Jun 09, 2017

Rs. 14 billion loss in disaster re-insurance coverage! Featured

The government is faced with a big problem in paying compensation for the people and properties affected by the recent floods and landslides as the Rs. 15 billion re-insurance coverage for natural disasters under the National Insurance Trust Fund has not been renewed.

When Colombo city was flooded in May last year, the NITF was able to obtain Rs. five billion to pay the compensation without any problem, and the Disaster Management Ministry was given Rs. 3.9 billion to make the payments.

Notifications of expiry, grace period ignored

The NITF had been informed repeatedly by the re-insurance firm that the natural disaster re-insurance for this year was to expire on 31 March and asked to renew it.

Previously, the premium was Rs. 500 million, but this time, the payment had been raised to Rs. 816 million on the basis the re-insurance firm had paid Rs. five billion for flood victims last year.

However, the government had been unable to renew the re-insurance coverage as a top government minister had been influencing the subject minister to award it to a Singaporean re-insurance firm.

It has come to light later that a family business of that minister has been re-insured by the same Singaporean firm.

A grace period given to renew the re-insurance had been ignored.

Supplementary estimate

Due to this tug-of-war by the two ministers, the NITF has lost an opportunity to secure Rs. 14 billion to compensate the affected.

Therefore, a supplementary estimate will have to be submitted to parliament to make the payment, government sources say.