News Non-Life23 Aug 2018

Nepal:Foreign insurers threaten pullout if helicopter rescue fraud remains uncurbed

23 Aug 2018

International insurance companies have set a 1 September deadline for Nepal to clamp down on fraudulent helicopter rescues of tourists or they will stop giving cover, reports AFP citing industry sources.

An AFP investigation earlier this year revealed a lucrative insurance racket around pressuring hikers in the Himalayas into unnecessary rescues.

Multiple tourists are crammed into a single chopper, but each insurance company gets billed for the flight. The trekking operators, lodge owners, helicopter companies, and even hospitals pocket the extra cash.

The fraud became so acute that Nepal's government, which relies heavily on tourism, launched a probe in June in a bid to keep insurers from pulling out altogether.

AFP has since learnt that an alliance of insurers from Britain, Australia and New Zealand have warned they will stop providing cover unless concrete action is taken.

Mr Danny Kaine of Traveller Assist, a UK-based company that represents international insurers in Nepal, confirmed the deadline and said, "They are essentially trying to reduce their massive losses from the past two years.",The helicopter scam has become such a money-maker that some budget tour operators are luring customers by selling treks at below cost price - knowing they can make enough profit on kickbacks when the tourists are evacuated.

In some cases, trekkers themselves are in on the scam, opting for a quick ride home billed to their insurance, while others are being scared into rescues for minor illnesses. 

Insurers are demanding that all helicopter rescues be pre-approved and capped at US$4,000 (S$5,400) per flight. They also want an inquiry into business permits after it emerged that some trekking outfits, charter companies and helicopter owners were operating with forged documents.

A mass pullout by the insurers would seriously dent Nepal's vital tourism industry, which the government is banking on to revive the economy. Ministers have set an ambitious goal of attracting two million tourists a year by 2020 -- double the number who visited last year.

The tourism ministry probe launched in June found there had been more than 1,300 helicopter rescues in the first five months of the year, costing insurers over $6.5m.

The investigation, covering 36 trekking companies, 10 helicopter companies and six hospitals, also uncovered evidence of guides putting baking soda -- a laxative -- in food to give tourists diarrhoea and then pressuring them to be evacuated by helicopter.

"We've heard of cases where tourists have been made deliberately ill," Mr Prakash Sharma Dhakal, the official who led the probe, told AFP.

As a result of the probe, he said, action was being proposed against 15 companies.

Industry insiders warn that the investigation has revealed only the tip of the iceberg.

"I know that there are some companies that are involved in the fraud that they haven't even spoken to," a source close to the investigation told AFP.


 

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