The insurance regulatory authority issued such an instruction after the number of cases of unsettled claims crossed over 25,000. “This volume of unsettled claims is too high, and raises serious questions over the credibility of the companies,” said Dr Fatta Bahadur KC, the chairman of IB.[break]
He expressed dissatisfaction at the insurers´ laxness in attending their customers´ claims. According to the board, its study has found that the general insurers are neither settling the claims with priority nor giving their decision on claims lodged by the customers promptly.
Given such a situation, KC said the board has instructed each insurer to submit their commitments to settle claims.
“We are confident the companies will soon improve their records and lower the volume of unsettled claims by half. If the companies failed, we will take action against them,” said Binod Aryal, IB executive director.
Apart from general insurers, IB records show life insurance companies too have about 500 cases of unsettled claims. “The problem of non-settlement of claims in life insurance companies is not as intense as in general insurance companies. But we are not satisfied with life insurers as well,” said KC.
In order to press the companies to promptly settle claims, the existing rule makes it mandatory for insurers to provision money equal to 115 percent of the claim amount in case they failed to reconcile the claim.
“Sadly, however, companies in Nepal have preferred to provision the money instead of settling the claims and serving the customers promptly,” said Bibek Jha, general manager of National Life Insurance.
Apart from ill intention of the companies, officials said claims settlement records remain poor also because of technical reasons related with reinsurance cover and also the lack of submission of sufficient documents by the customers.
Moreover, IB has also taken fresh initiatives to enforce third party insurance for vehicle owners.
Though the existing law makes buying of third-party cover mandatory, KC admitted the rate of its compliance has dropped over the past one year.
“The rate of compliance was relatively better when we enacted the law three years ago, but many of the vehicle owners did not renew their cover in recent years,” he stated.
In order to improve its compliance, he said IB has started discussions with the transport management department and the Traffic Police. “We are working out ways to motivate the people to voluntarily comply with the law,” he stated.
But at the same time, the board is also discussing a provision of penalty in order to compel the people who refuse to respect the law.
Related story
Over Rs 16 billion unsettled at TU since 1977
