The existing act allows the government to appoint the chairman without setting down specific provisions, but the proposed new law has set clear requirements for the appointment of the chairman and members (other than those from the civil service). The planned appointment process is similar to the one prescribed by the Nepal Rastra Bank Act. As per the proposal, there will be a governing board to run the authority headed by the chairman, two joint secretaries from the government and two members having expertise in life and non-life insurance businesses respectively.

The government will have to establish a three-member selection committee headed by the finance minister to appoint them. A former central bank governor or former chief of the insurance regulator and a person with 15 years of experience in the insurance sector will be the other two members. The selection committee will have to recommend three names for each position and the Cabinet will make the final appointment.

Candidates for the post of chairman and members from outside the government will be required to be a Nepali citizen and possess at least a Master’s degree in insurance, economics, commerce, management, public administration, statistics, mathematics, law, engineering or accounting along with 15 years’ experience in insurance. Experience has been defined as serving as a first class officer in government service, joint professor at university, chief executive officer in an insurance company or executive chief in an international institution.

The term of the chairman and members has been proposed to be of four years with the option of a one-term extension. The existing provision allows the government to extend the tenure by two terms. It does not contain many criteria except a requirement that a candidate should have expertise in the insurance sector.

Similarly, the existing act does not say how the chairman and members of the Insurance Board can be removed. The proposed law has provisioned that the chairman or members (from outside the civil servant) can be removed if they resign or remain absent from the authority’s meetings without a valid reason or engage in immoral conduct. If the chairman or members are to be removed for immoral conduct, a probe committee headed by an ex-judge of the Supreme Court and two members having expertise in different areas should be formed. The chairman or members will be suspended as long as the investigation continues.

Meanwhile, the proposed act contains no provision like in the Nepal Rastra Bank Act that the chairman or members cannot be removed for other reasons except those mentioned in the act. This will make the chairman of the authority a little bit weaker than the central bank governor.

The chairman and members are required to submit, within 30 days of their appointment, details about their jobs and the institutions they have been involved in before joining the authority and whether they or their family members are shareholders in any insurance company. They are also required to reveal whether they or their family members have served as board members, officials or auditors in any insurance company during the last three years, and whether they have worked as surveyors, brokers or mediators during that time. Candidates having a financial interest in the insurance business and those owning shares of more than 1 percent in any insurance company are ineligible to become the chairman or a member.

Those who have been convicted in corruption cases or other criminal offenses and those who have been involved in fraud in the financial sector will also be rejected, according to the proposed provision. The proposed act says that no other law can overrule the rights given by this act to the authority and it is also authorized to open offices abroad.