Kathmandu. Chief Executive Officers (CEOs) of life insurance companies are under stress after the Ministry of Labour, Employment and Social Security scrapped foreign employment term insurance and forwarded the draft with the proposal to run welfare programs.
As it is mandatory for those going for foreign employment, the ministry’s draft has become a headache for life insurers who have been doing business by issuing foreign employment term insurance.
Although the CHIEF Executive Officers of Life Insurers met the subject minister and discussed the issue of foreign employment insurance, it has not been addressed yet.
The bill prepared for the amendment of the Foreign Employment Act, 2064 BS proposes to close the foreign employment insurance policy and run a workers’ welfare fund through the Department of Foreign Employment and distribute compensation to the workers.
The Bill prepared by the Ministry of Labour, Employment and Social Security to amend the Foreign Employment Act, 2064 BS has proposed to remove the provision of issuing foreign employment term life insurance to those going for foreign employment from private companies.
The Ministry of Labour and Not the Nepal Insurance Authority has made the provision to make foreign employment term insurance mandatory. The insurance premium income from the sale of this policy accounts for 10 percent of the total annual insurance turnover of the life insurer.
Since this policy is issued only for a period of two years, it has become an easy means of earning profit for the life insurer as it can easily transfer the remaining amount to the shareholders’ fund by determining the claim liability in a short period of time.
In the current act, those going for foreign employment have to compulsorily get foreign employment term life insurance through the life insurance company. In the proposed bill, provision is being made to remove it and deposit the insurance amount in the welfare fund. The ministry believes that if this arrangement is implemented, the welfare fund of the workers will be further strengthened.
Similarly, it has been proposed to further widen the welfare fund to provide financial assistance in case of death during treatment in the destination country or in the course of treatment while coming to Nepal and in case of death of workers who came to Nepal on leave within the contract period.
The transaction of foreign employment insurance has led to unhealthy competition among life insurers. Apart from this, illegal commission given to foreign employment brokers (manpower) companies through payment service providers to acquire business has increased the risk of property purification.
Officials of the Department of Foreign Employment are aware of the fact that manpower companies have received illegal benefits from foreign employment insurance just as microfinance companies have taken illegal benefits from micro insurance. Officials including Madan Dahal, who has been the Director General of the Department of Foreign Employment, are aware of the inconsistent practices within the foreign employment insurance business as they have been part of the Board of Directors of the NRA representing the Ministry of Finance at some point or the other.
Although the Nepal Insurance Authority (NEA) has issued guidelines regarding the operation and management of the insurance bridge for the distribution of income for foreign employment insurance, there has been a dispute among the life insurers on this issue. The writ petition filed in the Supreme Court is still pending.
