Insurance Authority Conducts Surprise Inspections at 2 Insurers, Regular at 4 Others
The Nepal Insurance Authority conducted on-site inspections at 6 insurance companies and 1 reinsurer during Shrawan and Bhadra of fiscal year 2083/84. Of these, 2 insurers received surprise inspections and 4 received regular inspections. Although written responses have been received from the insurers regarding irregularities found during inspections, no decision on action has been made yet.
Kathmandu. The Nepal Insurance Authority conducted on-site inspections at 6 insurance companies along with one reinsurer during Shrawan and Bhadra of the current fiscal year 2083/84, focusing on institutional governance and financial discipline of insurers.
According to the Authority, on-site inspections were conducted at the head offices of 3 life insurers—2 with regular and 1 with surprise inspections. Under life insurance, regular on-site inspections were conducted at Asian Life Insurance Company Limited and IME Life Insurance Company Limited, while a surprise inspection was conducted at Sun Nepal Life Insurance Company Limited. The Authority conducted on-site inspections at the life insurers' offices for up to two weeks.
Similarly, the Authority conducted a surprise inspection of the government-owned reinsurer Nepal Reinsurance Company Limited. In addition, regular on-site inspections were conducted at non-life insurers Shikhar Insurance Company Limited and IGI Prudential Insurance Limited, according to a source affiliated with the Authority.
During the on-site inspections, key focus was placed on matters including the insurer's underwriting practices, term insurance business, financial interests of the insurer's directors and senior management in investments, internal controls, institutional governance, the insurer's activity in anti-money laundering, election of the board of directors, expenses for insurance business promotion, agent commission and incentive expenses, employee appointments and career development, and qualifications of department heads.
According to employees participating in the inspections, written responses have already been received from the insurers regarding irregularities and deficiencies found during the on-site inspections. The Board of Directors of the Insurance Authority must decide on action for matters showing serious negligence and misconduct after receiving responses from the insurers. For this, the Authority's regulation department has prepared a report and submitted it to the Chairman through the Executive Director. A concerned source said that even though a month has passed since the completion of the on-site inspection work, the on-site inspection report has not yet been presented to the Board of Directors of the Authority.
Meanwhile, although the regulation department has already submitted a report to the Chairman through the Executive Director regarding the misuse of insurance funds, capital, and investments found in the report based on the on-site inspection conducted by the Authority's on-site team at microinsurance companies, no decision has been made regarding action.
In the previous fiscal year's Jestha and Asar, the Authority conducted surprise on-site inspections at the offices of 2 life insurers, 1 non-life insurer, and 1 broker, and had cautioned one life insurer based on the deficiencies.