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Nepal: Informal market in insurance emerges

Source: Asia Insurance Review | Jun 2016

The lack of legal provisions has led to an increase in informal insurance, raising the risk of unpaid compensation for damage to property, according to National Planning Commission (NPC) Vice-Chairman Yubaraj Khatiwada.
   Mr Khatiwada said that many cooperatives had been insuring crops and livestock without authorisation. They collect insurance premiums from their members in the name of risk sharing, mainly in the farm sector, reported the Kathmandu Post.
However, such cooperatives neither maintain an insurance fund nor have reinsurance coverage. They may be unable to pay compensation if harvest and livestock losses are very high, he said. 
   According to him, the government has planned to bring such activities under a legal framework through a new Cooperative Act. However, the proposed law has been pending with the Cabinet for the last four months.
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