Kathmandu. KATHMANDU: The Board of Directors and Chief Executive Officer of five micro-insurance companies have been suspended for corruption in micro-insurance companies due to regulatory weakness of the Nepal Insurance Authority. Four out of the five insurers are yet to appoint a board of directors and an acting chief executive officer.
The Board of Directors and CEOs of Himalayan Reinsurance, Guardian Micro, Protective Micro, Liberty Micro Life and Nepal Micro Insurance have been suspended for their involvement in the criminal charges of corruption, money laundering, securities fraud, insurance fraud and banking fraud. A case was filed against them at the court on June 11.
Of these, the appointment of new directors and acting CEO of other four micro insurers except Nepal Micro Insurance Company remained undone for a month. In the absence of authorized officers, not only the policy level but also the day-to-day operations of these four insurers have been affected. Employees have also come to a standstill in managing their daily operating expenses and paying salaries.
Due to the regulatory weakness of the Insurance Authority, the biggest corruption case in the history of the insurance sector has shaken the entire financial sector of Nepal. The responsible officials of the NRA have not regulated effectively and deliberately ignored the serious shortcomings seen in the course of regulation, which has given an opportunity to eradicate corruption at the institutional level.
The Nepal Insurance Authority (NEA) has been silent for a month due to the absence of a leader in the micro insurers. The circular was issued on Monday for formalities with only 4 days left for the expiry of 83. The authority has directed Crest Micro Life, Guardian Micro, Protective Micro and Liberty Micro Life to resume their day-to-day operations and board formation.
With only a short period of time left, it is unlikely that any of the four companies except Liberty Micro and Protective Micro Insurance will form the board of directors and appoint the responsibility of the CEO within four days. As the heads of the finance departments have also been suspended, it will be difficult for the employees to get salary in the absence of the Chief Executive Officer.
Not only this, there will also be complications in the management of financial accounts for the year.
