Succession Plan made mandatory for Insurers

Kathmandu: The Insurance Board has directed all insurance companies to prepare a succession plan. It has issued a circular to the life and non-life and reinsurance companies instructing them to make such a plan if the post of Chief Executive, Deputy Chief Executive, or Head of Department is to be vacated for a long time or in case of retirement.

If the head of a department has to take leave for a long time, the performance of that department must not be obstructed.So, another employee must be trained on time to take the lead for the same job. The Board has directed to prepare a succession plan as per the Directive 22 of the Insurance Act and Corporate Good Governance Directive, 2075.The insurance companies have to submit the succession plan after getting approval from the board of directors.

The Board has also given such instructions to see whether the directive has been implemented or not.

Similarly, the companies have been instructed to prepare a job rotation policy with an employee rotation system so that the same employees do not work for more than five years in departments such as underwriting, claims, investment, accounting and reinsurance. The regulatory authority is of the opinion that such a policy will discourage unnecessary favouring from the management and provide equal development opportunities to all deserving employees.
There has been tendency to keeping the same employees as HOD of the crucial department like underwriting, claim, policy servicing and finance department for long and restricting others to succeed or have exposure to such department.It has either created a kind of monopoly of such HOD while employees of other departments are demotivated.

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