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EIP operation postponed again
KATHMANDU, DEC 11 - The operation of ‘Emergency Insurance Pool’ (EIP) approved about two months back, after a delay of over a year, has lingered once again as the government is still working out its management set up.
The pool designed to cover terrorism and sabotage insurance was supposed to come into operation from October 18, according to the EIP Regulations.
For its set up, the government required to appoint a chairman through cabinet decision, three members from insurance companies and a Fund Manager from free competition. "However, it failed to speed up the appointment process," said insurers.
Only positive achievement recorded so far had been the appointment of the chairman by the cabinet. But even that failed to lead the set up process as Bal Gopal Sigdel, the newly appointed chairman declined to take charge of the pool, said a government source.
"Submission of resignation by Sigdel as soon as he received the appointment letter was a major blow to set up the process," he said. He further informed The Kathmandu Post that Sigdel refused to take charge of new post on the ground of poor insurance knowledge.
In the resignation letter forwarded to the authorities few days back, he even suggested the government to appoint a person who has sound insurance knowledge to ensure effective operation of the pool.
Insurance is a technical sector in itself and businesses as sensitive as terrorism and other man made losses call for extra caution and expertise. "Sigdel knew what was required in the job. But the government is still to be serious on the matter," said experts.
As for the appointment of Fund Manager, who will be the executive head of the pool, the Ministry of Finance last week called applications pledging a time period of 35 days. "This clearly indicates that the pool will take time before it actually comes into implementation," said experts.
Insurers, meanwhile, viewed that the government was showing too much of laxness in setting up the pool, especially as it was originally announced of coming into effect from 16 July 2002. "This has prevented the insurers from applying themselves in business of terrorism and other man-made losses which are of very sensitive nature in the current insurance market," said Dip Prakash Pandey, General Manager of Everest Insurance.
Owing to the delay in setting up pool, insurers have been finding difficulties in intimidating losses to the Indian reinsurer of General Insurance Corporation (GIC), and settling claims of their clients.
All the general insurers that cover man-made losses, mainly that resulting from Maoist violence, have already agreed to member the pool, which will function as a separate insurance entity. It will insure damages resulting from civil commotion, sabotage, malicious act, strike and riots, apart from terrorism-generated losses.
The newly endorsed regulation, among others, has asked member companies to deposit the premium mobilised for the purpose in the pool that will have an initial financial size of Rs 100 million. The government would be contributing Rs 50 million, while insurance companies would be contributing the remaining amount.Posted on: 2003-12-12 04:15
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