Regulator seeks clarification from Everest Insurance

KATHMANDU, SEP 14 -

The Insurance Board (IB) has sought clarification from Everest Insurance Company on the latter’s decision to halt issuing new policies in all areas and limit its operation to settlement of claims.

The regulator on Thursday dispatched an official letter to Everest Insurance following media reports about the company’s decision ‘stop issuing policies’ from Tuesday. IB has asked the company to reply within three days.

“Although we have not received an official letter from the company yet, we felt it is necessary to seek clarification after media reports,” said a senior IB official. “Our first priority is to ascertain whether the news is true.”

According to IB, a public company under the regulation of a government authority cannot close its operations out of the blue. “There are certain procedures that should be followed before closing operations (or a part of operations),” said the official.

IB is of the view that Everest’s decision was irresponsible. “If the company was not satisfied with IB’s action, the court was always at their disposal,” said the source.

“Even the letter sent by the IB had mentioned that ‘the company if dissatisfied by the action can reach the appellate court within 35 days’.”

IB and Everest are currently at loggerheads after the regulator prevented the company from covering fire insurance. The regulator had taken action against the company, slapping its CEO Kewal Krishna Shrestha with a fine of Rs 10,000 for making payments ‘illegally’ to claims of Himalayan Snax, the manufacturer of Mayos noodles.

Insurers, however, say Everest’s action is a manifestation of the reservations they have to the board’s recent decisions. The Corporate Governance Regulation 2012 recently introduced by IB is another bone of contention between IB and Everest Insurance.

The regulation has deprived the board directors from doing business with their own company and controlling the salary structure of chief executives. Nepal Insurers Association (NIA) and insurers have expressed serious reservations over some of the provisions of the regulation.

Source: The Kathmandu Post