Kathmandu. The recent investigations and actions of the government bodies related to the insurance sector of Nepal have put a question mark on the regulatory capacity and intention of the Nepal Insurance Authority.
The Authority showed interest in investigating and taking action against the Insurance Authority after the Department of Money Laundering Investigation directed the Insurance Authority in the case involving seven insurance companies. All the employees of the NEA, the administration and the board of directors have also appeared in the role of witnesses on the serious issue that should have come to the notice of the Authority before the third party points it out and regulatory action should be taken.
It was only after the Department of Money Laundering (DoI) directed the Department of Money Laundering to investigate the money laundering case of businessmen Dipak Bhatta and Sulav Agrawal. The Central Investigation Bureau (CIB) of Nepal Police has arrested the incumbent Chief Executive Officer (CEO) of Nepal Police in connection with the irregularities in the distribution of primary shares issued by the Life Insurance Company. In this case, it cannot be said that the authority was not aware of the fact that some part of the shares allotted to the employees was distributed to other groups before the arrest of the CEO.
The authority investigated only after the Commission for the Investigation of Abuse of Authority (CIAA) directed that the insurance company was selling insurance policies at a much cheaper rate than the prescribed rate related to the construction of Kathmandu-Tarai Fast Track. The CIAA officials are upset that the board of directors of the authority has not yet taken full action on the basis of the crime.
Insurance Fund Rs. 8 trillion giddy eyes
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The amount of share capital, insurance premium and investment from insurance companies has crossed Rs 8 trillion. With the conclusion that the regulatory capacity in the insurance sector is comparatively weak and can be easily influenced, most of the interest groups now have their eyes on the life insurance fund and capital fund money held by the insurance companies.
The trend of the promoter shareholders establishing a company in the name of family members or relatives, buying shares at a high price, constructing projects, awarding construction contracts to a company owned by a person or group of employees or close relatives of the insurance company has been on the rise. Instead of curbing such anomalies, the board of directors and high-ranking officials of the authority are tempted to seek a partnership or gain some personal benefits.
These cases raise questions and doubts about the regulatory capacity of the authority. The Heads of the Department of the Authority take the issue of serious negligence or error found during on-site or off-site inspection lightly. The Board of Directors does not take action even in serious crimes on the basis of the report given by the supervisory team with the recommendation of action.
The NRA, however, has started a series of actions as an exception in recent times amid the perception that the new government formed after the election of the House of Representatives has adopted zero tolerance against corruption.
How is the bargaining between the authority and the insurer?
In the first phase, the senior officials of the Authority ask for answers from the insurer and warn of action after the completion of the on-site or off-site inspection. In the second stage, when the insurer sends the reply in writing, the employees of the concerned department or branch call as if they have conducted a serious investigation and even reprimand the employee. They warn of hefty fines. After doing this, the employee reports to the CEO of the company. After this stage, in the third stage, the CEO of the insurer sends an invitation to meet outside the office through an emissary.
In the fourth stage, the action is slowed down through meetings in a private residence or in a secret meeting room of a hotel.
The employees of the NRA’s on-site and off-site supervision departments, who have found widespread financial irregularities after conducting serious investigations in the fifth phase, are surprised and disappointed. The insurers are stunned and this continues.
What is the solution?
Just as an investigation was initiated against the former chief of the CIB in the investigation of businessmen Bhatt and Agrawal’s money laundering case, the investigation report prepared by the NRA’s Supervision Department and the Department of Money Laundering and the involvement of the responsible high-ranking officials of the Authority should be investigated. Every negligent employee, whether incumbent or retired, should be brought under the purview of legal action. Only if this measure is adopted, both the image and regulatory capacity of the authority will be improved.
