𝐃𝐞𝐜𝐡𝐞𝐧𝐜𝐡𝐨𝐥𝐢𝐧𝐠 𝐅𝐥𝐚𝐬𝐡 𝐅𝐥𝐨𝐨𝐝 𝐋𝐞𝐚𝐯𝐞𝐬 𝐑𝐞𝐬𝐢𝐝𝐞𝐧𝐭𝐬 𝐑𝐞𝐞𝐥𝐢𝐧𝐠 𝐖𝐢𝐭𝐡𝐨𝐮𝐭 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞

…𝑳𝒂𝒄𝒌 𝒐𝒇 𝑪𝒐𝒗𝒆𝒓𝒂𝒈𝒆 𝒂𝒏𝒅 𝑨𝒘𝒂𝒓𝒆𝒏𝒆𝒔𝒔 𝑬𝒙𝒑𝒐𝒔𝒆𝒔 𝑽𝒖𝒍𝒏𝒆𝒓𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 𝑨𝒎𝒊𝒅 𝑮𝒓𝒐𝒘𝒊𝒏𝒈 𝑫𝒊𝒔𝒂𝒔𝒕𝒆𝒓 𝑹𝒊𝒔𝒌𝒔

By Yeshey Lhadon

The flash flood that tore through Dechencholing on August 10, 2024, left homes, businesses, and vehicles devastated, and for many, the absence of insurance has added to their woes. The disaster has starkly exposed a lack of awareness about flood-related insurance coverage, leaving the majority of residents unprotected in the face of a natural disaster. While recovery efforts continue, Bhutan Insurance Limited (BIL) reported receiving only two claims, shedding light on the critical need for property insurance. Despite several inquiries, the Royal Insurance Corporation of Bhutan Limited (RICBL) has not responded to questions about their involvement in the aftermath of the Dechencholing flood.

Tobgay Dorji, Head of Marketing and Research at Bhutan Insurance Limited (BIL), revealed the startlingly low number of claims. “We’ve only received two insurance claims related to the Dechencholing flash flood. This highlights the fact that many property owners were unaware of the need for flood coverage or hadn’t insured their properties at all,” said Tobgay Dorji.

For motor vehicles, BIL explained that comprehensive motor insurance covers flood-related damages. However, third-party motor insurance does not protect vehicle owners’ personal property, leaving them vulnerable to significant losses.

“Comprehensive motor insurance covers damages from flash floods, but third-party motor insurance only covers liabilities involving third parties, not the owner’s vehicle,” added Tobgay Dorji.
The issue of property insurance is more complex. Standard policies do not automatically include coverage for flash floods. Such protection needs to be purchased as an optional add-on under fire risk insurance. Many property owners, including small business owners, only discovered this gap after the flood, leaving them without the financial means to rebuild.

“Flood coverage is not part of standard property insurance,” said Tobgay Dorji. “It must be purchased separately as an add-on.”
Despite the lack of awareness, BIL acted quickly in the aftermath of the disaster. A team from the company visited Dechencholing on August 11, the day after the flood, to conduct damage assessments and expedite claims. However, the low number of claims submitted so far points to a broader issue of insurance literacy.

“We conducted immediate assessments to ensure that claims could be processed without delay,” Tobgay Dorji explained. “Once the required documents are submitted, we will release eligible claims promptly.”
According to the Ministry of Home Affairs, the flood affected 49 households in Dechencholing, displacing 158 residents. The flood also damaged 10 buildings, including four under construction, and left 32 vehicles stranded, with two washed away.

In Kawang Gewog’s Changtagang area, two households were affected. The flood impacted 84 households at the RBG campus, and 64 students in the area lost school supplies. 62 foreign workers were also affected.
The flood has raised questions about the cost of insurance in flood-prone areas like Dechencholing. Higher premiums, tied to the area’s increased risk of flooding, may have deterred some property owners from obtaining comprehensive coverage. However, Tobgay Dorji clarified that premiums are based on risk assessments, as is standard in the insurance industry.

“Flood-prone areas will have higher premiums for flood risk coverage,” he said. “However, if proper flood mitigation measures are put in place, premium rates could come down.”
There is hope that investments in flood prevention infrastructure could help reduce insurance premiums for vulnerable areas, encouraging more property owners to purchase coverage and protect their assets.

One of the most significant issues the flood exposed is the lack of awareness about available insurance options. Many property owners, particularly small business owners, were unaware that they needed to add flood coverage to their existing policies. This gap in understanding has left them unprotected in the wake of the disaster.

“Insurance penetration is still at a very novice stage here in Bhutan,” Tobgay Dorji acknowledged. “Many see it as an unnecessary cost, but we’re working hard to change this perception through our insurance literacy programs.”
In early 2024, BIL launched an Insurance Handbook, titled A Basic Guide to General Insurance, aimed at educating the public about different types of coverage and the importance of insurance. The guide is part of the company’s broader effort to empower people to make informed decisions about securing their financial future.

“We hope this guide will help people understand why insurance is important and how they can protect their assets,” added Tobgay Dorji.
The absence of insurance coverage has left many flood-affected residents in dire straits. Among them is Kinzang Chophel and his wife, Choki Wangmo, who ran a small shop selling prayer flag materials. The flood destroyed their stock, machinery, and home. Without insurance, they are now struggling to rebuild their lives.

“We lost everything, the machines, our stock, our home. Without insurance, we have no way to recover,” Kinzang Chophel lamented. The couple is now relying on friends and family for help.
Tashi Wangchuk, a property owner whose five-story building was nearing completion, also faced significant losses. The flood caused damages estimated between Nu 400,000 to Nu 500,000. Tashi had not yet insured the property, a decision he now regrets.

“I was just about to finish the building, but I hadn’t insured it yet. Now, I’m paying the price,” Tashi Wangchuk said. The flood also damaged four of his vehicles, none of which were insured, adding to his financial burden.
Beyond processing claims, BIL has played an active role in supporting the community’s recovery efforts. A team of BIL De-Suups and claims department officials was dispatched to assist in damage assessment and recovery.
“Our team was divided into two groups: one to assess the damaged properties and another to help residents recover their belongings,” shared Tobgay Dorji. BIL’s commitment to supporting Dechencholing reflects the broader role of insurance providers during times of crisis.

For many residents, the Dechencholing flood has been a painful wake-up call, highlighting the importance of insurance. The financial burden of rebuilding homes and businesses without coverage has been overwhelming. BIL is urging all property owners across Bhutan to reconsider their approach to insurance and take action to protect their assets.

“People need to understand that insurance is vital for their financial stability,” Tobgay Dorji emphasized. “We encourage everyone who hasn’t insured their property to visit our offices and learn more about the different types of coverage available.”

As natural disasters become more frequent and severe, comprehensive insurance coverage is no longer a luxury but a necessity. For those who remain uninsured, the Dechencholing flood serves as a stark reminder of the risks they face.
BIL is urging Bhutanese property owners to learn from this disaster and take steps to ensure they are prepared for future emergencies.