Kathmandu. Nepal Insurance Authority, the regulatory body of Nepal’s insurance sector, is currently going through a serious policy and administrative crisis. FY 2082. The NEA, which unveiled its ambitious annual insurance policy and program for 2008, has become a prisoner of indecision due to internal instability and legal errors.
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The change of chairman in the last 6 months has exposed the extreme instability of the leadership in the organization that is supposed to be the trusted guardian of the insurance market. The entire insurance sector has become a prisoner of indecision due to the failure of the organization which has the responsibility of micro-supervision of 2 reinsurance, 14 life insurance, 14 non-life insurance and 7 micro insurance companies.
Extreme Right-Centered
The Insurance Act, 2079 has concentrated almost all the executive powers of the Authority on the Chairman. In such a situation, the entire institutional process will come to a standstill in case the chairman is absent or relieved of his post.
The most serious aspect is that the Insurance Act 2079 is silent on who will take the leadership until a new chairman is appointed until a new chairman is appointed. This legal vacuum has dealt a major blow to the performance of the authority. While all the powers of the chairman have been limited, the status of the remaining employees of the NRA is limited to the book. The heart of the employee trembles to take a decision on any important matter, the expression ‘When the chairman comes, he will be seen'{} has become a victim of indecision.
Obligations of an employee on the job
By the time the civil servant sent by the government designated as the so-called chairman }, half a day has passed by the time he finishes his job inside Singha Durbar and reaches the Authority. If the work of the ministry is overshadowed, they cannot set foot in the premises of the authority even if they want to.
Critical errors:
It is considered a legislative error that the employees of the NRA, experts of the Ministry of Law and the MPs of the Federal Parliament (House of Representatives and National Assembly) involved in the formulation of the Act have not paid attention to such an important aspect. In the absence of a clear legal provision for leadership selection, there is a high risk that decisions made by employees sent by the government as executive or officiating could be challenged and nullified in court tomorrow. There is a provision that the deputy governor of the bank can hold the executive office until the post of governor of the political appointment falls vacant and another appointment is made, but the act does not give the right to any employee of the authority from the executive director to the director to take the acting responsibility.
Effectiveness of Policy and Program:
The policies and programs unveiled by the authority have incorporated modern topics such as digital payment, risk-based capital and transparency dashboard. But with regulators themselves caught up in a leadership crisis, only a few of these programs have been implemented and most are limited to paper plans.
The authority should have been active to make this sector more transparent and credible in the present situation where the access to insurance has reached 47.395 percent. However, due to legal ambiguity and political interference, the future of the NRA is in uncertainty. Immediate amendment of the Insurance Act and stability of the leadership are inevitable for the way forward.
