Waiting period shortened to 35 days
KATHMANDU, OCT 19 -
The Insurance Board ( IB ) continues to be assertive towards insurance companies on the claim settle-ment issue.
Recently, the regulator issued a circular to all non-life insurance companies, asking them to start the claim settlement process for automobiles that were stolen and not found within 35 days after the claim was made.
The circular states that a majority of the insurance companies have been found starting the claim settlement process only six months after a theft is reported.
IB officials said most of the non-life insurance companies were found protracting the settlement process. “Some insurance companies were found delaying the process by as long as seven months,” said an executive director at IB . “They were found telling their clients that the search was on.”
As the search process could ‘go on for an infinite period’, the executive said, IB had to intervene to protect the rights of the insured. “So we decided that
a 35-day period is enough. If a stolen vehicle is not found within that period, the claim settlement should start,” said the official.
According to IB , the circular must be implemented ‘effectively’ and non-compliers will have to face ‘stringent action’. “We will soon carry out onsite inspections of insurance companies to ascertain whether they have implemented the direction,” said the IB official. “Also, the insured can come to us and file complaint against insurance companies if the latter do not start the settlement process after 35 days.”
Insurance companies, however, said IB ’s decision to reduce the waiting period to 35 days was ‘not rational’. “In a country like Nepal, where the theft control mechanism is really poor, a waiting period of 35 days is not enough,” said Deep Prakash Pandey, CEO of Shikhar Insurance Company. “When you look at the automobile theft cases, they are rarely found within 35 days.”
Officials at insurance companies also say the waiting period is practiced worldwide before the claim settlement process begins. “The waiting period should have been determined more practically, looking at the ground reality,” said a CEO of an insurance company, who declined to be named. “Our police administration is not efficient enough to carry out the search within 35 days.”
Insurance companies claim IB ’s decision will have a negative impact on their business. “Either the companies will stop insuring vehicles or they will hike
the premium significantly,” said Pandey. “Ultimately, it is the customer who will be affected.”
A committee formed to suggest the waiting period to IB and had suggested a 90-day waiting period, he said. “But IB unilaterally brought this decision.”
Source: The Kathmandu Post
