Kathmandu. Insurance companies have to spend at least one percent of their net profit under social responsibility. The Insurance Board has amended the Institutional Good Governance Directives for Insurers 2074 to make the insurance companies active in carrying out social responsibility.
Although the Companies Act stipulates that one percent of profits should be spent under social responsibility, insurance companies are have not been making remarkable contribution in social service activities.
The IB has added such provision by adding ‘B’ to Article 57 of the Institutional Good Governance Directive 2074. According to the new arrangement, it has been estimated that the insurance companies will spend at least Rs.80 million in next financial year.
As per the financial report of last fiscal year 2077/78, out of 39 insurers, 36 insurers have earned a total of 7.54 billion net profit.
In order to prevent misuse of such expenditure by the IB has guided the insurers to make such expenditure in the area of education, health, disaster management, environment protection, cultural promotion, infrastructure improvement in remote areas, increase in income earning capacity of socially backward classes, insurance literacy and other areas specified by the IB over the time.
Similarly, another amendment made in the Directive has the provision of spending at least two percent of the total staff expenditure of the previous financial year on training and career development.
Last year, each life insurers had contributed Rs.7,50,000 to the Government’s Covid19 relief fund.