Insurance Companies asks Nepal to check fraud

International insurance companies have set a deadline for Nepal to clamp down on fraudulent helicopter rescues of tourists or they will stop providing cover.

An AFP investigation earlier this year revealed a lucrative insurance racket around pressuring hikers in the Himalayas into unnecessary rescues. The fraud became so acute that Nepal’s government, which relies heavily on tourism, launched a probe in June in a bid to keep insurers from pulling out altogether. AFP has since learned an alliance of insurers from Britain, Australia and New Zealand have warned they will stop providing cover unless concrete action is taken.

The scam has become such a money-maker that some budget tour operators are luring customers by selling treks at below cost price—knowing they can make profit on kickbacks when the tourists are evacuated.

Insurers have demanded all helicopter rescues are pre-approved and capped at $4,000 per flight. They also want an inquiry into tourism companies over forged documents.

The tourism ministry probe launched in June found there had been more than 1,300 helicopter rescues in the first five months of the year, costing insurers over $6.5 million. Insiders warn that the probe has only revealed the tip of the iceberg, amid allegations that some businesses pressured the ministry to look the other way.