IB to amend rules to help insurance companies hire CEOs

KATHMANDU:

Insurance regulator will amend the rules for appointing chief executive officer (CEO) of insurance companies as one-fifth of the companies that do not have CEOs are having a hard time finding a match due to stringent criteria.

At present, five of the 25 insurance companies are being run without chief executive officers. Most of these companies are unable to find the candidate that matches the criteria set by Insurance Board (IB)’s Insurance Corporate Governance Regulation 2069.

“The regulation has posed some practical difficulties in some of the companies, so IB is working on amending the regulation to accommodate the current market scenarios,” said Raju Raman Poudel, director at IB.

According to existing the regulation, the CEO of an insurance company needs to hold managerial post for 10 years or above in any private organisation or as second-class officer in case of government official and two years of experience in an insurance company. The rule was applicable to the companies that would be hiring CEOs after IB brought the regulation back in August 2012.

Everest Insurance, PrimeLife Insurance, Gurans Life Insurance, Neco Insurance and NB Insurance are being operated sans CEO at present. The companies have been facing a tough time in the absence of a CEO, who is indispensable for a company to take strategic business decisions.

“We are in the early stage of preparing the draft that will address the CEO appointment and criteria according to the situation,” pointed out Poudel.

Since implementation of the new Insurance Corporate Governance Regulation 2069, IB has rejected appointment of chief executive in an insurance company for failing the eligibility criteria. It had shot down the recommendation of Reshta Jha as PrimeLife Insurance CEO citing his professional experience did not meet the criterion set by the regulation requiring 10 years of experience in managerial position.

Likewise, NB Insurance Company that is undergoing a ban placed by the regulator for its financial irregularities since past four months had been without a CEO for over a year. The company had even published vacancy announcement in the national dailies for CEO in August.

The new board of Everest Insurance Company, that was under IB’s management till mid February, is also looking for a CEO to take the helm of the company. The post has been vacant after IB ousted the then CEO Kebal Krishna Shrestha in October.

Furthermore, Neco Insurance is also looking for CEO after its merger with Premier Insurance fell through.

“The companies have nominated the names of the potential CEOs but many could not meet the criteria of professional experience, which has created difficulty,” said the official.

Insurance Corporate Governance Regulation 2069 had also specified the roles of directors and chief executives along with their remunerations.

New rate for motor indemnity

Insurance Board (IB) has slashed the motor insurance premium rate charged under Sabotage and Terrorism policy starting this Wednesday. The new rate fixed by the regulator stand at total policy amount’s 0.05 per cent for a private vehicle and 0.10 per cent for commercial vehicles, according to the circular issued by IB. Back in February, IB had reduced the premium rates charged by the insurance companies by 20 per cent to 25 per cent based the value of the vehicle. Then the reduced premium rate was only applicable to the insurance policies that cover loss and damage risks. For the non-life insurers, vehicle insurance is the largest portfolio as it contributes more than 40 per cent of the total premium collection.

Source: THT