Kathmandu. The universally accepted principle of insurance is to first identify and assess the potential risk, on the basis of that, determine the insurance premium, issue insurance policy, and only then risk bearing. However, in the micro insurance sector of Nepal, it has been found that the practice is being contrary to the common belief. <\/p>\n
In particular, in the group or borrower micro insurance through microfinance financial institutions, the insurers start the process of risk assessment only if the insured dies and claims are made. <\/p>\n
The ‘Micro Insurance Directive, 2081’ issued by the Nepal Insurance Authority (NIA) has a provision to give the right to initial risk assessment and document collection to the microfinance financial institutions acting as institutional agents. However, while making extensive misuse of the same provision, the microfinance companies have been sending only the name and loan amount of the borrowers to the insurance company by lying about their age, without giving basic details such as citizenship, health details or relationship proof of the insured while issuing loans. <\/p>\n
Life insurance companies also accept the risk on the basis of the list received without any initial check and risk assessment in the race to grow the business. When an insured debtor dies and the insurance claim is made, only then the insurance company and microfinance staff prepare the proposal form, the photocopy of the citizenship along with the old date documents and print the insurance policy and proceed with the claim process. <\/p>\n
In this way, the underwriting is done only after the incident and the death of the insured has attacked the very essence of insurance. Due to this, the insured’s family has to face a lot of trouble in getting the documents at the time of making the claim and there is a lot of rejection of the claim or excessive delay in payment on the pretext of not having the documents. <\/p>\n
The anomaly is not limited to this. Due to the lack of real-time data exchange between microfinance and insurance companies, it has been alleged that different insurance companies or the same company are getting insurance from the same company repeatedly. <\/p>\n
Taking advantage of the lack of insurance awareness among the insured in rural and poor areas, illegal activities such as recovering the amount from all the insurance companies after the death claim is made and dividing the claim amount received by the representatives of the insured and the representatives of the microfinance companies are also being carried out. There have been complaints of institutional fraud by leaving the victim’s family in the lurch on the pretext of clearing the principal interest of the insured. <\/p>\n
The Life Insurer’s Insurance Guidelines 2079 prohibit the issuance of insurance policies on the back date (old date). Issuing insurance policies on the old date after the death of the insured is a serious offense both legally and morally. Such distortions have increased the risk of losing public trust in the insurance sector. <\/p>\n
The microfinance company should make arrangements to enter the details of the insured through the digital system at the same time after approving the loan and taking the premium and generate the policy number in real time. <\/p>\n
To prevent the dual insurance of the same person, the Insurance Authority of Nepal should operate a central digital server that integrates all micro insurance. This anomaly would have been stopped if the Insurance Information Center was established. <\/p>\n
A strict rule should be enforced that the insurer should deduct the amount of claim payment to the microfinance and the microfinance should deduct the principal interest on the loan and send it directly to the personal bank account of the insured’s heir. A provision should be made that the microfinance should share the details of such claim payment with the insurer along with the account number of the concerned claimant. Apart from this, the liability of the insurer should be made to submit the demand by the insurance authority. This will ensure checks and balances. <\/p>\n
It will be difficult to stop this institutional loot in the name of micro insurance until strict legal action is taken against the underwriters, top management and miscreants of the insurance companies who issue insurance policies at a later date.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The universally accepted principle of insurance is to first identify and assess the potential risk, on the basis of that, determine the insurance premium, issue insurance policy, and only then risk bearing. However, in the micro insurance sector of Nepal, it has been found that the practice is being contrary to the common belief. […]<\/p>\n","protected":false},"author":5,"featured_media":322472,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45149,45159],"tags":[],"class_list":["post-322488","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-laghu-beema-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/322488","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=322488"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/322488\/revisions"}],"predecessor-version":[{"id":322489,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/322488\/revisions\/322489"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/322472"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=322488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=322488"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=322488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}