Govt reluctant to make insurance mandatory in building codes

Dr. Ravindra Ghimire

The government has shown reluctance to make insurance mandatory while building new house.

Though the government revised building codes following devastating earthquakes of 2015, it did not include the measure in the codes that can protect people from financial losses if the house is damaged by natural disasters like earthquake. Encouraging people to insure their house was not in government’s priority while revisiting its building codes, say insurance experts. “The recent earthquakes showed that people without insurance coverage are exposed to huge risk. It is the responsibility of the government to save people from this risk,” Rabindra Ghimire, an insurance expert, said.

Though bank and financial institutions (BFIs) sell home loans and insurance as a package, most of the houses are uninsured, making people vulnerable to financial losses in case there is any damage to their house.

“There should have been a provision in the building codes that makes it mandatory for the people to insure their house from risks like fire, earthquake and other calamities. Spending few thousand rupees for insurance should not be a big deal while building house with investment of millions of rupees. Insurance protects them from any financial losses borne out of damages in the house,” he Ghimire added.

Government officials, however, contend that they cannot make it mandatory for the people to get their house insured during construction.

“The government cannot dictate people to insure their house. It’s up to them to protect themselves from any financial loss,” Purna Chandra Bhattarai, joint secretary at the Ministry of Federal Affairs and Local Development -- the agency which drafted the building code, said.

“Introducing such requirements would be tantamount to promoting commercial interest.”

However, many say that it is better for the government to introduce a provision requiring people to get the insurance earlier rather than providing financial relief to people later on. “The insurance should be a part of the risk management plan of the government. As part of the plan, it has already introduced provision like earthquake resistant building, requirements for column size, beam size, outer wall, partition, reinforcement detailing, and wider roads, among others. The insurance requirement will protect people from any uncertainty,” said Ghimire.

He also said that the government should provide subsidy to people in rural areas to get their home insured.

According to Post-Disaster Needs Assessment (PDNA), over 505,000 private houses were fully damaged by the earthquakes of 2015 and around 279,000 houses suffered partial damages. With majority of the houses uninsured, the government has decided to extend Rs 200,000 as housing grant to people whose house was damaged in the earthquake.