Insurance Board sets two-term limit for board members of insurers

The regulatory authority of the insurance sector barred the board members of insurance companies from assuming the position for more than two terms.

Revising a directive on the ‘institutional corporate governance’ of the insurers, the Insurance Board (IB) has enforced the new provision.

A single term of a board member has been fixed at four years, which means a board member cannot assume his position more than 8 years.

Likewise, individual board members cannot purchase shares and debentures issued by the insurance companies, where he or she is a board member, the new amendment reads, adding that they cannot even be involved in the transaction of the company’s shares and debentures for up to one year after the termination of their contracts.

Insurers will have to assess the effectiveness of their annual plans and policies on a quarterly basis,  it reads, adding that the companies will also have to conduct the due diligence audit every five years and report the regulator within a fixed time period.

Government, again directs Insurance Board to settle Covid-19 insurance claims within 3 days

 Even after its first diktat the people are not getting their Covid-19 insurance claims, the Finance Ministry today again instructed the Insurance Regulator to make arrangements to provide Covid-19 insurance compensation payment within three days.

This time, writing a letter today to Insurance Board (IB) , the ministry directed to settle payment of claims that meet all processes and documentation. The ministry also asked the insurance market regulator to send daily progress reports to the Finance Ministry. It is yet another example of how weak regulator can invite the government interference. Instead, the Insurance Board should have warned and taken action to the insurance companies, when they fail to settle the claims.

The ministry was forced to issue written directive after widespread complaints that insurance companies have been delaying or causing hassles to settle the claims against the Covid-19 insurance policies.

The ministry – in the letter – has written that many of its earlier instructions have not been effectively enforced. Earlier also, the finance minister calling the Insurance Board chair to the ministry had instructed to settle the Covid-19 insurance claims within seven days. But very few payments have been made so far, the ministry writes in the letter. The ministry has also reminded the regulator that the hotline phone service for coronavirus-related claims has not been set up in the Insurance Board in line with the directives of last month. “The Insurance Board has also not sent the daily reports to the ministry regularly as directed earlier,” the letter reads, adding that the time to settle has been reduced as the board has not been ‘in action’.

Only 15 per cent or some 4,929 Covid-19 insurance compensation claims have been settled, out of a total 32,784 claims till Tuesday, according to the board.

Insurance firms asked to provide Covid-19 insurance compensation within a week

 A day after the Finance Ministry diktat, the Insurance Board has today instructed insurance companies to settle claims for Covid-19 insurance within a week of verifying their positive polymerase chain reaction (PCR) tests.

The insurance sector regulator – issuing a circular today – asked all non-life insurance companies to pay to insured Covid-19 patients with PCR positive reports within seven days. The new directive came after widespread complaints of hassles and delays on acquiring the compensation for the Covid-19 insurance coverage. The insurance companies have collected over a billion rupees in premiums by selling Covid-19 policies that provide coverage of up to Rs 100, 000, but many policyholders have been complaining that insurers have delayed for the claim settlement.

During the meeting yesterday at the Finance Ministry – where Insurance Board chair Chiranjibi Chapagain and Nepal Insurers’ Association president Dip Prakash Pandey were also present – finance minister Bishnu Poudel directed them to settle Covid-19 insurance claims without unnecessary delay. The meeting – that was also attended by the finance secretary Shishir Kumar Dhungana and revenue secretary Ram Sharan Pudasaini – also decided that the Insurance Board will coordinate and monitor the situation of Covid-19 insurance claims and settlement, and submit a daily progress report to the Finance Ministry.

The new Finance Minister Poudel also instructed the Insurance Board not only to make sure that policyholders get their insurance compensation within seven days but also to send daily reports of claim settlements. Accordingly, the Insurance Board has formed a committee led by its director Pujan Dhungel Adhikari including deputy director Nirmal Adhikari and assistant director Kedar Nath Bhatta to look after the complaints from policy holders. The Board has also asked the policyholders to register their grievances and complaints with the Insurance Board or make call on its Toll Free Number.

The Coronavirus Insurance Programme has been announced by the incumbent government in the budget for the current fiscal year. But the programme ran into controversy, immediately as the non-life insurance companies decided not to sell the policy, assuming that the amount to be paid in claims will be very high. After the public outcry, the Finance Ministry was forced to direct Insurance Board to ask the non-life insurance firms to give continuity to the coronavirus insurance scheme, and the government was ready to share the risk with the insurance firms, given the increasing cases of Covid-19 across the country.

