestock but also from multiple problems such as excessive rains, droughts, cold waves, pest outbreaks, market fluctuations and defaults. Although the farmers studied suffer losses of millions of rupees annually on average, they have not been able to pay the claims accordingly. <\/p>\n
For tourism entrepreneurs, the main risk is the closure of roads due to floods and landslides, cancellation of flights, decrease in tourist arrivals, cancellation of bookings due to epidemic or local unrest. The market needs a hassle-free claim payment process, simple policy in local language, transparent terms and quick service system through digital means. <\/p>\n
What kind of risk insurance products are being sold in Nepal’s insurance market? Although the market demand is wide and multidimensional, insurance companies in Nepal are currently selling only traditional, limited and supply-based insurance products. <\/p>\n
Insurance companies are mainly selling limited policies for direct physical damage to vehicles, houses, property, crops and livestock. Existing insurance products do not cover real risks such as loss of revenue, business credit risk, risk of reduced production in livestock or agriculture, and guest and employee liability. <\/p>\n
Farmers have not been able to get compensation due to mismatch between the technical standards of the weather index insurance and the actual damage caused to their crops. <\/p>\n
Entrepreneurs who have purchased insurance policies have also received only a small portion of the total loss due to paperwork, delays and rejection of claims. As a result, many entrepreneurs see insurance as an additional financial burden or tax rather than protection. <\/p>\n
The report points out that although more than 90 per cent of small enterprises in Nepal are exposed to high vulnerability to climate and operational risks, access to insurance is limited to 10 per cent. The report’s main conclusion is that sustainable development of small enterprises and national economic resilience will not be possible unless the insurance sector is reformed and made demand-driven, technology-friendly and accessible.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. At a time when Nepal’s micro, cottage, small and medium enterprises (MSMEs) are vulnerable to climate change, natural disasters and various economic risks, the existing insurance market fails to address their real needs. The report titled Risk Management in Nepal’s MSMEs: The Insurance Protection Gap, prepared by the United Nations Development Programme (UNDP) Nepal […]<\/p>\n","protected":false},"author":5,"featured_media":276905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45075,45159],"tags":[],"class_list":["post-310695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-insurance-education-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/310695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=310695"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/310695\/revisions"}],"predecessor-version":[{"id":310696,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/310695\/revisions\/310696"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/276905"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=310695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=310695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=310695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}