Regulator tells insurance companies not to hike premium
KATHMANDU, MAY 26
Insurance Board (IB) has rejected the proposal of insurance companies to hike house insurance premiums and extend the cooling-off period which is the time before an insurance policy becomes active.
A number of insurers have already jacked up the rates, and the industry regulator has told them to return the excess amount to the policyholders.
Insurance companies have been pressuring the IB to implement the new provisions citing the possibility of the premiums being raised by reinsurance companies due to heightened risks in the wake of the April 25 earthquake and continuing aftershocks.
However, the board has countered that potential customers should not be discouraged from buying insurance policies by hiking the premium and lengthening the cooling-off period.
IB Director Shreeman Karki said the board was firmly sticking to its directive issued last week barring insurers from hiking the premium.
“During a meeting with the chief executives of the country’s insurance companies a few days ago, we asked them to promptly return the excess amount they have collected from their clients,” he said.
The companies have been asking the regulator to allow them to extend the cooling-off period for house insurance to two weeks from the date the policy is issued. Currently, insurance policies become active immediately.
Insurers have argued that setting a cooling-off period is an international practice. Chunky Chhetri, deputy general manager of Sagarmatha Insurance, said there was an international trend to increase the cooling-off period during times of disasters. “Once the situation normalizes, it is shortened to the original period,” he added.
Meanwhile, the IB invited surveyors to its office and requested them not to delay the estimation process of the damaged houses to ensure that the earthquake victims get their insurance payments speedily.
The insurance companies have argued that the claims settlement has been delayed because the policyholders have been slow in providing the damage estimates. But Karki said that it was the job of the surveyors to prepare the estimates and not the house owners.
Following the April 25 Great Quake, the insurance companies have been overwhelmed by claims mainly in the non-life segments that include house damage, personal accident, vehicles and bank deposits. Of 12,000 claims that the companies have received, only a few have been settled.
The IB said that the insurance companies had settled 200 cases of life insurance claims worth Rs22.5 million so far. The number of these claims is expected to swell in the coming days.
“As there is no deadline for insurance claims and people are engaged in the death rituals of their deceased family members, life insurance claims are likely to grow massively from now on,” Karki said.
Source: ekantipur
