The Price of Risk
Regrets are costlier than actually owning an insurance policy. That is why purchasing insurance policies have become very important to transfer risks away from individuals, households and corporations.
A small amount of money spent may in advance save a huge economic losses in the future, serves as a preventive measure of risk management. Here are some of the important guidelines to protect assets and to ensure the financial stability through insurance:
- Identify probable loss exposure
CEO at Himalayan General Insurance Co. Ltd, Mr. Sushil Bajracharya, says that before transferring the financial risk to an insurer, it is recommended that one obtain some basic information about the wide spectrum of risk exposures for individual or corporation. For instance some of the more prevalent risks exposures are: property loss exposure, and crime loss exposure (robberies, burglaries, theft, fraud and embezzlement). What that means the risk factors should be identified first. All this information can be obtained with the help of an agent or by directly visiting the proposed service provider. If you need to deal with an agent, seek for someone competent and reliable; as there is always a chance for falsification or misrepresentation of information.
- Analyze loss exposure
Once the probable loss exposure has been identified, the frequency and severity of economic loss needs to be analyzed. Basically, it involves analyzing how many times the loss may occur within certain period, and how large will be the size of the loss within the same period. Further, it helps to determine the right amount of policy to own.
- Select the best service provider for treating loss exposure
Currently, there are seventeen general insurance companies operating in the market. Before selecting a company, it is advisable to compare the products and services offered by these companies. More importantly, the claim settlement processes should be studied carefully. Further, the government’s policy on insurance also plays a vital role on how it is received in the public. For instance, if there is a provision of subsidy or monetary reward as provided through the micro insurance policy (agro based insurance), then the tendency of owing insurance policies will certainly be high irrespective of individual disposal income.
Simplifying Claim Settlement
In case of life insurance:
- Life insurance policy holders are entitled to receive the insured amount after the death of the insured, or upon expiration of maturity period, whichever is earlier.
In case of non-life insurance:
- The insured are entitled to receive compensation when the loss is occurs due to insurable risk. But not all insurance claims may be eligible for settlement.
- The duration of claim settlement usually depends on the availability of valid documents. If valid documents are furnished timely, then there is a provision of spot payment. But, depending upon the situation, it might take 15 to 30 days for claim settlement. Hence, clients are equally responsible for timely claim settlement.
- Always safety first. What that means is that you should first call the police not the insurance company, in order to ensure safety and prevent additional loss.
- Once, the notification has been given to the police, claims can be communicated through an app as well. Companies like Himalayan General Insurance have already launched their apps to facilitate the claim procedure.
- In case of third party insurance, no negotiation should be made between two parties. If made, it could be constructed as breach of contract.
1. Insurance is not only a means to protect from financial loss but also a very important tool to maintain personal health and peace of mind.
2. Fire, motor and marine insurance businesses are subject to imply tariff rate, which is prescribed by the Beema Samiti (Regulatory Body). So, there is no variation in the premium rates between service providers.
3. All general insurance businesses excluding fire, motor and marine insurance are subject to non-tariff rate (the rate prescribed by the company itself). Under this provision the risk factor, the relationship between service provider and the insurer, and the business volume serves as a basis for determining the premium.
4. Nowadays, many banks as corporate agents for insurance companies, are jointly selling insurance policies, both life and non-life. There is usually no grace period available for non-life insurance policies.