With the theme ‘Building Financial Resilience – Disaster Risks Financing and Insurance’, the Association of Insurers & Reinsurers of Developing Countries (AIRDC) seeks to build financial resilience, disaster risk financing and insurance at the Global Insurance Conference in Kathmandu on September 26, 2018.
To begin with, Finance Minister Yubaraj Khatiwada identified climate change as a factor that triggers unrest in the society, environment, economy and causes fluctuations directly/indirectly in Nepal’s insurance business.
Nepal Finance Minister Khatiwada On Insurance Concerns
“We know some of them can be insured and some cannot be insured. And even if all of them could be insured, there are no service providers to insure them at an affordable cost or price or premium or charges to the service seekers and this is a problem we are facing at present,” the finance minister said.
Adding further, he said, it is understandable that not all risks are liable to financial insurance but there are definitely risks which require insurance and the global insurance industry thrives on those risks.
Referring to the increasing global financial integration and the kind of systematic risks it poses, he asked world insurers, reinsurers and regulators to come up with a ‘good strategy’ to overcome these challenges.
Risk Management: Alternative to Post-Disaster Response
“Natural disasters pose a big threat to the AIRDC economies in terms of fatalities and economic losses. Given the impact of the natural disasters in these economies, the need of risk management as an alternative to fully post-disaster response becomes paramount,” said Khatiwada proposing the concept of risk management.
Explaining further, he said, risk management encompasses both investments in high-return risk reduction instruments and provision of post-disaster cover for the recovery process. Financial instruments like these not only provide post-disaster financial resources but play an important role in the protecting the society.
Taking the example of the 2015 Nepal earthquake Khatiwada said, lack of required insurance protection forced victims to depend on government relief & reconstruction.
This weighed heavily on the Nepal Government which had to partially rely on external resources. “To meet the resources, the government relies on cutting other expenditures, tax cuts and borrowing and donor contributions,” Khatiwada said.
“While disasters present a broader range of social and economic impact, causing damages on infrastructure and economic activities, ensuring that the economy has necessary resources to recover, rebuild and resume economic growth is critical for effective risk management,” he added.
What Other Speakers Had to Say
Nepal Insurance Board Chairperson Chiranjibi Chapagain pointed at how underdeveloped or developing countries were at the receiving end of such disastrous occurrences.
“The most affected and vulnerable are those having low income and living below poverty lines. Once affected, they cannot come out easily from the consequences of the disaster and therefore it is our concern to find out insurance solutions to enable the affected people to restore their economic states to their conditions before the event,” adds Chiranjibi.
AIRDC President Yassir Albaharna opines that AIRDC member countries face common risks and problems and the regulatory body seeks to address these problems, collectively.
The two-day conference is organized by AIRDC, Nepal Insurers’ Association (NIA) & Nepal Insurance Board (NIB) and will see the participation of more than 400 delegates countries.
Let’s see what effective measures AIRDC will come up with to deal with the consequences of natural disasters and better equip its people to protect themselves against disasters.