Court allows IB to manage Everest Insurance business

KATHMANDU:

The Patan Appellate Court today discontinued the stay order issued against the Insurance Board’s decision to take over the management of Everest Insurance Company (EIC), dismiss the company’s CEO and suspend board members from conducting insurance business for the next five years.

The appeals court’s decision means the insurance sector regulator has been legally allowed to continue handling the business of the non-life insurance company until the final verdict is out. The decision also means the company’s CEO, who was sacked by the regulator, will not be able to assume his position and board members will continue to be barred from carrying out insurance-related business until the court issues the final verdict, as per registrar of the Patan Appellate Court Nirpadhoj Niraula.

Earlier on October 23, the appeals court had stayed the insurance regulator’s decision to dismiss Everest Insurance’s CEO and suspend the executive board. The next day, it had issued another stay order on the Insurance Board’s decision to take over the management of the insurance company.

The insurance sector regulator on October 9 had taken over the management of the non-life insurer, dismissed its CEO and suspended board members from carrying out insurance business for the next five years citing it had failed to effectively run its business for the last three months despite repeated calls ‘to correct mistakes of the past’.

Everest Insurance fell under the regulator’s radar more than a year ago after it was found to have made payments for an insurance claim worth Rs 40 million made by Himalayan Snax before the surveyor submitted the final report. At that time, IB took the case seriously as Himalayan Snax and Everest Insurance had a common promoter. But as investigations into this case were going on, the regulator also found that the company had flouted regulations on 18 different counts.

Following this, the regulator suspended the fire business of the company. But instead of rectifying its mistake the company, in September 2012, threatened to shut shop. Later, the company was also not able to renew its operating licence because of the suspension of its fire portfolio.

Since then the regulator has been asking the company to renew its licence by correcting its mistakes.

“Despite the repeated summons of the regulator, the company’s board had failed to respond properly, so to protect the interest of policy holders we decided to intervene,” chairman of IB Prof Dr Fatta Bahadur KC had then told The Hiamlayan Times.

Source: THT