Kathmandu: The non life insurance industry is passing through a cut throat competition.It has resulted ill practice in the industry.
The partipants of an interaction program held at Insurance Institute on Thursday by the Insurance Board admitted that the unhealthy competition has brought challenges in policy underwriting.
The HOD of underwriting department admitted that the policy would be issued at a lower rate than the tariff due to undue pressure from the CEO for business.
Participants have informed that the policy is issued without any actual assessment of the risk. If one company quote the tariff rate of a product at Rs 2, another will quote Rs 1.5 only. When unhealthy competition between companies carries risk at a low price, the premium they take is not enough to reinsure. In such cases, some companies even do not reinsure. If such an insurance claim is made, the company will not have enough fund to pay the claim.
The participants have requested the Board to amend the Property Insurance Directives.
The partipants also complained that the provision of policy issue or renewal only after the realisation of premium made through cheque has created practical problem. They questioned,if the cheque is recieved at 2pm on the last date of policy expiry, should we renew or not since the cheque will not be realised by the same day due to banking services.
Addressing their question, Chairman of Insurance Board Surya Prasad Silwal has instructed them to do as per what is written in the law as there is no one above the law. He has requested everyone to do business without unhealthy competition. He has warned that stern action will be taken if the rules and laws violated.