Insurance Board takes steps to stop unhealthy competition among non-life insurers

Kathmandu: The recently launched ‘Accidental Insurance Directive 2078’ is expected to discourage the on going unhealthy competition among non-life insurers for grabbing business at any loss or cost.

Due to the fixation of minimum premium rate, the regulatory authority has made attempts to avoid unhealthy competition among non-life insurers for the sales of Group Personal Accidental(GPA) insurance policies. This directive is a second in a row from the regulatory authority to stop the unhealthy competition among non-life insurers. Earlier on this month, the IB had issued a circular to all non-life insurers fixing the minimum rate for Engineering Insurance.

Insurance Board(IB) has issued Accidental Insurance Directive 2078 on Monday. The IB has also specified the minimum rate of accidental insurance in the directives. When doing such insurance, the insurance companies must charge a minimum premium of Rs. 2 per thousand. In case of group accidental insurance(GPA), the minimum premium rate Rs. 2 for persons from 2 to 25, Rs 1.75 for 26 to 100 persons and Rs. 1.50 for above 100 persons.

The IB has mentioned in the Directives that the maximum term of such insurance policy must not exceed 1 year. Companies are allowed to issue individual accident insurance and group accident insurance policies. Provision has been made for no group to be set up for the sole purpose of group insurance. Similarly, if it is proved that the group was formed only for the purpose of group insurance coverage, such insurance policy will be void. When issuing such insurance policy, the risks inherent with the profession of the insured must be clearly disclosed.

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