IB to direct insurers to introduce fisheries insurance products
KATHMANDU, Jan 29: The Insurance Board is soon making it mandatory for non-life insurance companies to introduce products on fisheries insurance - a measure expected to provide cushion to fish farmers and pave the way for easy flow of credit into the fishery sector.
The move comes two weeks after the insurance sector regulator introduced a directive on insurance of crops, livestock and poultry.
“We are currently working with the Fisheries Development Center to determine the premium rate for insuring fishes as well as pools and reservoirs where fishes are grown,” a high-ranking official of the Board told Republica on condition of anonymity.
“Once this is done, a template of fisheries insurance policy would be created based on which non-life insurance companies would provide coverage to fish farms.”
As of now, the Board is mulling over fixing annual premium rate equivalent to two percent of the investment that has gone into raising fishes to cover fish farming. This means two percent of the cost incurred in fish farming till the time of harvest would be accumulated from farmers to provide cover to their business for a period of one year. “To insure pools and reservoirs, one percent of the cost incurred in building of these infrastructure may be raised by insurance companies as annual premium,” the official said.
The Insurance Board is also thinking of introducing an insurance policy that would provide cover to yield projected by farmers and approved by independent technical experts. If such a scheme is introduced, fish farmers would be entitled to compensation if the actual yield falls short of estimation.
“This scheme, if introduced, is also likely to attract annual premium rate equivalent to two percent of the value ascertained by the expert,” the official said.
The Insurance Board is mulling over taking a slightly different approach while framing policy for fishery sector, as fish farming is considered less risky than crop, horticulture and livestock farming.
“Even experts of the fisheries development center agree that insurance companies won´t suffer losses if they provide cover to projected yield,” the official said.
This is unlike in the case of crops insurance, in which coverage is provided to investment that has gone into raising crops and horticulture until the time they are ready for harvest.
“We hope a flexible policy will ease the access of probable fish farmers to bank credit,” the official said.
One of the reasons why financial institutions fear extending loans to farmers - despite the government´s repeated calls - is the baggage of high risk that comes along with investment in the agriculture sector.
In response, the Insurance Board, on January 14, formally introduced the Crops, Livestock and Poultry Insurance Directive, based on which non-life insurers have introduced six insurance products on paddy, vegetables, potato, poultry (chicken and duck), fruits (orange and juanr -- a citrus fruit) and livestock.
“We hope introduction of fisheries insurance policy will provide another lifeline to farmers and encourage more to enter the business,” the official said.