Kathmandu. The rise in third-party insurance companies is likely to boost the business of non-life insurance companies.
The government is in the coming fiscal year 2083. Out of the budget of Rs 84, the third party insurer has announced Rs 10 lakh. Currently, the third party sum assured is Rs 5 lakh.
In this regard, the government has announced to double the third party insurer. The government has said that the third party insurance amount is going to be increased, which has not been increased for a long time.
Similarly, the government has made accident and transportation insurance compulsory.
The Motor Vehicles and Transport Management Act, 2049 BS has made third party liability insurance mandatory for all types of vehicles. It requires insurance to cover third-party property damage and third-party injury or death. It also involves risks to the driver, passengers, and other employees such as assistants or security personnel.
Currently, the third party insurance provides compensation up to Rs 500,000 in case of death and up to Rs 300,000 in case of injury.
Nepal Insurance Authority (NIA) has released the current fiscal year 2082. According to the data as of April 2018, non-life insurers have brought in business worth Rs 41.39 billion from various sectors. Out of this, the companies have collected Rs 12.63 billion in insurance premiums. The share of motor insurance in the total business is 30.52 percent.
Most of the business of insurance companies is seen in motor insurance. According to the information that the claims of third party insurance in motor insurance are less, the insurance company’s business insurance will increase further due to the increase in the insurance amount.
Although the government has announced to increase the insurance premium, now the Nepal Insurance Authority will have to decide on the determination of the insurance premium of the third party insurance. Currently, the premium under the third party is Rs 700 per passenger or Rs 4,000-5,000 depending on the type of vehicle. The authority will have to decide whether to increase the rate or not.
Similarly, Chief Executive Officer (CEO) of Sagarmatha Lumbini Insurance Company Chunky Chhetri said that the government’s decision to increase the third-party insurance amount is a good sign for the non-life insurance sector. “This will be a big relief to the insured,” he said, “On the other hand, the business of the companies will also increase.” ’
