Global terrorism has both helped and hindered the insurance business, and the same goes for Nepal where we face our own homegrown insurgency. Dip Prakash Pandey, General Manager of Everest Insurance, talked to Nepali Times about the impact of 9/11 in the local context, Indian insurance companies and future trends.

Nepali Times: How has terrorism affected the insurance business?
Deep Pandey: In a way, it was a blessing in disguise for the industry. Before 9/11, most people lacked awareness about the necessity of insurance. So there has been 20 percent growth and there is potential for more, mainly because the aviation industry is rebounding. New products are coming in. Our own company is bringing in new products. For instance, we see a huge potential for insurance gains in Nepal with regard to international adventure tourists, trekkers and mountaineers who come here.

The government formed a pool to which insurance companies have contributed Rs 50 million. If this pool is developed in the right way, we can work to create another reinsurance company to serve the poor. International insurers exclude the risk of terrorism, so we have not been given such coverage. But, we managed to find the reinsurance support from the General Insurance Corporation of India. We studied the market and past records of losses before fixing the present rate.

What kind of property do people usually insure in Nepal?
Vehicles, because the main growth has been in automobiles which is financed by banks and other financial institutions. There is some retail insurance, but it hasn't shown much growth. The area we could have a major premium volume is still out of our reach: home insurance. Very few people insure their homes. It helps now that bank-financed home loans are coming in.

Are you worried about the arrival of Indian insurance giants?
As per the law, any property in Nepal has to be insured under a company registered in Nepal. So the Indian involvement has been in life insurance policies.

How clean is the business?
The chances of malpractice are always there, but it is being controlled because of competition. With so many companies coming up, everyone wants to be the best and lure more clients. There are cases of bad deals that usually happen in marine transit but such incidents are rare because of communication and travel trade development. Foreign insurers provide transit cover only till Kolkata, now people buy coverage from warehouse to warehouse. This has pushed up the premium volume for the Nepali insurance industry.

Do you think the recent railway agreement between Nepal and India will check problems of pilferage?
I feel chances of losses are minimised as long as the insurance industry exists. The premium volume should come down and the ultimate beneficiaries will be the consumers.

What percentage of your business is aviation?
At present Everest Insurance does Rs 300 million premium and around 45 percent of our business is aviation. We started in 1994 and in a decade we are number one according to the Bima Samiti. Last year we settled three claims amounting to $4.5 million.