Kathmandu. The ‘Directive on Establishment and Operation of Foreign Employment Term Life Insurance Group Insurance Fund (Pull), 2081’ issued by the Nepal Insurance Authority for the sale and management of foreign employment insurance policies has not yet been implemented.
The bridge has not been implemented due to the disagreement of some insurers selling employment term insurance policies. After the Authority issued a directive on the division of business shares contrary to the agreement reached in the meeting with the Life Insurance Association of Nepal, Sun Nepal Life Insurance is reluctant to accept the provision related to the bridge. The majority of Sun Nepal’s business is based on premium income from the sale of foreign term insurance policies.
On Chaitra 12, in the presence of the CEO of life insurance companies, the Authority had pressured the CEO of Sun Nepal Life, saying that ‘if you refuse, you will face difficulties’.
Sun Nepal has been maintaining that it will agree to participate in the bridge system only if the business is shared based on the existing business share. The Authority had issued instructions in the last month of Bhadra to share the business with effect from Shrawan 2081. This directive has not been implemented yet after the Authority decided on the business sharing share against the insurers’ agreement.
The Life Insurance Association of Nepal had initially proposed to distribute 50 percent of the share based on the business of the last fiscal year 2080.81 and the remaining 50 percent on a proportional basis. Although the majority of insurers agreed to this proposal, some insurers disagreed. In the insurers’ meeting, it was proposed to share both insurance premiums and risks by including the business of the last month of Shrawan. However, when an agreement could not be reached among the insurers even by last Asoj, the Authority intervened and issued a directive.
Insurers have been expressing dissatisfaction that the Authority has implemented the business allocation directive under the influence of a large business house, contrary to the agreement reached between the Chief Executive Officers under the facilitation of the Life Insurance Association of Nepal.
In particular, they are expressing dissatisfaction that the Authority has allocated business through the directive to ensure the business of four insurance companies, including one life insurance company and three small life insurance companies, which have direct and indirect investments from a group. All four insurers had zero market share in the sale of foreign employment term insurance policies.
Sun Nepal Life, Asian Life, Nepal Life, Surya Jyoti Life, IME Life, Citizen Life are the major life insurers issuing foreign employment term insurance policies. Recently, small life insurers have also obtained licenses to sell this insurance policy. Indian joint venture LIC Nepal and American insurer Met Life (ELICO), government insurer National Life Insurance Company do not sell this insurance policy from the beginning.
The directive states that the responsibility of managing the foreign employment term insurance policy pool will be taken by the domestic reinsurance company. The first revised Foreign Employment Term Life Insurance Group Fund (Pull) Operation Directive, 2081, on February 6, has provided for the management of the bridge by reinsurance companies for a period of 4 years. Immediately after this provision, Nepal Reinsurance agreed to hand over the responsibility to Himalayan Reinsurance for the first 4 years.
The Insurance Authority had operated the insurance bridge for the first time on Magh 1, 2075 for the sale of this insurance policy. After that, the Authority had abolished the insurance bridge with effect from July 1, 2079.
