IPPAN and NIA reach agreement on hydropower insurance premiums

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The Independent Power Producers’ Association, Nepal (IPPAN), and the Nepal Insurers’ Association (NIA) have reached an agreement regarding hydropower insurance premiums, setting a positive course for the future. The officials at NIA visited the IPPAN Secretariat on Wednesday to discuss the premium dispute, and both parties achieved consensus through fruitful deliberations.

To ensure a scientific and fair evaluation of insurance premiums, it has been decided to form a committee with three representatives from each side and two expert members. This committee will meticulously assess the appropriate premium rates for hydropower insurance. Both NIA and IPPAN have pledged to honor the recommendations of this committee, regardless of whether they indicate lower or higher premiums compared to the current rates.

During the discussion, Chunki Chhetri, President of NIA, acknowledged the challenges faced due to the reluctance of reinsurance companies to reinsure Nepali hydropower projects. While expressing support for the development of the energy sector, Chhetri emphasized the need to strike a balance between seeking profit in private sector businesses and ensuring reasonable insurance costs.

President Ganesh Karki of IPPAN emphasized the importance of considering the proportionate risk coverage with any changes in premium rates. He voiced concerns about insurance companies increasing premiums while potentially reducing the risk coverage, which is detrimental to the industry.

Mohan Kumar Dangi, Senior Vice-President of IPPAN, asserted that the promoters rejected the previous premium, and under any circumstances, they will not accept a new premium rate. Uttam Blon Lama, Vice President of IPPAN, advocated for comprehensive risk coverage, drawing parallels with entire risk insurance for car owners, even in the event of an accident. He also raised concerns about the clarity regarding the minimum or maximum time to receive payment after making a claim, while insurance premiums are being reconsidered.

Ashok Khadka, CEO of Neco Insurance, informed that a proposal to raise the hydropower insurance premium from Rs 2 to Rs 7.50 per thousand has been forwarded to the Nepal Insurance Authority. To avoid adverse impacts on hydropower promoters, he suggested that the premium could be maintained at Rs 5.50 based on a comprehensive analysis of global premium trends. He proposed establishing a committee to determine the rates, advising IPPAN to continue with a premium of Rs 2 per thousand until a decision is reached.

In the past, after the insurance committee decided to unilaterally increase the insurance premium, IPPAN opposed it. When the insurance authority tried to increase the premium a little while ago while rejecting the previous premium, IPPAN also warned not to increase the premium without discussing it with the concerned parties.

Source: Republica