Kathmandu. The Insurance Authority of Nepal (IBA) has summoned the board of directors of the insurer for answers after it found serious violations of corporate governance and policy irregularities.
According to the sources associated with the Insurance Authority, during the on-site inspection carried out by the authority over the past few months, the NEA found serious negligence in the business promotion expenses, advertisement expenses, non-transparent commission expenses, investment with financial interest, asset purification, risk assessment and irregularities in the term insurance business.
Apart from this, the Authority has also taken notice of the fact that some insurers have distributed salary facilities by making different arrangements in the pay scale of the same post in accordance with the Labor Act 2074, the Directive on Institutional Good Governance of the Insurer and the Employees Bye-laws of the Insurer. Since the labor exploitation of the employees leads to the exodus of skilled manpower and weak internal control, the Authority needs to conduct a special study on the salary, allowances and other facilities of the employees of each level of the insurer.
“Even though the CEOs have not been able to reduce the number of manpower in order to evaluate the best performance by deducting management expenses, they have adopted a policy of discrimination in service and facilities,” said the source, “This makes the CEOs look heroes in the short run, but in the end, if an employee challenges the labor court, the CEO will have to bear all the compensation personally.”
According to the authority, the authority has called for the accountability of the board of directors on these issues as the final responsibility for the negligence done by the top management lies with the board of directors. According to the authority, a written reply has been received from the management of the insurer regarding the deficiencies found during the inspection. Since the response received is not satisfactory, the board of directors is being called for further clarification and accountability.
In case there is no satisfactory response from the Board of Directors, the Board of Directors of the Insurance Authority will decide on the action against the concerned insurer.
“We are probably calling them after the Dashain holidays,” an official of the Insurance Authority told Insurance Khabar, “The responsibility of the board of directors is not only to hold meetings and receive allowances, but also to ensure that the ongoing activities are in accordance with the rules.”
This time, the Insurance Authority has summoned only the members of the board of directors (including the chairman) except the independent directors of the insurer. An official of the authority said that they were not called because the independent director does not have the executive status.
