Thursday, June 5, 2014

Insurance Providers Without Borders, Anyone?


Given that the latest spate of climate change related catastrophes affecting largely uninsured poor countries, should commercial insurance based policies be made available to these people?

By: Ringo Bones 

It is a quite a sobering thought that over 90 percent of the surviving victims of Typhoon Haiyan that hit Tacloban City in Leyte of the central part of the Philippines back in November 8, 2013 don’t have any kind of insurance policy. A little over six months after the tragedy, a majority of the survivors are still scrimping and saving their own hard earned cash to fix their own homes and small business establishments since they don’t have any insurance payouts to collect and use to fix their own homes damaged by the most powerful typhoon on record so far to ever hit landfall. 

Trevor Maynard of Lloyd’s of London says current models used to predict disasters use historical data and the insurance company’s latest actuarial studies have shown that hurricanes poses the greatest damage in terms of payout costs when it comes to insurance policies tailored to meet latest climate change related catastrophes. Given that the world’s major insurance providers dismiss providing insurance services for the world’s poorest uninsured since such business schemes are “not economically viable” from their perspective, could insurance providing schemes based on Muhammad Yunus’ microfinance banking be a solution? 

Even though various kinds of microfinance insurance schemes already exists, creating one as a basis for a “insurance companies without borders” that would provide insurance coverage of climate change related catastrophes for the world’s poorest could solve the problem of typhoon and flooding victims unable to start over after their homes and businesses, livestock, farms, etc. are destroyed. Such solutions are likely to succeed given that they are congruent to existing conventional insurance underwriting schemes – except they are underwritten by a local microfinance banking scheme. 

Wednesday, June 4, 2014

The Uninsured Mount Everest Sherpa



Should the Nepalese government provide adequate insurance for the Mount Everest Sherpas? 

By: Ringo Bones 

Given that it was the tragic April 18, 2014 avalanche that shed light that probably all Mont Everest Sherpas are uninsured, the rest of the world now wonders why the Nepalese government has failed to provide adequate insurance to the Sherpas that assist foreign mountain climbers climb the world’s highest mountain. After all, Nepal earns millions of dollars in annual climbing fees from Everest alone. For the 2014 season, the Nepalese government had issued climbing permits to 734 people including 400 guides for 32 expeditions. The world has now been speculating whether the millions paid in climbing permits had been simply pocketed by Nepal’s political elites – rather than being set aside as an insurance / compensation fund for Sherpas.
Immediately after the tragic April 18, 2014 avalanche, the Nepalese government offered US$400 to each of the 13 victims’ families as a way to pay off “funeral costs.” Unsurprisingly, none had been pleased by the government’s offer. 

The average annual income in Nepal is around US$700 – while a Sherpa working for a typical 3-month season earns US$4,000. Despite earning more than the average Nepalese, being a Sherpa is a hazardous profession – a lot can happen to one hauling gear up a mountain for international climbers waiting at the Everest Base Camp.  

Mingna Sherpa said in an interview:”We love the mountains…but a mountaineer could climb in peace if he knew that his family will be taken cared of if something bad happens to him.” Nepal’s Deputy Prime Minister Prakash Man Singh said the government has been working to help the Sherpas, but unless the Nepalese government establish an effective social security for the Sherpas, international climbers could be put-off climbing Mount Everest via the Nepalese side because the government has scant social responsibility due to its inability to provide a well-underwritten insurance policies for the Everest Sherpas.