The government intervened in the foreign employment insurance market on Monday and fixed different premium rates based on insurance policy´s tenure and age of applicants to create uniformity in the prices of policies sold by different insurers. 

Premium rate on foreign employment insurance policy with one-year tenure, for instance, has been fixed at Rs 1,025, Rs 1,500 and Rs 3,500. These rates apply to those who fall in the age group of 18-35, 36-50 and 51-64 respectively. Those who fall in the same age group but are purchasing policies with two-year tenure need not pay a premium of more than Rs 1,825, Rs 2,500 Rs 5,000. And those buying three-year policies will be charged no more than Rs 2,430, 3,400 and 6,600, says an Insurance Board (IB) statement.

The new premium rates, which have to be paid only once at the time of purchase, will come into effect from Tuesday.

Foreign employment insurance policies were introduced in the market in 2007 following promulgation of the new Foreign Employment Act, which makes it mandatory for the people leaving the country for employment purpose to be insured. 

Currently four out of a total nine life insurance companies--Prime Life Insurance, MetLife Alico, Nepal Life Insurance and National Life Insurance--are selling foreign employment insurance policies. These policies are sold to people leaving the country for employment purpose through legal channel and provide coverage of up to Rs 500,000 in case of death, permanent disability or partial disability.

But lately the government had found there was no uniformity in premium rates of these policies, although all the firms were providing coverage of Rs 500,000.

For instance, premium rate on foreign employment insurance policy with one-year tenure at one company that Republica talked to was Rs 1,053, while the premium rate on the same policy at another company was Rs 1,105. This was the same for policies with two and three-year tenure. 

When this practice was brought to the knowledge of Prime Minister Baburam Bhattarai, who also holds the labor ministry, he called a meeting of labor ministry, foreign employment association, Foreign Employment Promotion Board, the IB and insurance companies and asked them to immediately settle the issue, an Insurance Board source told Republica.

During the meeting everyone acknowledged that the difference in policy rates was not significant. But the government was of the view that insurance companies should not try to extract even small amount from people who go to work abroad selling or mortgaging their properties, the source said.

To settle the issue once and for all the PM then instructed the IB, the insurance sector regulator, to coordinate with stakeholders and come up with a uniform price. Later, after a couple of rounds of meetings, IB officials and insurers settled on the rates that were announced Monday.

Benefits of New Insurance Policies

• Compensation will be provided even if the cause of death is suicide.
• Policy holder or beneficiary of policy holder can claim for compensation amount even if the policy holder was in the home country at the time of accident
• Beneficiary of policy holder can claim for compensation if the policy holder dies within 183 days (6 months) of arriving the home country
• Policy holder will be eligible for permanent disability compensation amount if the person does not recover from permanent disability within a period of 365 days.
• A sum of Rs 100,000 to be provided for transporting dead bodies.
• Another Rs 15,000 to be provided as cremation fee.
• Policy holder who are temporarily disabled will be provided two percent of compensation amount per month.
• Published on: 18 October 2011 | Republica