Kathmandu. A serious and dangerous anomaly has been found to be on the rise in the life insurance and microinsurance sector in recent times. Life insurance policies issued by microfinance institutions for the protection of loans are being sold arbitrarily, flouting the basic principles of insurance and underwriting.<\/p>\n
The insurance premium should be determined according to the age on the basis of risk, but due to the sale of insurance policies at the same rate i.e. ‘flat rate’ for all age groups, the insurance companies are adding unnecessary and huge financial burden. The Insurance Authority has banned the issuance of life insurance policies at the same rate (flat rate).<\/p>\n
According to the rules of actuarial risk assessment, it is natural for insurance policies to be expensive because the risk of death of younger people is less and the risk of older people is high. However, in the market of Nepal, especially in microfinance through microfinance, insurance premiums are charged at the same rate from both high and low age insurers. Due to this practice, on the one hand, injustice has been done to the small and low-risk insurers, and on the other hand, the insurance companies have not received the actual insurance premium that should be paid according to the age, which has directly affected their risk bearing.<\/p>\n
Another aspect of the distortion seen in this sector is the extreme misuse of moral hazard. It has been revealed that loans are issued in the name of people suffering from serious diseases like cancer, liver, kidney disease or are close to death due to excessive alcohol consumption and 4-5 insurance policies are purchased on that basis.<\/p>\n
After the death of the insured by paying a premium of only two to three thousand rupees, the organized gang and tendency to collect claims up to eight to ten lakh rupees through various insurance policies has become dominant. Due to such insurance policies issued without health check-up and even general risk assessment, the insurance companies have lost crores of rupees in illegal and unethical claim payments.<\/p>\n
Experts in the sector have pointed out that the regulatory body Nepal Insurance Authority should take the following strict steps immediately,<\/p>\n
saying that such wrong practices have increased the risk of collapsing the entire microinsurance system.<\/p>\n
A notarized copy of the citizenship of the concerned insured should be made mandatory in the risk assessment process while issuing the insurance policy. In addition, the tendency of age fraud should be reduced to zero by directly linking the insurance system to the national identity card or eKYC.<\/p>\n
Apart from this, the wrong practice of uniform rate should be stopped immediately and it should be made mandatory for the insurance companies to submit the details of the insurance premium payment to the authority regularly only on the basis of the age and risk of the insured. The insurer who violates the rules should be punished severely for each insurance policy.<\/p>\n
Another way to curb the existing anomalies in micro insurance is to make arrangements for registration, approval and issuance of insurance policies through the integrated portal of the Insurance Authority in the case of micro insurance and credit protection insurance like in agricultural insurance. As a result, the same insured cannot take insurance policies beyond the maximum limit prescribed by the micro-insurance guidelines from different institutions.<\/p>\n
The main objective of micro-insurance is to provide financial security to the poor and underprivileged people. But now it has become a means of earning illegal commission for the Chief Executive Officer and Deputy Chief Executive Officer of the microfinance company. On the other hand, when calculating the insurance premium, operating expenses, insurance claim payment earned by the insurance company, the saving amount is not even 10 to 20 percent, in some months the insurer has to pay more claims than the income and illegal commission.<\/p>\n
In order to prevent the collapse of life insurance companies and maintain the public’s trust, it has become imperative for the Nepal Insurance Authority to take technical control as well as take stern action against the insurers and officials who violate the rules.<\/p>\n
In this context, the employees of the micro insurance companies have complained that the authority has hidden the report instead of initiating action against the top management and director of the concerned insurers on the basis of the shortcomings pointed out in the supervision report of the micro insurance companies.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. A serious and dangerous anomaly has been found to be on the rise in the life insurance and microinsurance sector in recent times. Life insurance policies issued by microfinance institutions for the protection of loans are being sold arbitrarily, flouting the basic principles of insurance and underwriting. The insurance premium should be determined according […]<\/p>\n","protected":false},"author":5,"featured_media":321645,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45149,45159,45099],"tags":[56074],"class_list":["post-321653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-laghu-beema-en","category-news-en","category-regulatory-en","tag-microinsurance-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321653","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=321653"}],"version-history":[{"count":2,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321653\/revisions"}],"predecessor-version":[{"id":321674,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321653\/revisions\/321674"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/321645"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=321653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=321653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=321653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}