As we all know, Nepal has recently introduced many reforms to repair its tattered banking sector, and quite honestly, most of these have produced wonderful results. By contract, another important group in the financial sector-- insurance – continues to remain a sorry mess. Undoubtedly, much of the blame goes to the regulator. Even in a fast-growing sector with business worth Rs 27 billion annually, the activities of the board have been unnaturally passive. Quite seriously, we have not heard of any concrete policy decision taken by the board to safeguard the interests of clients in recent years. Hence, the board has not been able to draw the attention of the general public, unlike other financial sector regulators like Nepal Rastra Bank and the Securities Board of Nepal. Frankly, IB’s performance has been lackluster and has failed to win public confidence. It has not been able to spearhead reform in the sector, which remains entangled in anomalies such as ‘insurance on credit’ for promoters and people close to the companies concerned, and there has been a lack of decent settlement of insurance claims made by clients.
Globally, the insurance industry is regarded as a crucial financial service because it cushions individuals and business entities against possible and unexpected loss. Its services have spread subtly to all levels of the economy. However, in Nepal, life insurance covers just over 10 percent of the total insurable population and the reach of non-life insurance is no greater. Insurers generally attribute this dismal situation to low awareness on the part of the general public. But what has damaged the insurance sector even more is poor claim settlement records, as these have caused even informed members of the public to shy away from buying insurance cover. This is where we believe IB has failed badly. The responsibility for protecting the public interest and ensuring justice to customers rests with the regulatory authority. However, the board has remained focused on protecting the interests of the companies rather than those of the general public. Hence, we urge the government to seriously mull a series of reforms to revitalize the sector and expand the scope of insurance business.
Related story
Insurance authority issues directives on monetary loss insuranc...
