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Insurance regulator to conduct regular onsite inspections
The Insurance Board (IB) has moved to conduct regular onsite inspections of insurance companies, targeting to streamline the working processes of insurers more effectively.The Insurance Board (IB) has moved to conduct regular onsite inspections of insurance companies, targeting to streamline the working processes of insurers more effectively.
As of now, the regulator only carries out an onsite inspection after receiving complaints. Similarly, it has been scrutinising the insurers based on the financial reports that the insurers need to submit at the board on a quarterly basis.
IB Officiating Executive Director Raju Raman Paudel said the board in the past three days carried out spot inspections at Asian Life Insurance and Siddhartha Insurance. “We have targeted to cross-check each of the insurer at least once a year through the spot based observation,” Paudel said.
There are a total of 38 insurance companies in operation—20 non-life insurers and 18 life-insurers.
Among these, two are state-owned while three are foreign companies. In the fiscal year 2017-18, the non-life insurers collected premiums worth Rs22.13 billion, a growth of 16 percent. Similarly, the premium collection by the life insurers amounted Rs19.44 billion, a growth of 52 percent.
As per the IB source, the surge in the volume of insurance business has also highlighted the pressing need for the regulator to carry out field based inspections. For the purpose, the regulator has made two monitoring teams led by the Chartered Accountants at the board.
The new initiative by the board is expected to cross-check the inner workings of the companies within the framework of existing laws. Besides, it will also check the period of claim settlements by the insurers, documentation process followed during the claim settlements, timely allocation of surveyors and their reporting, underwriting and reinsurance provisions.
In a number of past cases, the IB had taken action against insurers failing to abide the government rules. Four months ago, the regulator halted United Insurance Company from carrying out fire insurance scheme after the insurer was found illegally insuring promoters’ property and compensating more than the lost amount.
Earlier, the board took over management of Everest Insurance after the insurer was found to be involved in a number of anomalies.
Apart from these, distributing dividends among promoters and shareholders without taking approval, providing the claim amount without having proper documents, delay in claim settlement and surveyors’ false report on insurance coverage are among the underlying problems in the domestic insurance business.
In addition, most of the insurers are reluctant to offer micro insurance policies despite the government’s rule making it mandatory for both life and non-life insurers. According to the rule, at least five percent of the insurer’s total policies have to be comprised of micro insurance.
Paudel said the new provision is expected to help check such anomalies in the insurance business. According to him, the onsite inspection team will prepare the report and the board will initiate necessary action against the insurers provided they are found not abiding the government rule.