Kathmandu. The Nepal Insurance Authority (INSURANCE AUTHORITY) has warned the insurer not to repeat negligence repeatedly, saying that the insurer has played with the provision related to “ear marks”.
Repeated negligence has been noticed when insurers requested for “ear marks” and “ear-marked” refunds in the online system implemented for insurance companies to temporarily freeze deposits held in banks and financial institutions.
According to the NRA, an online system has been made available to the insurer to facilitate the bank financial institution to mark the amount of insurance fund deposited in the bank financial institution or to release the amount that has been erased. Using this system, the insurer has the ability to request an “ear mark” and request a waiver if the amount of the ear mark is needed.
Although the insurer has requested for the release of the “ear mark”, the authority has rejected the request due to the tendency to enter the request without giving a clear reason. In the case of a request rejected, the insurer has to request for the removal of the ear mark by giving a clear reason, but despite dozens of requests pending, the AUTHORITY has warned of action if such negligence is repeated.
what is an earmark
“Ear Mark” refers to the lien of the authority in term deposit accounts opened by the insurer in banks and financial institutions licensed by the Nepal Rastra Bank.
Within seven working days of opening the term deposit account, the insurer has to make a block request in the “ear mark” system and if requested after this period, the authority will not take any action.
Even if a block request is received from the insurer, the authority approves the request in the earmark system after releasing the details of the fixed deposit account with the documents attached.
If there is a discrepancy in the details submitted in the withholding request, such request is rejected by the authority citing reasons. In respect of such a rejected request, the insurer has to make necessary corrections and re-attach the necessary details.
Insurance companies have invested the amount collected as insurance fees in various term deposits. In order to ensure that the insurer does not use the amount kept in the term deposit indiscriminately, the AUTHORITY has implemented the ear mark system i.e. the system of stopping the term deposit for regular monitoring. Due to this system, the insurer has to compulsorily take prior approval of the AUTHORITY to use the amount kept in the deposit even if he invests the amount in the fixed deposit at his discretion within the limits of the investment guidelines.
The term ‘ear mark’ is derived from the practice of cattle farmers raising their ears to identify their pets. In this way, it is easier for the farmer to identify the animal when it is pierced or cracked in the earlobe. The year mark on the insurer’s fixed deposit also ensures regular monitoring of the insurance authority to prevent misuse of deposits.
