Wednesday, June 12, 2013

Finance Minister urges for crop and livestock insurance

Finance minister Shankar Koirala, today, strongly asked the Insurance Board to implement crop and livestock insurance as soon as possible.
Despite the insurance regulator making agro insurance mandatory for non-life insurance companies since January 14, the plan has failed to take off hitting the commercialisation of agriculture and livestock farming.
The country is net importer of crops and livestock apart from meat and its product despite one-third of the population involved in the agriculture and huge potential for livestock farming and export.
During his visit to the Insurance Board today, the minister directed the board and employees to seriously push for the implementation of crop and livestock insurance — which are key to commercialisation of agriculture also envisioned by the incumbent government — at the earliest.
The government, in the budget for the next fiscal year, is prioritising commercialisation of agriculture also for import substitution of crops and livestock.
"The regulator must fulfil its responsibility to make these insurance schemes available nationwide," Koirala said, adding that the board needs to form a group comprising of experts so that the plan can take off without any disturbances.
According to regulation, non-life insurance companies will have to insure paddy, vegetables, fruits and potatoes, livestock and poultry. The Ministry of Agriculture Development is supposed to provide 50 per cent subsidy for the insurance.
In last six months since the regulation was introduced, only NLG Insurance has introduced livestock insurance product and some others have formed a group to test the product, its reception and the risks involved.
The regulator of the insurance companies had also determined five per cent insurance premium of the sum assured. The board had fixed the amount of insurance policy ranging from Rs 10,000 to Rs 150,000 for cattle based on their breed and age.
Koirala also warned the board for its ineffective regulatory presence.
Moreover, introduction of microinsurance that was announced in the budget of fiscal year 2010-11 has yet to become a reality. The board has not been able to even prepare a regulation for microinsurance meant for the poor and rural population.
Chief economic adviser of the finance ministry Dr Chiranjivi Nepal also expressed the need to establish an anti-fraud bureau to check fraudulent activities at insurance companies.
"Moreover, there is a need to vigilantly look into insurance companies and it is unfortunate that Rastriya Beema Sansthan has yet to conduct its audit since the last five years," he added.
The board chairman Dr Fatta Bahadur KC pointing out the need to amend a few clauses in the existing Insurance Act that are posing a hindrance to effectively regulate the sector, asked to give Insurance Board autonomy like the central bank.

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