Global insurance conference kicks off

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Finance Minister Yubaraj Khatiwada addressing the inaugural session of the AIRDC conference, in Kathmandu, on Tuesday. Photo Courtesy: Nepal Insurers' Association

Kathmandu, September 25

The two-day conference of Association of Insurers and Reinsurers of Developing Countries (AIRDC) with the theme of ‘Building Financial Resilience – Disaster Risks Financing and Insurance’ kicked off in Kathmandu, today.

 

Addressing the inaugural session, Finance Minister Yubaraj Khatiwada, said that climate change provides a lot of shocks to the society, to the economy, to the environment, and also happens to directly or indirectly influence the insurance business.

“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. “I understand that all risks cannot be financially insured but there are definitely risks which could be insured and insurance industry all over the world thrives on that.”

He further talked about the growing financial integration across the world and the kind of systemic risks we face from this interwoven financial world and urged insurers, regulators and reinsurers from various countries to brainstorm to develop a good strategy to cope with the challenges.

“Natural disasters pose a big threat to the economies of the AIRDC in terms of fatalities and economic losses. Given the impact of the natural disasters in those economies, the need of risk management as an alternative to fully post-disaster response becomes paramount,” according to the
finance minister.

“Risk management includes not only the investment in high-return risk reduction instruments, but also in instruments that provide post-disaster cover for the recovery process. Such financial instruments not only provide much needed post-disaster financial resources, but also contribute importantly for the protection of society,” he added.

Citing an example of the devastating earthquake of April, 2015, Khatiwada said that due to lack of adequate insurance protection, victims had to depend on the government for relief and reconstruction in the aftermath of the disaster.

“To meet the resources, the government relies on cutting other expenditures, tax cuts and borrowing and donor contributions,” he reiterated. “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.”

Also speaking at the inaugural ceremony of the conference jointly organised by AIRDC, Nepal Insurers’ Association (NIA) and Insurance Board, Yassir Albaharna, president of AIRDC, said that the risks and problems faced by the member countries of the association are common and the AIRDC aims at helping them to address the problems collectively.

The two-day long conference that has brought over 400 delegates including 88 from 20 various countries aims to discuss on how to build financial resilience, disaster risk financing and insurance.

Chiranjibi Chapagain, chairperson of Insurance Board, said that the effects of catastrophic risks are more severe in the underdeveloped or developing countries. “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,” he said. “Hence, 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.”

Dip Prakash Panday, president of NIA, said that insurance companies play an important role in protecting people from the financial losses resulting from catastrophic events.

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