Kathmandu. A report by the UN Capital Development Fund has pointed out that the information technology security systems of insurance companies in Nepal are at risk of cyber attacks.
According to a blog report published by the Fund on April 4, 2024, most insurance companies in Nepal are dependent on the old system. “Those who are vulnerable to cyber attacks do not have integrated working facilities in their main operating systems,” the report said.
“Insurance companies in Nepal are using two special operating systems that are useful for basic insurance services,” the report said, which also covers the information technology infrastructure and safety of 14 non-life insurers. “However, they lack the necessary APIs,” the report said, adding that these core operating systems prove to be weak in connecting to new applications and making the company’s service delivery more effective. Such systems limit the company’s ability to adopt new technology applications and worsen the user experience. ’
Challenge to the Department of Information Technology
If the technical capabilities of 14 non-life insurers in Nepal are to be tested, then there is a lack of well-equipped and capable IT departments. Or the only job of the Information Technology Department is to help with the company’s hardware problems.
The information technology departments of insurance companies in Nepal are not in a good position to understand the architecture of the system in most cases. At the same time, their access to digital plans set by management is also limited.
For most insurance companies, embracing and optimizing digital technology simply means digitalizing the distribution system through apps or websites. These facilities are limited to the collection of insurance fees and the application for claim payment.
Future opportunity
There are opportunities for the sector to start a new chapter and think about new technologies beyond insurance delivery. Companies available in the market can use data analytics to explore options to sell multiple products, understand customer behavior and sustain them, develop new products, expand into new geographies, and reduce transaction costs.
Cyber security is an important aspect. This requires a deep understanding and commitment of insurers. Nepal Insurance Authority (INSURANCE AUTHORITY) has set regulatory provisions for insurance companies to audit information technology infrastructure annually. In practice, however, this provision is limited to completing formalities.
Although there is a huge gap in the existing information technology system and infrastructure of most of the insurers of cyber security, the insurer’s leadership is not serious about addressing it immediately.
