Insurance firm to turn Nepal loss into silver liningOctober 12th, 2010 - 4:00 pm ICT by IANS
By Sudeshna Sarkar
Kathmandu, Oct 12 (IANS) Less than two months after being hit by a plane crash in Nepal that killed all 14 people on board and destroyed the aircraft, National Insurance Company Ltd (NIC), the insurer, is ready to bounce back with a silver lining in the loss.
NIC, India’s oldest insurance company, is now seeking to increase its presence in Nepal’s aviation insurance sector with the prompt payment of the insurance money, amounting to nearly $2 million, which it hopes will speak “louder than words” for its efficiency and sympathetic dealing with disasters.
The 103-year-old Indian company, which began operations in Nepal nearly 30 years ago, has been a new entrant in aviation insurance in Nepal, beginning in 2006. It has a single client, a domestic Nepali airline Agni Air.
In August, a 15-seater Dornier aircraft flown by Agni crashed while flying mostly foreign tourists to northern Nepal, killing all the 11 passengers as well as the three-member crew.
While the crew had been insured, as per international practice, for $30,000 each, the passengers were insured for $20,000 each and the aircraft for nearly $1.5 million.
“On Aug 25, within 24 hours of the crash, our assessors from Singapore flew to Nepal,” says Jagadish Ghosh, NIC’s CEO in Nepal. “The next day, they went to the crash site to assess the situation.”
NIC also put in advertisements in Nepal’s dailies, asking the next of kin to submit legal evidence of their relationship with the victims so that they could start disbursing the insurance money.
“We have already paid the airline NRS 70 million this month to buy a new aircraft,” Ghosh told IANS.
“The new Dornier has been bought from a company in Australia and began flying to Nepal via Indonesia, Thailand, Myanmar and India. It is expected to arrive in Kathmandu on Wednesday.”
Despite the loss, NIC remains resistant as it had reinsured the aviation contract with Mumbai’s New India Assurance, which too brought in about a dozen reinsurers.
The reinsurance means NIC has to absorb only 1.5 percent of the loss incurred by the death of the passengers and 15 percent of the loss caused by the destruction of the aircraft.
It has already entered into a contract with Agni for the Nepal journey of the new aircraft, at a premium of NRS 2.7 million.
“The aviation industry is one of the biggest sectors seeking insurance in Nepal,” Ghosh said. “Its yearly premium is worth about NRS 800 million. To do insurance in Nepal, you need to enter aviation. We are hoping that our prompt and sympathetic service will speak louder than any advertisement.”
Though the practice is for the insuring organization to collect the money from the reinsurers and then pay the claim, NIC is read to disburse the money even before collecting it from the reinsurers, Ghosh said.
However, due to the difficulty in identifying the bodies of the passengers, that had to be subjected to DNA testing, the airline is yet to have its paperwork ready.
NIC will have an additional financial year to recoup the loss as the air-crash occurred in August.
Its balance sheet for the closed financial year shows a growth of 27 percent in business and a gross profit of over NRS 95 million.
(Sudeshna Sarkar can be contacted at email@example.com)
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