May 20, 2020 | Investopaper
General Insurance Companies are required to waive the lockdown period premium on motor insurance. The Insurance Board has instructed the non-life insurance companies to give a discount on the insurance premium during the lockdown period saying that the risk will be less as the vehicles run very low during the lockdown period. The committee has issued a circular for this on Tuesday.
The owner will have to pay one third of the total insurance fee. The amount is specified for the risk of stagnation. Out of the remaining two thirds of the fee, only the amount has to be paid after deducting the lockdown period. “One-third of the total annual fee of the vehicle will be deducted for the risk of stagnation and the remaining two-thirds will be discounted proportionately,” the circular said. The committee has also directed the insurer to provide a certificate of discount amount at the request of the insured in case the vehicle is insured elsewhere.
The lockdown period should be maintained from Chaitra 11 until the government removes the lockdown. The committee has also directed to count the period of waiting period for the period of permission given by the government to operate the vehicles by issuing information in the case of emergency service vehicles. For all vehicles except the essential ones, the number of days from Chaitra 11 to the day of lockdown opening will have to be calculated. However, the committee has clarified that the exemption will not be available for the vehicles claimed during the current insurance period.
About 1.5 million cars are insured annually in Nepal. This number is increasing every year. In the first nine months of the last fiscal year alone, 1.25 million motor insurance policies have been issued. During the same period, 879,000 motorcycles, 159,000 private vehicles and 260,000 commercial vehicles have been insured.
The annual loss due to motor accidents to the insurance alone is more than Rs 7 billion. This is the average annual payment made by the insurance company to the insured in case of accident, theft and vehicle damage. Statistics show that insurance claims are increasing with the increasing number of road accidents. In such accidents, car owners have to bear a separate loss of around Rs 1 billion annually.
Also Read: Best Non-Life Insurance Companies In Nepal