With recent regulation brought by the government in Nepal to make third party insurance mandatory for every vehicle, we are seeing more and more people getting their vehicles insured. However, many are still puzzled with the fact how a non-life insurance works and what benefits that they can get from such kinds of insurance. So, we decided to have a conversation with Mr. Bisswo Ram Timila, CEO at NECO Insurance to clear the confusion surrounding auto insurance and got to have insight on the insurance industry. Read on to find out what Mr. Timila has to say about the budding insurance industry in Nepal.

CAN YOU BRIEFLY EXPLAIN WHAT AN AUTO INSURANCE IS AND WHAT ARE THE DIFFERENT TYPES OF AUTO INSURANCE?

When talking about auto insurance, there are various types of automobiles such as two wheelers, four wheelers, commercial and private which means there will be various kinds of insurance as well. When people go for insurance, there are comprehensive insurance and third-party insurance. As mentioned earlier there are various types of automobiles but specifically there are two types of insurance that I have just stated.

IT’S PRETTY EVIDENT THAT THE AUTO INDUSTRY AND THE INSURANCE INDUSTRY ARE CLOSELY RELATED. CAN YOU GIVE US A BRIEF INSIGHT ON THE CORRELATION BETWEEN THE TWO INDUSTRIES?

As of recently, we can see a growth in the insurance industry and much of it is from the auto insurance segment. This also due to the regulations brought by the government that requires mandatory third-party insurance for any kind of vehicle which why there seems to be a close relation between the two industries. We can even say that auto industry has been a major part of any insurance company’s premium income; the premium collected from the auto insurance is up to 50% of the total collection.

WITH THE GROWTH IN AUTO INDUSTRY, HOW WELL DO YOU THINK HAS IT HELPED IN THE DEVELOPMENT OF INSURANCE INDUSTRY?

Of course, the growth in auto industry has been affecting the insurance industry in a very positive way. As I have mentioned earlier, 50% of the premium collected is through the auto segment. We can say that auto industry is supporting the insurance market in a very substantial manner. Overall, auto sector has been some kind of a back bone to the insurance industry and we believe that the growth in the auto sector will definitely help in the growth of the insurance industry. Its somehow like both the industries go hand in hand and complement each other.

CAN YOU STATE THE IMPORTANCE OF AUTO INSURANCE AND WHY EVERYONE NEEDS TO GET ONE?

I must say that auto insurance is very important, but here in Nepal, the government has only made third-party insurance mandatory, so, it hasn’t been in effect to its full extent. But still, it’s a good thing that at least the third-party insurance is mandatory. Let’s take a scenario for an instance, if someone riding a motorcycle gets hit and needs medical treatment, the insurance can over up to 8 lakhs and will save the rider from all these expenses. Also, you see premium 4 wheelers that cost crores and what if someone just hits the vehicle and damages it, they would be liable to immense expenses. But thankfully, four-wheeler insurance can cover up to 50 lakhs. By stating that we believe that insurance truly protects owners or drivers from such damages therefore, it is important for everyone to get an auto insurance.

WHERE DO YOU THINK NECO INSURANCE STANDS IN THE MARKET IN TERMS OF AUTO INSURANCE?

In today’s date, NECO’s premium growth is thanks to the auto industry and as of right now we rank 4th in the insurance industry. This is in terms of non-life insurance segment of the industry by premium figures. Up till the last third quarter, we made a profit of 21 crores and our premium collection will also amount to 160 crores. In accordance to that, all the claims have been settled from our side which has led us to have a substantial amount of growth in the industry. So, we believe that NECO is indeed building a status for itself in the insurance market.

WHAT ARE THE GOALS AND PLANS THAT NECO IS LOOKING FORWARD TO IN THE AUTO INSURANCE MARKET?

In the context of auto insurance, NECO is the first to introduce on the spot payment. It is normal in foreign countries, but it’s a first time that it has been implemented in Nepal. On the spot payments basically mean that if there is an accident, the scenario is taken into consideration and the settlement is done at the moment with the payment being made within 24 hours of the incident. This is the same philosophy that we are trying to bring in Nepal, so if there’s an accident, one of our personnel will reach the spot and investigate the incident and every thing will be settled on the spot and try to deliver the cheque on the spot. So, as of now, we plan to staple this initiative in the auto insurance market.

WHAT DO YOU THINK NEEDS TO CHANGE FOR THE AUTO INSURANCE INDUSTRY IN NEPAL TO GROW?

The present regulation brought in by the Nepal government to mandatorily get a third-party insurance while owners pay their taxes for their blue renewal hasn’t been fully effective. In my opinion, if this rule is implemented to its fullest, I believe that the growth in premium would be even higher compared to what it is right now. Also, we still can’t see a trend where owners go for comprehensive insurance for their vehicles. Comprehensive insurance is mostly only done when the vehicle is financed for but other than that there in only a minimal amount of people who go for this kind of insurance. In the present context, with all the premium vehicles, if there is a certain damage to the vehicle then they will have to pay a substantial amount for the repair, having a full insurance of the vehicle can save them from a lot of these expenses. So, basically people have to realize the importance of insurance and then only can we see a more substantial growth in the industry.

THE CONCEPT OF INSURANCE IS FAIRLY NEW IN THE CONTEXT OF NEPAL IN TERMS OF THE MANDATORY THIRD-PARTY INSURANCE, HOW DO YOU THINK THE GENERAL PUBLIC IS TAKING IT?

I believe that the general public has positively received the mandatory law of insurance. It’s a good initiative that the government has been indulged in making such regulations and they indeed have played a very important role in developing the present scenario of insurance industry. But still, the public needs to realize the importance of having insurance and shouldn’t take it lightly.