Nepal's Guides Are Making Big Money on Insurance Scams

Lightheaded or feeling woozy? Trekking companies are convincing tourists it's an emergency and making tens of thousands off the insurance claims.

Guides in Nepal are scamming insurance agencies for profit. Here's what you need to know. (Photo: branex/iStock)
Guides in Nepal are scamming insurance agencies for profit. Here's what you need to know.

In Nepal, there’s a new scam directed at trekkers in the Mount Everest region, and to see how it works you need look no further than the experience of Jessica Reeves.

The Australian told Agence France-Presse that she was trekking with Himalayan Social Journey when she complained to her guide about a common cold. It wasn't an emergency, and certainly not life threatening. But her guide repeatedly urged her to agree to a helicopter rescue.

“They said if I kept going it would be really risky, so it was better to leave now instead of risking it,” she said.

According to Reeves, nine or ten hikers in her group shared a helicopter ride back to a hospital in Kathmandu, but were each told to say they were alone. She thinks that Himalayan Social Journey billed each of the client’s insurance providers for a separate helicopter ride, banking about $35,000 in the process. Another trekker told GearJunkie earlier this month that her partner complained of a mild headache and their guide suggested a helicopter rescue right away, saying they should both take the ride and tell whoever asked that they were feeling very sick. A local helicopter pilot, who rescued trekkers almost daily during the April and May trekking season, told AFP that during that time he flew only three people who actually seemed to be ill. 

One of the more concerning findings was of companies serving food tainted with baking soda, a known laxative, in order to sicken tourists so they could be pressured into a helicopter rescue.

As the scam goes, once off the mountain the climbers are taken to hospitals, where they undergo a battery of tests, all billed to their insurance. From mountain to hospital and back, the guides, helicopter companies, and hospitals all take a cut from these false insurance claims. According to AFP and Traveller Assist, a UK-based company that represents international insurers, the high number of helicopter rescues for tourists made 2017 the most expensive year yet in Nepal for insurance companies (though 2018 is on track to outdo it).

Outrage over this widespread scheme prompted a major government crackdown this summer. And last month an investigative committee submitted a 700-page report to Nepalese Tourism Minister Rabindra Adhikari. The report found that 1,300 helicopter rescues took place in the first five months of 2016 and cost insurers more $6.5 million. One of the more concerning findings detailed how some guides served food tainted with baking soda, a known laxative, in order to sicken tourists so they could be pressured into a helicopter rescue. In all, according to the Kathmandu Post, the investigation probed ten helicopter companies, six hospitals, and 36 travel, trekking, and rescue agencies—with further investigation of 15 of these companies recommended. The scamming has become so pervasive that the report advised that all rescue operations be taken over by Nepal’s police. 

The stakes for solving the problem are high. Insurance companies set a September 1 deadline for Nepal to crack down on the abuse, threatening to stop providing coverage for trekkers and climbers if nothing is done. That would have huge ramifications on the country and the people who depend on this work, because tourism is one of Nepal’s main industries.

The country already took a major financial hit after the 2015 magnitude 7.8 earthquake struck. It killed nearly 9,000 people and crumbled homes and buildings. Ever since, tourism has been slow to recover. Meanwhile, there are more than 2,600 trekking agencies competing for this now smaller pool of tourists. So operators lower their rates, which leaves little money left over. 

“We are moving on a price war rather than a service war.” Deepak Joshi, CEO of the Nepal Tourism Board, told GearJunkie. “And that is causing desperate measures.”

Filed To: NepalMountaineeringClimbing
Lead Photo: branex/iStock