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Tuesday, 6 June 2017 01:00 - - {{hitsCtrl.values.hits}}
By Chathuri Dissanayake
The National Insurance Trust Fund will have to cough up their own funds to pay compensation for property damage suffered during the recent floods and landslides as they had failed to sign the reinsurance agreements which lapsed two months ago.
The Government has announced compensation up to Rs. 2.5 million for a fully damaged or partially damaged house under the National Natural Disaster and Emergency Relief Insurance scheme introduced in April this year. However, NITF has not been able to sign the reinsurance cover which lapsed on 1 April.
Cabinet approval for the procurement process was granted for reinsurance with Renaissance Re, Singapore acting as the lead reinsurer with a total cover of Rs. 15 billion, only on 26 May, a day after the disaster struck.
“We will be paying from the funds available as the reinsurance scheme will not cover these claims,” NITF CEO Sanath De Silva told Daily FT.
The Government is to pay Rs. 816 million as the premium for the new reinsurance, which is up from Rs. 426 million.
NITF has to follow the Government procurement procedure, which takes over three months. The process started in January, he said.
“There are clauses that say you have to wait for 45 days after the procedure commences. And the reinsurer needs nine months of data. There are practical limitations within the process. So there is a technical problem in the regulations in the country. From the NIFT point of view we have no control over the matter. Those periods should be allowed whether you like it or not,” he said.
However, De Silva is confident that all claims can be met from NITF funds alone.
“We have enough money. There will be a dip in the profit but it will not affect profitability in the future. Even last year we paid out Rs. 9 billion. We had a net charge of about Rs. 3.2 billion. But we made a profit and contributed Rs. 3.2 billion to the Treasury,” he said.
NITF has already given Rs. 150 million to pay Rs. 10,000 per household as an advance on the compensation for property damage. The paper yesterday reported that claims on damage to houses and small businesses inflicted by the floods could add up to Rs. 825 million according to initial assessments by NITF.
According to the latest report of the Disaster Management Centre (DMC), 2,788 houses have been fully damaged in the floods and landslides while another 18,413 have been partially damaged. The disaster killed 213 people and injured 147. The adverse weather affected 14 districts and 683,831 people.
