KATHMANDU, Dec 17: Nepal Insurance Authority (NIA) is considering blacklisting insurers and all those concerned if found cheating their customers.
Citing growing cases of anomalies in the sector, the regulatory body has targeted to enforce the measures as per the law. According to the NIA, it has included this provision in the insurance regulation which is in process of receiving final approval from the Ministry of Finance.
The NIA has prepared the regulation in line with the Insurance Act 2022. The act has empowered the authority to implement stringent policies against the wrongdoers in the insurance businesses.
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Raju Raman Paudel, executive director of the NIA, said they are working to establish an Insurance Information Center that will work in a similar modality to that of the Credit Information Bureau of the banking sector. “The institution will help track the functioning of insurance companies and their associated organizations,” he said.
The new regulation, if it is endorsed in its present form, will help establish the Insurance Development Fund, the Insured Welfare Protection Fund and a separate oversight agency apart from the information center. Paudel said the NIA has already started homework in line with the measures envisioned by the new regulation.
Paudel added that the anomalies in the insurance sector have been growing mainly due to lack of details about the players of the insurance business. “At present, none of the government bodies hold the detailed information about the individuals and organizations related to the insurance businesses.”
The new act enacted last year has talked about regulating the sector by adopting various policies. “The regulation will help implement the law,” Paudel added.
According to the NIA, it is moving forward with the objectives of minimizing the risk to the general public involved in insurance and to protect the rights and interests of the insured. This is likely to increase the public participation in insurance for making contributions to sustainable economic development of the country by maintaining institutional good governance in the insurance sector.
Since the size of the insurance market is small, an unhealthy competition among insurers is a serious challenge for the Nepalese insurance market. The practice of price-cutting is rampant, while almost all the insurers have concentrated their businesses in selected urban areas only. Likewise, the manipulations of insured by the insurance companies and intermediaries are also apparent.
Low and irregular income of insurers, low level of insurance awareness, small size of the market, unhealthy competition among the insurers, shortage of competent human resources, low risk retention capacity of insurers due to low capital base, limited access to reinsurance market, weak legal and regulatory framework, are among the key challenges underlying in the sector.
