Nepal earthquake to expose developing nations’ low insurance penetration

April 28 2015 by InsuranceAsia News Staff

Due to the low insurance penetration rate in Nepal, global insurers with a presence in the country are expected to shoulder just a fraction of the US$2bn in economic losses caused by the massive earthquake last Saturday.

According to Kinetic Analysis Corp, the event in Nepal will expose the fact that insurance penetration in the country has been woefully low, as with most developing countries that do not have mature insurance industries.

A report released by the Insurance Information Institute showed that spending on property-casualty coverage, such as auto and home insurance, in Nepal is less than US$4 per capita annually.

In the US, the spending is almost US$2,300.

In 2013, insurers in Nepal collected about US$277m in premiums, mostly from life coverage. In India, the earthquake’s damage cost about USD800m but less than 1% of the losses was covered by insurance.