Kathmandu. The Insurance Regulations, 2081 also envisage a specialized organization or expert to provide risk assessment services. The insurance underwriter will determine whether a risk is insurable for the insurer.
Insurance companies have been doing the work of assessing the risks inherent in the insurance proposal with the insurer’s own human resources. The insurer has been practicing risk assessment based on the experience and qualifications of the available human resources or on the basis of the opinion received from reinsurers.
Insurance may appoint a third party for such services in cases where the insurer does not have the expertise or the risk underwriting cannot be done with the available human resources. As in business outsourcing, in this service, the underwriter, who provides services as a third party, will provide the service between the insurer and the insured.
When accepting the proposal of engineering insurance in large projects, there may be a risk of bearing a large risk at a low fee due to the lack of sufficient knowledge of the equipment, methods and processes used in the project by the available manpower of the insurer. In such a situation, it is considered appropriate for the insurer to appoint an insurance underwriter.
Section 66 of the regulations provides that a person and organization that has acquired expertise in the subject can obtain a license from the authority to analyze the risks inherent in the insurable person or property and assess the risks. The insurance underwriter will also analyze the risk and determine the insurance premium and insurance terms.
A person who has worked in the underwriting department of an insurance company for a long time, has specialized in reinsurance, or has gained experience in insurance underwriting work in high management can provide services as an insurance underwriter. Underwriting service providers require manpower with expertise in insurance underwriting, engineering, health, infrastructure, climate, etc. The regulations do not specify the qualifications of an insurance underwriter. The Authority should clarify this through guidelines or guidance.
The Authority may determine the maximum limit of the insurance amount based on the expertise and capabilities of the underwriter. For underwriting the risk, the concerned service provider will receive a service fee based on the insurance premium.
The insurance regulations have set the underwriter’s license fee at Rs. 5,000 and the regulatory fee at Rs. 1,000.