Finance Ministry directs to settle Covid insurance claims within a week

 After huge public outcry about the non-payment of compensation from insurance companies, the Finance Ministry today directed to the insurance sector regulator to settle Covid-19 insurance claims of the claimants within a week of verifying their positive polymerase chain reaction (PCR) tests.

During a meeting held at the Finance Ministry, Finance Minister Bishnu Poudel directed the Insurance Board and Nepal Insurers’ Association (NIA) to settle the claims within seven days. During the meeting, the minister also directed them to establish a hotline number and help desk services to register complaints.

The minister directed – both the Insurance Board chair Chiranjibi Chapagain and Nepal Insurers’ Association president Dip Prakash Pandey -- to settle the claims without any unnecessary delay, though the ministry and Insurance Board should have taken action against the insurance companies for not settling the claims.

The meeting – also attended by the finance secretary Shishir Kumar Dhungana and revenue secretary Ram Sharan Pudasaini – also decided that the Insurance Board to coordinate and monitor the situation of Covid-19 insurance claims and settlement and submit a daily progress report to the ministry.

The Coronavirus Insurance Programme has been announced by the government in the budget for the current fiscal year. But, the programme courted controversy after non-life insurance companies decided not to sell the policy as the amount to be paid in claims will be very high.

However, the Insurance Board directed non-life insurance company to give continuity to the coronavirus insurance scheme after the government’s assurance to share the risk with the insurance companies.

Meanwhile, Indian ambassador to Nepal Vinay Mohan Kwatra also paid a courtesy call to finance minister Poudel today. Ambassador Kwatra, on the occasion, handed over a cheque of Rs 1 billion for housing reconstruction projects in Gorkha and Nuwakot that are being supported by India.

The insurance companies sold Covid-19 policies that covers up to Rs 100, 000. As the number of Covid-19 cases increased, the insurance companies failed to settle the claims.

Reliance Life to go public

 Reliance Life Insurance is issuing 6.3 million units of ordinary shares to the public from August 20 at Rs 100 per unit. 

The life insurance company is issuing 30 per cent of its issued capital of Rs 630 million worth of shares post which the paid-up capital of the company will be Rs 2.10 Billion. Sanima Capital is the issue manager of the shares.

Out of 6.3 million units of shares to be offered to masses, some 315,000 shares have been set aside for the employees of the company, some 315,000 shares have been set aside for mutual funds approved by Securities Board of Nepal (Sebon) and the remaining 5.67 million shares will be offered to the public.

According to chief executive officer of Reliance Life Insurance Prabin Raman Parajuli, the company is the first to issue Initial Public Offering (IPO) to the public among the last lot of 10 new life insurance companies licensed by Insurance Board (Beema Samiti). “The company has been launching innovative plans at competitive prices as demanded by the market with core focus on quality servicing and digitization which further ensures enhanced service delivery,” he said.

Reliance Life Insurance -- commenced its operations from November 17, 2018 – is promoted by Siddhartha Bank Ltd and prominent business houses. The company has been rendering professional services to the public through its 100 point of sales.

Insurance coverage of farm sectors up

Insurance coverage in agricultural products increased by 58 per cent in the last fiscal year.
The Insurance Board attributed the surge to the government subsidy as the government currently offers subsidy equivalent to 75 per cent of the premium amount to encourage farmers to insure their farm products.
The insurance companies sold insurance policies worth Rs 18.72 billion in agricultural products in the last fiscal year 2018-19, compared to the insurance policies of Rs 11.85 billion a fiscal year ago in 2017-18, according to the board that revealed that the insured amount has increased fourfold in the past five years.
Last fiscal year, non-life insurance companies collected Rs 631.44 million in premiums, up from Rs 510.93 million a fiscal year ago. “Over the period, the insurers issued 101,152 policies, some 73 per cent more compared to a fiscal year ago.”
The government – through the budget for the fiscal year 2014-15 – had announced providing 75 per cent subsidy in the premium of agriculture insurance to farmers.
According to the board, the government provided premium subsidies totalling Rs 631.44 million to farmers in the fiscal year 2018-19. “The subsidy was 65 per cent more than the amount a fiscal year ago,” the board claimed, adding that the board made it mandatory for non-life insurers to provide agriculture insurance services, assigning them certain districts to carry out the business due to low coverage.
The board has enforced over two dozens of distinct insurance policies to cover major livestock and crops – including ginger, coffee, paddy, mushroom, potato, sugarcane, seed, vegetable, turmeric, cardamom, banana, cattle, fish, poultry and goat – produced in the country.
Likewise, farmers can claim insurance, if their crop or livestock is damaged from fire, lightning, earthquake, flood, inundation, drought, landslide, tornado, hailstorm and snowfall. They can also claim insurance for losses due to pest and disease, the board added.
According to the board, the share of crop insurance is still negligible compared to insuring livestock. In the last fiscal year, farmers purchased policies in crop insurance amounting to Rs 834.58 million, which stood at only 4.7 per cent of the total insured amount in farm products. “In the crop insurance, farmers purchased policies worth Rs 547.39 million to cover risks in fruit production.”

