Insurance Board bars non-life insurers from distributing cash dividend, forcing them to settle COVID insurance claims

Published On: January 12, 2022 06:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 12: The Insurance Board (IB) has barred the non-life insurance companies from distributing cash dividends to their shareholders this year, citing the large amounts of insurance claims that the companies are yet to settle.

According to Raju Raman Paudel, executive director of the IB, the regulator has imposed the restriction temporarily mainly due to the non-life insurers’ inability to settle the claims against the insurance of the coronavirus pandemic. The IB’s records show that the insurance companies have not paid Rs 11 billion of the claims under this heading.   

There are 20 non-life insurance companies operating in the country. With the regulator’s direction in place, these insurers however can issue bonus shares to their shareholders from the profits they earned last year.

The IB last year launched insurance against the COVID-19 pandemic with much hype, but the government bodies have left the insured COVID-19 patients in lurch as the insurers have failed to settle the insurance claims. Almost all of the 20 non-life insurers had sold policies against COVID-19. 

Along with the spike in coronavirus cases last year, around 140,000 individuals purchased COVID insurance policies. According to the Nepal Insurers Association, as of last July, claims of only Rs 4.78 billion from 60,587 insured were settled.

For such insurance coverage, the insurance firms charged the premium of Rs 1,000 for each individual and Rs 600 for an additional family member for those who purchased policies worth Rs 100,000. The sector’s regulator has been facing pressure to settle the insurance claims for which the insurers collected large amounts in premium from their clients. 

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