Kathmandu: Life insurance companies have started taking precautions during policy underwriting amid the killing of innocent life for insurance claim. After the incident of killing of 21 year old youth Sarjan BK for a claim of Rs.2.5 crore from Reliance Life Insurance Co. Ltd. the Insurance Board has instructed all life insurers to exercise full caution during medical, financial or moral hazard underwriting.
Life insurance companies have started the practice of accepting the offer only if all the proofs required for risk assessment and on-site report are included in the case of life insurance policy proposals worth above Rs. 50 lakh sum assured.
In the first phase, all branch offices have been instructed to recommend a short list of hospitals recognized by the Government of Nepal and send them to the head office for registration. Based on the list obtained in this way, the head offices of the life insurance companies will enter into a service contract with the shortlisted health institution for the medical test of the life insured. Only the medical report issued by such health institution will be valid now onwards. If any fraud in the medical report results claim, the health institutions will be made liable for the same. The insurer may sue for the cancellation of the registration of the concerned health institution.
After it was found that the employees and agents of the insurance company were using fake stamps and medical test reports along with the proposals of large sum assured, the Insurance Board has verbally warned the CEOs to stop such practices.
In the absence of the proposer or life insured, the employees of the insurance company or the agents prepare a medical test report in the name of the insured after conducting their own health examination, an old agent said, there is coalition between the employees of the insurance company and the pathology staff for such report. They have been preparing such fake reports to collect the amount received from the insurance company for the medical test report and for the convenience of the insured and in some cases to issue a large insurance policy in the name of the insured with bad health.
Apart from medical test report, moral hazard report has also been made mandatory to be attached with the proposal of large sum assured. In the ethical risk report, the old agent himself or the branch, sub-branch manager of the insurance company, for the approval of the insurance proposal by taking on-the-spot information about whether the insured or the proposer wants to insure with good intentions, whether the evidence attached to the insurance proposal is reliable and whether the background of the proposer is reliable. The employee or agent who made the recommendation should be held responsible in the event of any questionable incident later on in the policy issued on the basis of such recommendation.
While approving the insurance proposal of Sarjan BK, there was no attempt to know the real background of the life insured by the Branch Manager or underwriting department’s staff of Reliance Life Insurance. As it is unnatural and suspicious to offer an insurance policy of Rs. 2.5 crore to a youth who hails from a slum. If the employees of Reliance Life’s branch office had tried to know real background of Sarjan BK, his murder would have been avoided.