Insurance Board cuts cost of riot, protest insurance products down

Insurance Board (IB) – the insurance sector regulator – has reduced premiums on insurance products that cover damages inflicted by riots, strike, malicious attacks and sabotage terrorism by up to 50 per cent.
The new premium rates will come into effect on July 16. The board had made it mandatory for those buying insurance products to protect themselves from risks related to riots, strikes and acts of terror after the Maoist insurgency reached its peak. The regulator has now reduced the premium on coverage of these risks following decline in the number of such violent incidents.
According to the board's director Shree Man Karki, the board had revised the premium rates to relieve customers from extra financial burden, as cases of riots, protests and acts of terrorism are not heard very often.
The board has reduced premium on riot and strike insurance coverage for private and commercial buildings to 0.02 per cent of the coverage amount from 0.026 per cent of the coverage amount.
Similarly, premiums on riot and strike insurance coverage for warehouses range from 0.035 per cent to 0.060 per cent of the coverage amount.
Previously, the premiums on these products ranged between 0.044 per cent to 0.08 per cent. Premium on riot and strike coverage for factories, on the other hand, has been reduced to 0.04 per cent from 0.05 per cent of the coverage amount.
Likewise, premium on riot and strike coverage for shops has been reduced to 0.08 per cent down from 0.104 per cent of the coverage amount.
For movie theatres, exhibition halls and parks, premium has been brought down to 0.05 per cent of the coverage amount – down from 0.07 per cent – while media houses and telecom companies have to pay a premium of 0.035 per cent of the coverage amount – down from 0.044 per cent – to protect their assets from risks related to riot and strike.
The board has also revised premiums on riot and strike insurance coverage for power houses, electricity transmission and distribution systems, and buildings under construction.
As per the revised rate, power houses and electricity transmission and distribution systems will have to pay a premium of 0.035 per cent of the coverage amount, while buildings under construction will have to pay premium of 0.02 per cent of the coverage amount.
Likewise, the board has reduced the premium for malicious damage under fire insurance policy to 0.05 per cent of the coverage amount.
The board has also fixed the premium for household insurance at 0.1 per cent of the coverage amount.
Meanwhile, the Insurance Board has also revised premium on personal accident insurance coverage. From July 16, personal accident insurance product with coverage of up to Rs 2 million can be bought upon paying 0.01 per cent of the coverage amount. Currently, this premium rate is only applicable for personal accident insurance with coverage of up to Rs 1 million. 

