Insurance Act: Members of BODs of BFIs cannot join BODs of insurance company

Kathmandu: Nepal Insurance Authority instructed insurers to abide by the provision of the Insurance Act 2079 for the disqualification of promoters or shareholders for representation on the board of directors(BODs) of insurers. The Authority reminded the insurers about Clause(e) of Section 50 members of the Insurance Act 2079 which states that any member of BODs or basic shareholder of any other insurer, bank, financial institution, or institutions that collect any kind of deposit, is disqualified to represent in the BODs of an insurance company.

As many banks and financial institutions have a shareholding in insurance companies, their promoter shareholders and employees become directors of insurance companies. Now they have to resign from the member of BODs. But for some insurance companies, this rule does not seem relevant and practical.

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