Reposted from Kuensel
By Nidup Gyeltshen
The royal insurance corporation of Bhutan limited is working on a proposal to take over the management of rural life insurance scheme, which was entirely managed by the government.
Recently, it signed an agreement with the government to take over the rural housing insurance scheme, which it was managing for the government.
RICBL taking over the social security scheme means the premium rates will be jacked up, so that it is sustainable to the company, but the sum insured, which is the amount paid out in the end, will also be enhanced, insurers said.
As of today, the gewog administrators and gup collect the insurance premiums, which are submitted to the government that pays the compensation when death occurs.
The RICBL is not at all involved in the scheme.
The chief executive officer of RICBL, Namgyel Lhendup, said, premium rates as of today were very low.
Today, an insured individual, who must be above eight years old, pays Nu 45 annually, and during time of death receives Nu 15,000.
RICBL’s executive director, Sonam Dorji, said that these amounts did not even cover one-tenth of the total death expenses. “We want to make sure that the new scheme covers at least 50 percent of the total death expenses,” he said.
While it is yet to be finalised, Sonam Dorji said that the sum insured is expected to be around Nu 30,000 for those who die above the age of eight, and Nu 10,000 for those who die below the age of seven.
The new scheme will have no age bar.
“We’re working on the premium rates, and for that we need to study the life expectancy and mortality rates,” Sonam Dorji said. “We’ll also have to consider the affordability and the sustainability issue of the scheme.”
Similar to the rural housing insurance scheme, the government will only provide a fixed subsidy amount for the rural insurance scheme as well. In other words, the government will contribute a certain share of the premium.
Unlike the housing insurance scheme, where one household paid only one premium, the life insurance scheme means every individual in the house have to pay the premium.
“We’re therefore concerned about the affordability by the people, because premium rates will have to be increased, to keep scheme sustainable,” Sonam Dorji said.
By taking over the life insurance scheme from the government, RICBL intends to strengthen the social security scheme in the country and increase insurance penetration in the country.
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