Everest Insurance to resume normal operations from today
KATHMANDU, Sept 20: Everest Insurance, which was at loggerheads with the insurance sector regulator and had partially halted its business in a sign of protest, has formally announced resumption of normal operation from Thursday, putting an end to the nine-day-long ambiguity over the future course of the non-life insurer.
The insurance company has also said it will formally request Nepal Stock Exchange to resume its share transaction on Thursday which was halted on Sept 12 following the insurer´s threat to shut down the company for good.
“Everest will now move ahead in a positive direction and will comply with every instruction issued by the regulator. We will also start issuing new policies from tomorrow (Thursday), except for fire insurance policies, business of which has been temporarily banned by the Insurance Board,” Kewal Krishna Shrestha, CEO and board secretary of Everest Insurance, told journalists on Wednesday.
The fire insurance business of Everest has been temporarily banned by the insurance sector regulator, after the insurer was found guilty of extending excessive amount in advance against a fire claim filed by a company owned by one of its promoters.
Following this, the Board slapped a fine of Rs 10,000 on Shrestha and asked the company´s board of directors to take strict action against him.
As this regulatory decision was being considered a slap in the face by Everest´s promoters, the Insurance Board, at around the same time, introduced a directive on corporate governance, which among others, bars insurance companies from generating business from its promoters, prevents one individual from assuming a position in the board of multiple insurance companies and restricts more than one member of a family from taking seats in the board of the same company.
Earlier, directors of Everest had said these instructions and other provisions in the directive that restrict board members to be part of various internal committees had made it difficult for the company´s promoters to do business and reduced their role to that of caretakers of insurance company.
The insurer then issued a threat of shutting down the entire business and stopped issuing new policies from Sept 11.
Following this, the Insurance Board last Thursday sought clarification from the company on why it partially halted its business. In reply, the company softened its tone and said it had to temporarily stopped issuing new policies to divert attention to settling old claims which had piled up.
During Wednesday´s press meet, Shrestha reiterated the same reason for partially halting its business operations. “Following the closure, we have settled over 100 claims,” Shrestha said, whose company has highest number of unsettled claims among non-life insurance companies.
He, however, could not say why the company did not take that decision in May when the Insurance Board had instructed all insurance companies to reduce their claims by half within six months.
Shrestha also could not say whether the decision to partially shut down business operation was wrong. “Since the Insurance Act does not explicitly say anything on such issues, we don´t think we were involved in illegal activity,” he said.
When asked by Republica, whether it was ethical for a public company to take such a decision without making public disclosure, Shrestha did not say anything.
“Yes, we should have formally informed our clients about this. But since most of the newspapers had regularly carried the news, we became oblivious of the formality we should have taken,” he said.
The Insurance Board, meanwhile, said it will discuss whether to take action against the company for partially shutting down its business for nine days during the next board meeting.