Insurance, anywhere is considered a profitable business. However it is not the case of Nepal. According to the cover story of February 2013 issue of New Business Age, the aviation insurance in Nepal is collecting impressive premiums but failing to register similar profit. One of the reasons stated is high premium paid to the foreign reinsurer companies. If a domestic reinsurance company can be brought into the scene, the money that is going abroad can be saved. 

 

Another probable reason for the aviation insurance to become a loss making business is the high rate of accidents under the Nepali sky. The frequent air crashes lead to higher compensation payment to the insured. This also increases the premium to be paid to the reinsures who have vowed to bear all the risks. It is obvious that whenever there is higher risk, the reinsurers will seek higher premiums. So, ultimately the insurance premium for the aircrafts flying into the high mountain areas becomes high. Unless, the high risks of the aviation industry in Nepal are managed, profitable aviation insurance seems to be a far cry. For that, more safety measures need to be undertaken by the airlines as well as better technology for navigation and other systems must be in place which helps to minimize the air accidents. 

 

Uttammani Dhungana, Sagarmatha College