Kathmandu. As the size of insurance funds of insurance companies is expanding, the busyness of chief executive officers (CEOs) of insurance companies is also increasing. CEOs, who have been focused on managing a single company, are now forced to actively participate in the day-to-day management, operations and policy decisions of all companies, from subsidiaries to invested companies, due to investment diversification.
CeOs have to be involved as members or chairmen on the board of directors of other companies with substantial investment or share ownership of the insurer. CeOs are stressed as they have to attend regular meetings of the board of directors and manage time from the daily schedule. They have not been able to devote enough time to their regular work. The unnecessary busyness of CEOs, who are forced to represent other companies on the board of directors under the pressure of the insurer’s board of directors, increases the risk of delaying policy decisions or also failing to formulate and implement business strategies at the appropriate time.
बैंकका Can’t Become CEO Inline_tags_PLACEHOLDER_6##
Institutional governance in the banking sector is closely monitored. The CEO is confined to the role of a pure CEO to avoid any lapse that leads to conflict of interest. CeOs of banks and financial institutions are not allowed to represent directors or employees in any commercial company other than infrastructure development banks. In insurance companies, it’s the exact opposite, it’s like being left open.
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E.P.Instruction No. 6/81 Provisions relating to institutional good governance Sub-section 8 of Section 4. Unified Directive issued by Nepal Rastra Bank to licensed institutions of category “A”, “B” and “C” category, 2081 [/caption]
Nepal Rastra Bank (NRB) has imposed a provision prohibiting the CEO from working in any other professional organization in any other professional organization in view of the burden of responsibility and seriousness of the post. Business organization is defined as any organization operating with the aim of earning profit. Here, the Rastra Bank has focused the CEOs on regular work without using the phrase but not.
Rastra Bank has reduced the CEOs to the main responsibilities without having to pay attention to the right and left by deviating from the main duties of the provision related to institutional good governance, which has created an environment for them to devote full time and concentrate by being full-timers in their banks or financial institutions. The bank has been giving representation to the board of directors of the companies where it has invested in, the deputy CEO or any employee of the higher managerial level.
#inline_tags_PLACEHOLDER_5#no #बीमामा regulatory restrictions
CeOs also enjoy other benefits, including meeting allowance, while giving time as directors in companies with insurers’ investment. Direct involvement in transactions or investments or policy decisions through that organization leads to direct conflict of interest.
Until the NRA opened the way for investment diversification through the investment demand of the insurer, the insurer had been investing a large part of the insurance fund mainly in term deposits of commercial banks. After the provision of running subsidiary companies, companies including Depository Participants (DP), capital managers started opening. In recent times, they have been expanding their investment in education, agriculture, hydropower, tourism and real estate sectors.
Spokesperson and Executive Director of Nepal Insurance Authority Sushil Dev Subedi said that the existing provisions related to insurance are silent in this regard. “The AUTHORITY can issue directives in this regard based on the need after consultation with the stakeholders,” he said. ’
##inline_tags_PLACEHOLDER_5#need #तत्काल regulatory restrictions
If the Board of Directors of Nepal Insurance Authority does not immediately give priority to this issue and amend the Institutional Good Governance Guidelines, 2080, then the distortion will increase.
- कुनै CEO to be appointed as directors in how many entities with insurers’ investment?##inline_tags_PLACEHOLDER_41#
- सञ्चालक will be able to enjoy the benefits of salary from the insurer and allowances from the company where the insurer has invested? ##inline_tags_PLACEHOLDER_41
Those who know the institutional good governance of business organizations suggest that it is appropriate to restrict the CEO of the insurer from representing the board of directors of any other company. They also suggested that any kind of share ownership in any company invested by the insurer should be banned from getting any kind of direct or indirect benefit.
