Crops, Livestock, Poultry Insurance in Nepal

The Insurance Board introduced a directive that makes it mandatory for all non-life insurance companies to come up with insurance products on crops, livestock and poultry. The Crops, Livestock and Poultry Insurance Directive, which came into effect on January 14, is expected to provide relief to individuals and firms engaged in agriculture business, while paving way for banks and financial institutions to channel more funds into the agriculture sector, which has remained neglected for long. Following introduction of the directive, the Board, the insurance sector regulator, also introduced six insurance products on paddy, vegetables, potato, poultry (chicken and duck), fruits (orange and juanr, a citrus fruit) and livestock. In the initial phase, insurance companies will launch policies on these products only and will gradually provide cover to other crop, livestock and poultry products. As per the directive, crops insurance will cover production cost involved in farming of all crops and horticulture until the time they are ready for harvest. This includes cost involved in purchase of seedlings and fertilizers, and labor charge, among others. However, insurance coverage will not be provided in case plantations are done on less than eight aanas (2,738 sq ft) of land in hilly region and one kattha (3,645 sq ft) of land in the Terai, the directive says. On the other hand, livestock and poultry insurance will provide coverage to all types of cows, oxen, buffalos, yak, female yak, sheep, goat, swine, chicken and ducks based on sum insured fixed by the Insurance Board. For instance, maximum sum insured for high-breed dairy cow and buffalo are Rs 150,000 and Rs 125,000, respectively. This means those who have purchased cow and buffalo insurance policies cannot claim for more than Rs 150,000 and Rs 125,000, respectively. Similarly, sum insured for water buffalo and ox raised for reproductive purpose has been fixed at Rs 70,000, while insurance coverage for water buffalos and oxen used for transportation purpose has been fixed Rs 40,000. Likewise, sum insured for sheep and goat raised for meat production cannot exceed Rs 8,000, while maximum insurance coverage for different types of chicken and duck have been fixed at Rs 1,200 and Rs 700, respectively. Based on the need, farmers can purchase crops, livestock and poultry insurance policies from any non-life insurance company by paying an annual premium equivalent to five percent of the sum insured, except in the case of commercial poultry, for which an annual premium equivalent to six percent of the sum insured has been fixed. This means, if the worth of the product that is being insured is fixed at Rs 100,000, a premium of Rs 5,000 and Rs 6,000 has to be paid per year, respectively. “But in case the insured plant, animal or fowl has a life span of less than a year, then the premium amount will be calculated based on production cycle,” says the directive, which allows insurers to extend up to 15 percent of the premium amount as commission to agents who sell these policies. The directive also says claim settlement process should be wrapped up within 30 days of first reporting the event.

This news item is originally published in myrepublica dot com on January 6, 2013