Kathmandu. Misleading publicity materials about life insurance are being circulated on social media using terms such as discount on insurance premium, discount, fixed deposit, guarantee return. Despite the fact that such words and inducements are being spread in the insurance sector, the regulatory body of the insurance sector, the Nepal Insurance Authority, seems to be trying to evade its regulatory responsibility.
According to the Insurance Act, Insurance Regulations and Insurance Agent Code of Conduct, the Authority itself has the right and responsibility to conduct agent examinations, issue licenses, monitor whether the code of conduct is followed or not, and warn those violating the rules, seek clarifications and take action.
Even when the media has drawn the attention of the regulator by publishing a series of misleading propaganda with evidence, the authority has chosen to go back by directing the insurance companies to ‘monitor’ and ‘send recommendations for action’ instead of taking direct action as per the Act and Regulations.
According to the provisions of the Insurance Act, 2079 and the Code of Conduct, if any agent violates the rules, the Authority is not legally obliged to seek recommendations from the insurance companies. The Authority has the right to directly seek clarification from the violating agent and to suspend or cancel the license if the explanation received is not satisfactory or if the offence is proved. However, the Authority’s attempt to shift the responsibility of action on the shoulders of the insurance companies despite having all the powers in its hands has raised serious questions about the intention and capacity of the regulator.
Section 95 of the Insurance Act contains provisions relating to cancellation of the license of an intermediary (including an agent). The Authority may revoke the license of an insurance intermediary or other insurance service provider:
(a) If he commits any act contrary to the Insurance Act or the Rules, Byelaws, Directives framed thereunder or the directives issued by the Authority, or
(b) If it is proved that any act has been committed against the rights and interests of the insured.
The Authority shall give reasonable opportunity to the concerned insurance agent to defend itself before cancelling the license as per the provision of the Act.
Section 98 provides for regulation, inspection and monitoring. According to Rule 112 of the Regulations, the Authority has to follow the code of conduct as prescribed.
Om Bahadur KC, president of the Professional Agents Association of Nepal, said that it is wrong to make misleading publicity as insurance is a business of trust. “The Insurance Authority and the concerned company should be active to stop such wrong activities by some agent friends,” he said.
Agents continue to spread misinformation, still spreading false propaganda materials on social media
KC said that the insurance authority should ask the concerned company to clarify the name of the agent on the basis of the complaint received about the misinformation of the insurance policy. “The authority had issued a circular to the insurance companies some time ago,” he said, “But it did not seem to be very effective. Therefore, now the concerned company should be sent in the name of the agent and ask for clarification.” ’
Sushil Dev Subedi, executive director of the Insurance Authority, said that they have been receiving complaints about the agents who spread false information about the insurance. “We have also alerted some agents about this,” he said, adding that the authority has also started the process of taking action on the basis of the evidence received. ’
Subedi also informed that the regulatory division of the Authority is closely monitoring the false publicity of insurance being done through social media. “The Authority is also drawing attention to this issue by issuing circulars to the insurers,” he said, adding that the NRA is also coordinating with the insurers and investigating the agents involved in such wrong activities. The Authority will take action against those involved in wrong activities. ’
