Kathmandu. The initial phase of implementation of TAG_OPEN_em_38 the Insurance Authority’s Second Strategic Plan 2023-2027 implemented after the implementation of the Insurance Act, 2079 has seen progress in regulatory and institutional reforms.
On the other hand, even though it was included in the first strategy, the work for the protection of the insured interests has not materialized. The major goals directly related to the improvement of the insurance claim process and the public interest have not yet been achieved.
The objective of the five-year strategic plan is to establish the Insurance Authority as a competent, transparent and internationally accredited regulatory body. The achievement seems to be unbalanced when compared with the target and the progress made so far during the two years of the implementation of the strategy.
Progress in Institutional and Regulatory Reform:
The institutional structure has been strengthened with the transformation of Insurance Board to Nepal Insurance Authority. The additional powers given by the Insurance Act, 2079 have expanded the regulatory capacity of the authority. The executive authority of the authority is completely concentrated on the chairman.
During this period, provincial offices have come into operation in Koshi, Madhesh, Gandaki, Lumbini, Karnali and Sudurpaschim provinces. This achievement has strengthened the goal of moving insurance regulation from centralization to decentralization.
Amendments to the guidelines, regulations and supervision system are also being carried out as per the Insurance Act. Directives on risk-based capital and solvency have already been issued in preparation for the transition to a risk-based supervision system.
Risk-Based Supervision:
The authority has prepared a policy and structure for risk-based supervision of life and non-life insurers. Similarly, Nepal Life Insurance, Citizen Life Insurance and Life Insurance Company, American Life Insurance (MetLife), National Life Insurance, Sagarmatha Lumbini Insurance, NLG Insurance and Neco Insurance Company have been supervised on the risk based on risk.
Earmark has been linked to information technology for regulatory control over the term savings deposits of the insurer. Effective digital surveillance systems and regular risk-based inspections of insurance companies are yet to be institutionalized.
Less progress than expected in insurance access:
The strategic plan lays emphasis on micro insurance, expansion of agriculture and livestock insurance, and insurance literacy. The government-subsidized agriculture and livestock insurance program has had some positive effects.
The goal of expanding the sale of insurance through digital means seems to be only limited. However, the target of including insurance in the school and university level curriculum has not been implemented yet.
The main objective of the insured’s interest is still unfulfilled:
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Although the target is to establish the Insurance Protection Fund by 2023-2024, it has not come into operation yet. Although this goal has been repeated since the first strategic plan, the failure to implement it has raised questions about the credibility of the regulator. The goal of establishing the Insurance Development Fund and Insurance Information Center also seems to be limited to the discourse and paper drafting of meetings.
The issue of reforming the insurance claim payment process has been at the center of the complaints of the general public. Although the strategic plan envisages a digital claims system and faster claims resolution, there has been no effective change in practice. It is clear that the claim payment service is not effective as the number of complaints against the insurer is increasing at the Authority.
Gradual improvement in human resources and infrastructure:
There has been gradual improvement in staff training, capacity building and human resource management within the NRA. KATHMANDU: The construction of a new central office building at Kupandole of Lalitpur has neared completion.
The insurance school, which was envisaged as a separate training and study center for the insurance sector, has not been established yet. The Insurance Institute has also not implemented the proposal to start an educational program on insurance subject at the undergraduate and postgraduate level.
Approach explicit, implementation unbalanced{
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Although the second strategic plan of the Nepal Insurance Authority (NEA) is considered far-sighted and in line with international standards, the achievements so far seem to be focused on the regulatory structure and legal reforms.
Although the authority seems to be institutionally strengthened, the structures that directly benefit the insured such as the Insured Protection Fund, claims process reforms and grievance management are still weak.
With more than half of the strategic plan remaining, there is a need to expedite the implementation of the strategic plan, with clear timelines, public accountability and result-oriented reforms.
