Kathmandu: The Office of the Auditor General has commented that the Insurance Board has not been able to effectively regulate and monitor insurance companies. Submitting the 59th annual report for FY 2077.78, the issue of the insurance committee’s inability to regularly monitor insurance companies has been raised.
The Board has been suggested for effective monitoring and supervision of insurance companies. The report has mentioned that the Board has carried out on-site inspections in 2 life and 6 non-life insurances and emergency inspections in 12 in the year 77.78. It is mentioned in the report that the regulatory authority did not take action regarding the failure of the audit by the insurance companies on time.
The Auditor General has drawn serious attention to the fact that insurers have been submitting voluntary statements when the Insurance Board has not decided the format of the quarterly report required from the insurers. Dissatisfaction has also been expressed in the AG report that the Board did not take necessary action against the insurer based on the indicators and records of the data obtained in this way.
Some insurers have only mentioned a few sections of the report without mentioning the full details of the provisions in the Insurance Act, Regulations and Guidelines. It has been mentioned that the Board has been negligent by approving the committee and giving only a vertical report without giving the mandatory information.
It is mentioned in the report, “Since the Insurance Board has not decided the format of the quarterly statement, the insurers have been giving reports voluntarily and in various format. The Board has not been able to maintain record of the report and data received. There is no procedure for identifying problems by keeping the records properly. Failure to comply with the provisions mentioned in the Insurance Act, regulations, guidelines and circulars means that no action will be taken. In the absence of additional records, there is a situation where some insurers are monitored more than necessary and some are not prosecuted. This kind of monitoring does not seem to be able to effectively develop or control the insurance business.
There is a situation where insurers who do not follow the instructions mentioned in the regulations, guidelines and circulars will not be prosecuted due to not keeping records after evaluating the information. In the report, the Auditor General has suggested that proper action should be taken based on the indicators received from the insurer and the evaluation of the information.
In 32(3) of the Insurance Regulations 2049, there is a provision to submit the survey report within 15 days of the appointment of the surveyor and to pay the claim within 35 days, but the details of the insurance document with delay in the payment of the claim have not been requested and the necessary investigation and instructions have not been given by the Board.
The Auditor General has suggested to amend the Insurance Act so that it conforms to the Income Tax Act as there are contradictions between the Insurance Act 2049 and the Income Tax Act 2058 during the submission of the audit report. In the Insurance Act 2049, there is a provision that the insurer must submit an audit report within 10 months of the end of the financial year. In the Income Tax Act, there is a provision that the payment must be made within three months of the end of the year and in case of failure to pay, the period can be extended by three months.
Even though the renewal fee was submitted by the end of Chaitra, it is not seen that the necessary documents have been submitted or an application has been made for an extension of the deadline to submit required documents for the license renewal. Even though it has to be renewed by the end of Chaitra end, the provision that the audit report required for renewal can be submitted by Baisakh is contradictory, so it has been instructed to bring uniformity.
The Auditor General has mentioned the issue that the Board did not take action even though the registration and renewal of insurers should be done by the end of Chaitra, even though the insurers did not submit the mandatory documents for two years.
According to Rule 2 of the Insurance Act 2049, when a foreign insurance company files an application for license renewal, it is required to submit a certificate of renewal of the license obtained to conduct insurance business in its own country, but the Board has been renewing the license with two Indian Insurers without obtaining such proof.
In the past 4 years, there has been a significant increase in pending complaints against claim settlement. Until the audit period, 180 complaints were pending hearing in the Board.
