The insurance policy providing a financial security to the individuals from the probable financial loss due to the consultancy provided by the occupational engineers is the Engineering Occupational compensation Insurance policy. After the 4th amendment of the public procurement act on poush of 2073, while buying such consultancy service, within the three days of contract, compulsorily, a copy of this insurance policy should be presented before service receiver by the service giver as per the legal enactment first of all this type of insurance contract after being approved by the insurance board was sent to all general insurance companies for the execution. Since it is a new type of insurance contract, regarding the task execution in the practical ground, some problems are probable to be observed as well as for the successful operation, some technical challenges do exist. For it, the timely solution of these challenges with the proper discussion between the insurance board, insurers, insurance agencies, surveyors, media personnel for reaching the final result by the efficient utilization of the nation’s resources is the core responsibility of all.
Engineering consultancy is one of the head consultancy line engaged over giving its service to the nation. Based on their consultancy, various infrastructures, productions as well as the development works are levelled. But still, there are still many chances, where due to various reasons including the technical errors knowingly or unknowingly, the public sector can face the greater financial loss. For compensating these financial losses , various insurance contracts are formed in the insurance sectors .Due to the weakness in such consultancy , there are active places that in private as well as the public sectors operating companies can turn bankrupt overnight as well as may even lose their financial status .In that case , based on the study and investigation of the mistakes , weakness of both the service giver and the receiver , through the medium of the insurance , the give or take of compensation based contract is having the global access.
Today’s world is the world of specialization as well as the age of outsourcing. The lack of specialization in every sectors, subjects, will make it difficult to have the desiring outcome. It’s not possible to have someone with the specialization in all sectors, and it is beyond the imagination too.
In regards to the consultancies, seeking the expert advice from the consultancy for the sector, on which one lacks his knowledge with the maintenance of the quality in service deliverance is called the ingenuity. Because of various reasons, the consultancy of the consultant sometimes can be full of errors. In such case, it is easily estimable, what might be the result of executing such type of consultancy. While studying over the ways to be safe from this sort of errors, the concept of occupational compensation insurance contract was germinated and which is in practice in majority of nation in the world market. In this type of contract apart from the consultant and service receiver, the insurance company can also be benefited for the insurance premium.
In the world, the development infrastructures attract much investment. In such investment, for the errorful consultancy of the consultant can bring down the investment return of the investor undesirably. It is not possible for the consultant, who is paid just 2 to 5% percent of the billions costing plans to compensate the compensation of the loss too. To save the investment in such case because of the consultancy is a major issue right now.
Out of two pillars of economic development, insurance is one. By means of insurance, the compensation can be provided for the mistake of the consultant as well as the ruined economy can be relocated too. The news of reconstruction of the twin’s tower for its insurance and the indemnity for the natural calamities are often heard by us. Likewise, the compensation for the loss due to the error in the consultancy service of the consultant in the future, can be done by means of the insurance. In many countries right now, with the legal base this type of insurance have been in practice. Its sector and market is increasing day by day.
Practice in Nepal and the Legal phase
In Nepal, this nature of insurance contracts are seen to have been in use as per the record while accepting the assistance and as well providing the debt by the interested parties in the development. In that time, through the foreign companies the insurance contracts were issued. The knowers of it even the share the bitter experience of the increment in the cost of the project because of this.
The outflow of the foreign currency, the increment of the cost, difficult to make the consultant responsible in Nepal as well the desire to bring new product in Market of the Nepal Insurance Company made it possible to know the need of issuing this sort of insurance contract. There was the rising demand of this type of insurance from every sectors too.
Being a new subject how to reach the ultimate decision, how much premium to be levelled, the services of compensation, how to fix the conditions, under the formation of the immediate chairman a discussion was occasioned. In the gathering of Insurance board, insurer forum, insurer, Nepal Engineering consultant’s board, Surveyors to give a report, a right based technical board was formed. By studying the international practice, trend, law that board presented a report by the referral of Insurance Board. As per the report, reaching at the decision, by the acceptance of the insurance contract providing the unified similar service, conditions, and facilities as well as fixing the minimum percent of insurance premium too, there have been the market practice. After the amendment of the public procurement act 2064 in 2073 on poush, any public sector while buying the service from any selected service provider, within 3 days of the contract should present copy of this type of insurance contract copy and in case of failure to do so, and the agreement can be void too as per the legal system. This type of insurance contract is issued from the insurance board and sold through the insurer as per the practice.
The characteristics of the insurance contract and simple conditions
This insurance contract I normally for 1 year period. Thereafter, as per the requirement, it can be renewed. The policy amount (Amount of compensation) can be to the maximum of 10 Lakhs or the 3 times of the annul earning of the service provider, whichever is higher. The insurance premium for it is levelled at 0.5% of the policy amount. In the engineering consultancy service, owing to any carelessness, mistake, error, if any legal liability falls due over the insured, this insurance contract covers that liability. The insurance policy is designed on that basis. If the project of billions of rupees level then the compensation of the 10 Lakh cannot cover the cost .In that case, the insured has to pay some additional sum for the additional service. That means for any particular project, if the limit of the policy is to be extended, additional policy has to be purchased.
In what case the policy amount falls due to be paid to the insured? In the case where it can be proved legally that because of the mistake or error of the consultancy service, the insurer suffers the financial loss, then the liability of the insured can be established. Proved legally signifies the semi judiciary or the judiciary body (Court) injunction establishes the legal liability for the disbursement of the claim amount. In other general cases, based on the particular of the claims by the insurer and the survey report of the appointed surveyor, the compensation is justified. In case once issued insurance contract has to be cancelled, owing to various reasons, by deducting some particular amount, the remaining premium is refunded in general case. But in case of this engineering consultancy contract, this sort of facility seem not to operate. That means the contract can be cancelled but the paid premium is not refunded. In case of any problem regarding the legal and the practical phase, the insurance board shall account it and seek the way of the clarity.
Problems, Challenges and the way now
Being a new insurance , the manpower operating in it have not become fully used to it , which can be easily implied too .for the foreigners , this insurance contract have been in practice by the great consultants in Nepal and for the re insurance , the brokers being used to , there doesn’t seem to be problem . The first time issued insurance policy do have some behavioral errors in the technical dimension of it. Recently introduced as well as having different claim procedure, there have not any claim as said by the insurers. Making its access easy with the help of the insurance board, Insurers forum and insurer as well by the media publicity will surely help to expand its practice in the market. We can be assured in that respect.
Insurance act 2049 and Public procurement act 2049
Annual report of the insurance board 2073/74 as well as other
The report based on the study of the board, formed by the insurance board
Insurance Regulatory Development Authority of India’s website
International Association Insurance supervisors’ website
Insurance related Website Wikipedia