Insurance Board hikes accident cover for passengers

Introducing a new motor vehicle insurance tariff policy, Insurance Board (IB) has increased the premium for third party motor insurance policy as well as the minimum coverage effective from the next fiscal year.
Revising the motor insurance tariff directives, the board has hiked the insurance coverage amount by five times in the case of death of passengers in vehicle accidents, effective from the beginning of the next fiscal year.
Issuing the amended Directive on Motor Insurance Rate, the regulatory authority of the insurance sector has increased the coverage to Rs 500,000 per person from current Rs 100,000. Currently, third party – those not in the vehicles – gets a coverage of Rs 500,000.
The board said the provision is applicable to passengers in all types of public and private vehicles; four-wheeler, three-wheeler and two-wheeler.
Premium, however, differs with the capacity of motorbikes. To purchase the new insurance policies, owners of two-wheeler with engine capacity of less than 150cc will have to pay annual premium of Rs 1,500, excluding taxes. For owners of two-wheeler with engine capacity of 150-250 cc, the annual premium has been fixed at Rs 1,700 (excluding taxes), while owners of two-wheeler with engine capacity of over 250 cc have to deposit premium of Rs 1,900 (excluding taxes) per year, according to the board.
“If existing policyholders wish to upgrade to the new policy, they can do so by paying some extra fee," IB Director Shree Man Karki said, adding, "but it has to be done within the month of Shrawan (July 16 to August 16). "The insurance companies have already been notified."
The latest revision made to the premium rates, however, has not brought about changes in third-party liability coverage."
Third-party insurance enables policyholders to claim for compensation if their vehicles kill or injure people or damage properties during road accidents.
Currently, owners of two-wheeler can claim for up to Rs 5 million in compensation from insurance companies under third-party liability. This includes compensation of up to Rs 2.5 million to cover losses of human lives or cover medical expenses of people injured in the accident.
Compensation of another Rs 2.5 million is provided to restore properties damaged during accidents.
Karki said the new provision is in line with the budget announcement. "Under the vehicle insurance, a similar provision of third party insurance will be made to insure the passengers travelling in public vehicles,” the budget for 2016-17 had announced.
Likewise, the board has doubled the compensation for performing last ritual of an accident victim to Rs 50,000. Earlier the compensation amount was Rs 25,000. It has also raised the medical insurance of the injured to Rs 300,000 per person from current Rs 5,000.
A caretaker of the wounded will receive Rs 500 daily for 45 days from previous 30 days, according to the amendment.
The new provision has maintained the third-party insurance at Rs 500,000, while the insurance coverage ceiling for medical treatment has been raised to Rs 300,000 from current Rs 200,000. All types of vehicles, including ambulance, used to transport the wounded to the hospital will be provided Rs 10,000.
Karki also said that the board has introduced the 'knock for knock' system. "If two vehicles collide, insurers will have to bear the cost for maintaining the vehicles concerned,” according to the new directive.
In case of passengers’ death in such collision, compensation of crew member and riders will be drawn from the insurance coverage of the vehicles concerned. "The insurer will have to be reimbursed the amount from the insurer of the other vehicle which is found guilty for the accident.”
Third-party vehicle facing loss due an accident will be provided the repairing cost without depreciation provision.
However, the board has not made any insurance coverage provision for a third person in a two-wheeler. "Only the driver and a pillion rider of a motorbike will be provided the insurance coverage of Rs 500,000,” the directive reads, adding that a child of less than one year of age would receive 25 per cent of the insurance policy amount, while a child of 1-5 years of age would be provided 50 per cent of the policy amount.
"If the treatment of an injured person is done in foreign countries, including India, the family members concerned will have to inform the insurer in a week," Karki said, adding that the provision has been enforced to discourage the practice of producing fake bills to receive hefty sum for treatment coverage.
According to the new directives, the premium fee of motor insurance has been increased in line with the coverage amount. While owners of motorbike will have to pay additional Rs 500 per year for insurance, automobile owners will have to pay total premium of Rs 700 per seat. Compensation covering ambulance cost of Rs 10,000 to take the injured person to the hospital, and Rs 500 per day for up to 45 days for the attendant of the injured person and 25 per cent discount on premium for disabled-friendly motorbikes are some of the highlights of the new directive.
The liabilities of motorbike alone stand at Rs 1.6 million. However, the premium has been increased by only Rs 500. It means owners of two-wheeler can insulate themselves with insurance coverage of over Rs 6.6 million by paying a premium of as little as Rs 1,500 per year, according to the Motor Insurance Premium Directive.
Insurance companies can, however, deny to these payments, if policyholders were found to be driving under influence or if accidents were premeditated.

World Bank, IMF hold talks for Financial Sector Assessment Programme

At the request of the government and the central bank a joint mission of the International Monetary Fund (IMF) and World Bank (WB) visited Nepal from February 2-16 to conduct an evaluation of the financial system under the Financial Sector Assessment Programme (FSAP).

The programme evaluations are conducted on a regular basis for IMF and World Bank members, and are meant to provide an independent assessment of financial sector stability and development prospects.

In broad terms the programme reviewed and assessed issues related to financial stability, prudential regulation and supervision, risk management, the payments system, debt recovery and the insolvency regime, financial cooperatives, and access to finance—particularly by low income households and SMEs.

Upon completion of its work, the IMF and World Bank teams will prepare reports for their respective executive boards, which will inform the Financial Sector Development Strategy and Technical Assistance from development partners. It is also intended to provide guidance to Nepal on best international practice in financial sector regulation and development.

The mission met with senior officials from Finance Ministry, Nepal Rastra Bank, Insurance Board, Securities Board of Nepal (Sebon), Ministry of Cooperatives, and other related government agencies as well as representatives of the financial sector, industry, and civil society.

