Kathmandu. Nepal’s insurance business has a history of 70 years, but the insurance sector is still in a state of expansion. The insurance business has made significant strides in the last ten years. The size of transactions, branch network, employees, insurance fund, investments, cash transactions has become extensive.
As the size of the business grows, with the increasing use of technology and employees with bad mindsets, the operational risk is also high. Therefore, it is necessary to protect the trust of the customers by minimizing the financial irregularities, unethical behavior of agents and employees, and operational risks that may occur within the insurance company.
The Board of Directors and top management of the insurer need to pay attention to:
1 Strict provisions relating to financial transactions:
Cash Transaction Prohibited: Prohibits any agent or employee from accepting cash payment from the customer. All premium payments should be made digitally (mobile banking, digital wallet, cheque, connect IPS or directly into the bank account of the company).
Mandatory receipt: An official confirmation message (SMS and email) from the central system should be sent to the customer’s mobile immediately after digital payment.
Prohibition on Private Transactions: No employee or agent shall be allowed to take personal loans or share private investment plans with customers using the name of the company. If this is done, the provision of immediate disciplinary action should be enforced.
2) Monitoring of Agents and High Performers:
Ethics testing Many business agents should not only be seen as celebrities but also have quarterly audits of the source of their business and renewal rate.
Compliance mandatory: No matter how big a business agent or a good working employee, a zero-tolerance policy should be adopted if the company violates the policy.
3. Post-exit security of employees and agents:
Instant Notice: If an agent or employee resigns or is removed from the company, all the clients he or she is looking at should be required to publish an official information within 24 hours that this person is no longer a representative of the company.
Digital Profile: The list of active agents should be updated on the company’s website, so that the customer can check the agent’s legitimacy himself.
4) Warning Mechanism
Confidential Complaint Portal: If an employee or customer suspects that someone is selling fake schemes or cheating them, a confidential mechanism should be set up to complain directly to the Audit Committee of the Board.
Guarantee of security: The identity of the complainant should be kept completely confidential.
5) Responsibilities of the Board of Directors
Risk Agenda: Each meeting of the Board of Directors shall focus at least 20 percent of the time on operational risk and compliance.
Not only business, but also credit: The board of directors should prioritize ethical business by making insurance premium collection the only criterion for success.
The main reason why Japan’s Prudential Life Insurance has been hiding the fraud scandal for 34 years was to keep the illusion that all was well. Companies in Nepal should also not hide under the carpet what their agents and branch managers are doing in the field in this business race.
