Though not a visionary, the young individual always showed fiery courage to bring some order into the insurance sector that has been riddled with arrogant companies seeking loopholes to take undue advantage of situations. [break]
During many conversations with Republica, Aryal extensively talked about deliberate attempts made by insurers to delay settlement of genuine claims, the fraudulent activities like issuance of insurance policies after occurrence of accidents and the use of influence to prevent actions against insurance companies.
It´s not that the Insurance Board was unaware of these activities prior to his arrival in February 2012. But it was asleep on the job most of time and was not conducting on-site inspections of insurance companies even once a year.
Aryal, who had resigned from the board of directors of the Insurance Board to take the seat of executive director, forced the regulator to wake up.
Although the Board is led by its chairman -- Dr Fatta Bahadur KC -- it is an open secret that Aryal played the lead role in introducing long overdue reforms in the sector. In this drive, mighty companies like Shikhar Insurance, Everest Insurance, NB Insurance and Asian Life Insurance -- that have friends in high places -- were penalized for not playing by the rules.
He, under the leadership of Dr KC, also instructed companies to settle genuine claims without delay, limit spending on insurance agents to bring down premium rates and stop insuring promoters’ assets so as to curb conflict of interest.
Because of the zero-tolerance policy and strict enforcement of insurance laws, many companies have been trying to bring Aryal down. But the media fraternity was behind him as he was fast taming unruly companies -- something the Board had not been able to do in its two decades of existence.
But the support extended to Ayral had to be reviewed earlier this month after his involvement in policy corruption and fraud came to light.
He was initially charged with demanding compensation for total loss of a jet ski -- owned by a company promoted by him -- by purchasing an insurance policy after the occurrence of the accident, which was illegal. It is said Aryal also used influence to alter the cause of accident from “drowning in the Koshi River” to “fire”.
Since Aryal himself was fighting against these ill practices, his involvement in these affairs has only made a mockery of the regulatory body.
In defense, Aryal has said he had resigned from the company that owned the jet ski prior to assuming the post of executive director. But since the Office of Company Registrar has not received official information about the matter, no one is willing to give him benefit of the doubt.
As this case was unearthing, Aryal also faced charges of policy corruption for his involvement in the introduction of a directive that allowed owners of insured earth-moving vehicles to demand a hundred percent compensation in case of total loss.
He said this provision has benefited owners of earth-moving vehicles, as deduction of depreciation in the past forced vehicle owners to walk away with very little money. Fine!
But why did the new provision also apply to claims filed previously at insurance companies?
This question has come to haunt him now, as his company, Aryal Construction, had demanded compensation for total loss of one of its excavators in a “fire” at around the time of the directive´s launch. And because of the new legal provision Aryal Construction was able to walk away with approximately Rs 6.6 million in compensation, as against around Rs 5.1 million if the legal changes had not been made.
Was he oblivious to this fact as well, as the Insurance Board has probably never issued a fresh directive and told insurers to apply it to compensation claims filed on previous dates. What were the Board chairman and other board directors doing?
Now, there are charges that Aryal was appointed to the post of the executive director in an illegal manner.
It is said Aryal -- in the capacity of board director -- himself prepared the criteria for selection of candidates for the post of executive director. He then stepped down as board director and filed his own candidacy.
The so-called free competition for selection of executive director was then participated by only two candidates, as against the normal practice of incorporating at least three candidates. It is now said that Aryal´s competitor, Rajan Chitrakar, a post-graduate with 26 years of experience in the insurance sector, was asked to drop his bid for the post for the flimsy reason of failing to submit work experience letters.
These suspicious acts show the Insurance Board was determined to bring in Aryal by any means. Little wonder, the entire process -- from the vacancy announcement to the appointing of Aryal to the post -- was completed in nine days between, February 4, 2012 and February 12, 2012, as against the normal practice of giving at least a month´s time to those interested in filing candidacy.
Now the spotlight has also fallen on the secret Aryal had kept since his appointment as the executive director -- his involvement in Aryal Construction and Bristi Travels, in which he is still a major shareholder.
As per the selection criteria, prepared by Aryal himself, candidates who are already engaged in the organized sector are not eligible for the post of executive directive at the Insurance Board.
Now what explanation can he give for violation of this rule? And once again what was Chairman Dr KC doing as he was the chair of the appointment committee at the Board which forwarded Aryal´s name for executive director´s post to the board of directors.
Dr KC may argue he was not aware of Aryal´s misdeeds. But how could he allow Aryal to prepare the candidate selection criteria and then appoint him to the post later?
Dr KC, who himself introduced a directive on corporate good governance for the insurance sector, should have been aware that good governance is also about distribution of rights and responsibilities among different officials to avoid conflict of interest. Despite knowing this, he gave his blessings to Aryal, meaning Dr KC should take responsibility for the fiasco as well.
These cases of policy corruption, fraud and violation of norms are definitely humiliating for the Insurance Board, which was formed to regulate, oversee and supervise the insurance sector which has attracted billions of rupees of public funds.
To save its reputation, strict action must be taken against those involved in corrupt acts. Otherwise, public will start viewing the regulator´s decisions with suspicion and gradually lose confidence on the body, which also works as a court to settle claim-related disputes between clients and insurance companies.
Immediate action against the culprit is also necessary to prevent Nepal´s image from being tarnished on the international market, which builds pressure on countries like Nepal to penalize and criminalize corrupt actions. Immediate action is also necessary to protect the county´s image in the international insurance market and the International Association of Insurance Supervisors, an umbrella body of insurance sector regulators, of which Nepal is a member.
If not, how can the Board instruct insurance companies to promote honesty and responsible behavior?
However, punishing those responsible should not mean paving the way for entry of weak regulators. The new candidates should have the courage to give continuity to initiatives taken by Dr KC and Aryal.
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