Insurance Board to rein in agents of non-life insurance firms

Kathmandu, Jan 5

Insurance Board (IB), the regulator of the insurance companies, is gearing up to issue new directives to non-life insurance companies to ensure that their agents and staff do not overcharge or dupe policy buyers.

The new provision that is being discussion with the stakeholders includes downsizing the commission percentage to the agents of non-life insurance companies as the prevalent commission rates have prompted unhealthy practices and irregularities in

the sector.

The insurance regulator has proposed to downsize agents´ commission to 5 percent from existing 15 percent in the non-life insurance business, and to discourage dummy agents by enforcing a new provision of barring staffs and family members of employees of non-life insurance company working as agents.

IB spokesperson Raj Kumar Aryal said that preparations for chalking out new directives are underway as urged by the chief executive officers of the non-life insurance companies to control the works of the agents.

“The proposed directives, which will be soon endorsed, are meant for controlling the corruption and irregularities in the non-life insurance companies,” added Aryal.
Recently the IB had discussed with all the CEOs about the new provision and they have taken it positively, added Aryal.

IB officials also said that the agents as such are not necessary in the non-life insurance as the businesses are actually being managed without any agents.
Officials also revealed that some staffs mainly from the marketing department of non-life insurance companies are also found working as agents. In some cases, staffs are found sharing the agents´ commission with the policy buyers, themselves.

It is believed that cutting down commission percentage point for agents will benefit to the insurance policy buyers and shareholders of the company.
There are a total 17 non-life insurance companies in the country.

Among them NB Insurance Company is in suspension and the IB has taken over Everest Insurance Company. Earlier, the regulator issued a directive for both life and non-life insurance companies to cap their administrative expenses and the regulation had curtailed the estimated management cost of about Rs 780 million of all the insurance company in the fiscal year 2012/2013.

IB had capped the cost of business promotion, reception, insurance agents and advertisement to only 6 percent of the sum paid by policy buyers in the first premium of life insurance companies beginning from the first day of the fiscal year 2012/2013. Likewise, the management cost for the non-life insurance company was capped at 1.5 percent.

Source: Republica