Insurance Board hands over management to newly elected board of Everest Insurance

After Everest Insurance shareholders elected a new seven-member board of directors in the special general meeting today, the Insurance Board handed over the management to the elected body.

After takeover by the Insurance Board (IB) five months ago, the non-life insurance was managed by the Insurance Board team led by Santosh Prasain since October 10, 2013.

Sashi Agrawal, Rajan Kumar Poudel, Surendra Silwal, Niranjan Kumar Tibrewala, Pawan Kumar Shanghai, Arun Adhikari and Purusottam Raj Bhattarai were elected – out of the total 10 shareholders, who had filed their candidacy for the board members – by the shareholders.

The regulator of the insurance market took over the Everest Insurance after it stopped normal business activities. The regulator – in the first of such kind of move – had dissolved the board and suspended the chief executive officer before sending a three-member team headed by Prasain.

According to company, some 1,800 out of 3,404 claims have been cleared after the new management took charge of the company. The company also earned Rs 80 million profits within four months.

Central bank team takes charge of Nepal Share Markets and Finance from today

A three member team of central bank took charge of the Nepal Share markets and Finance from today.

The team led by deputy director Santosh Kumar Ghimire, has assistance directors Kaji Ram Karki and Prakash Shrestha will sell shares or bring in new investors to increase capital, find merger partner, recover the remaining amount – Rs 2.13 billion – by the then executive chairman Yogendra Shrestha, and prepare a report within the six months and submit to the central bank to either run or sent to liquidate the Class C financial institution.

According to the due diligence report (DDA), Shrestha had embezzled Rs 2.68 billion. Shrestha was involved in insider lending against the good governance and prudential norms of banking.

Though late, the central bank's board had taken the decision to take over the board and management of troubled Nepal Share Markets and Finance last Thursday.
According to the regulation, a financial institution that is declared troubled has to be taken over by the central bank, if it does not improve within six months or sent to the liquidation. But the central bank gave it more than enough time to improve.

Central Investigation Bureau (CIB) last year had arrested Shrestha for his involvement in creating fake borrowers and misusing the deposits of the public. He is still in the jail.

Earlier last week, the central bank has taken over the management of the NCC Bank suspending the board due to prolonged dispute among the board of directors.

Likewise, in 2006, the central bank had taken over the Bank of Kathmandu and returned it within three months. However, the central bank has failed to improve the financial health of Gurkha Development Bank – that it has been handling since last two years – and is still managing it.

Insurance Board to handover Everest Insurance after electing new board

Insurance Board led team is handing over the management of Everest Insurance after holding election of board of directors on February 13.

The insurance market regulator – for the first time – had earlier taken over the management of Everest Insurance in October after dissolving the board and suspending the then chief executive Kebal Krishna Shrestha, after repeatedly failing to abide by the regulator's directives.

Meanwhile, some of the old directors of the board are filing the candidacy for the new board election that is slated for February 13. One of the board members in the suspended board Niranjan Kumar Tibrewala is also fielding his candidacy for the election on Thursday.

Likewise, Ravi Kumar Tibrewala, Purushottam Raj Bhattarai, Hindu Sanskriti Karki, Rajan Kumar Paudel, Surendra Kumar Silwal, Sashi Agrawal, Pawan Kumar Shanghai, Rashmi Holding and Sunglow Investment are eying the post of board directors.

Earlier, the Board in October had sent a three-member team led by Chartered Accountant Santosh Prasai – including the Board's deputy director Kundan Sapkota and assistant director Om Bahadur Adhikari – to manage the insurance company.

In December, the Board team resumed the insurance business.

The non-life insurance company got into trouble after its management, according to the Insurance Board, paid a claim worth Rs 40 million to Himalayan Snax – the manufacturer of Mayos noodles – without receiving the final report from the surveyor. The Board first slapped fine and stopped it from issuing fire insurance. Contesting the Board's claim that it paid the claim without receiving final report from the surveyor, Everest Insurance shut down its entire business.

The tussles, according to the market insider, between chief executive Shrestha and Insurance Board executive director Binod Aryal, since long has over-spilled and took a nasty turn after Aryal was found to have submitted fake certificates while being appointed the Board's executive director. Aryal – bringing much shame to the regulator – had also been running his parallel business that had conflict of interest and was against the norms of good governance in the regulator.

The Board sacked Aryal after finding his involvement in business having conflict of interest but it has raised serious question on the Board's professional image.