KARACHI, Dec 9: Insurance claims of Rs600-650 million are being filed in respect of loss of lives and property in earthquake-hit districts of Azad Kashmir and NWFP but many of these are without proper documents and involve a lot of investigations.

Institutional and government claims in respect of loss and damage caused to infrastructure installations and buildings and fixtures of banks are estimated at around Rs250 to Rs300 million. These claims demand compensation from the public sector National Insurance Corporation (NIC).

Processing of all these claims is relatively hassle-free as both claimants and compensation agencies are government entities. In event of loss of documents in the earthquake-devastated areas, the copies are available at zonal offices or at head offices -– Islamabad-Rawalpindi, Lahore or Karachi — of the affected government and privatized entities.

One or two private general insurance companies too have received some claims of loss of private property in NWFP and Azad Kashmir areas. These houses were constructed under bank loan schemes and were insured against fire, atmospheric disturbance (floods and heavy rains) and other calamities.

Settlement of these claims is also not much of a problem as far as the verification of damaged property is concerned. The lender bank has all the documents of damaged property and details of the owner/owners who are actually the borrowers. But the verification of owner or owners of the damaged property and legitimate heirs has become a big problem.

Like elsewhere in Pakistan, the documentation of population and property in the earthquake-affected districts of NWFP and Azad Kashmir leaves much to be desired. Legal verification of deaths and legitimacy of the heirs is also a prolong issue. Insurance companies are seeking legal opinions from their lawyers and also want clear instructions from government agencies like the Securities and Exchange Commission of Pakistan and the commerce ministry.

The public sector State Life Insurance Corporation (Slic) has a lot of job to do. Most of its policyholders are dead and policy documents are hard to find from the rubble of the demolished structure of residences, shops and offices. The Slic zonal office will have to take the initiative of going through the documents, find out the policyholders and search for them or their heirs. Slic has not so far announced any plan for locating the policyholders or identifying the heirs.

More than Rs300 million worth of policies are said to have been issued in the names of residents of the earthquake-affected districts of Azad Kashmir and NWFP.

While claims processing and compensation to the people in the earthquake-hit areas are engaging Pakistani insurance companies, the World Bank has organized a two-day global conference on “insurance and reinsurance for natural catastrophic risk” in Istanbul, Turkey.

The conference was spread over seven working sessions that discussed and debated on insurability of natural catastrophic risks, financial market solution to manage natural catastrophic risks, role of the government and development of public-private partnership for natural catastrophic risk management, with particular reference to earthquake, agriculture and flood and storms.

Saifuddin Zoomakwala, chief executive of the Eastern Federal Union (EFU), one of the top private insurance companies of Pakistan, and Mr Kamal Azfar, an eminent legal experts, have been called at the conference to give their presentations.

Insurance tariffs for natural calamities are worked out by insurance companies on the basis of seismic and weather zoning done by global reinsurance operators like Munich Re. Areas identified as most earthquake zone prone in Europe, Asia or Africa are declared high risk zones and carry high premium tariffs.

With reports of fast climatic changes and earth structures, Munich Re and a few other big reinsurance operators are updating their zones.

The Potohar region was hitherto a moderate risk zone but after the recent earthquake it may be declared a high risk zone. Karachi comes under moderate risk zone because of fault lines and nearby sea.