Insurance Board tights screw on insurance firms

The Insurance Board (IB) is not going to accept annual reports of insurance companies if the insurance on credit was also included in the income of the company. IB officials said the company would have to make provisions so that the credit amount is not reflected on its earnings. As the trend of the insuring on credit has increased in the last few years, the IB decided to tight its screw to discourage such a tendency. The non-life insurance companies had been insuring on credit amid tough competition among insurance companies. As many as 12 out of 17 non-life insurance companies have insured Rs. 130 million on credit until fiscal year 2007/08, according to IB. The companies insuring on credit are to recover from Rs. 48,000 to Rs. 30 million from such insured.
The companies are yet to submit their annual reports of fiscal year 2008/09 to the IB. But, Rastriya Beema Sansthan has not submitted its annual reports to the IB as it has been unable to hold annual general meeting for several years. IB chairman Phatta Bahadur K.C said that the regulatory body has also asked the companies to write off such amount and come clean regarding the insurance on credit while submitting their annual report for fiscal year 2008/09. The companies have also said that the tendency of insuring on credit would come down heavily amid the IB direction. "We have also reformed this process," said Deep Prakash Pandey, president of Insurers' Association. "We have stopped giving bills if we are not paid premiums."
He said that the companies were planning to register insurance policies only after payment of premiums. Those who are insured on credit don't get insurance coverage in case of damages to their vehicles, according to IB. K.K Shrestha of Everest Insurance also said that the insurance on credit decreased significantly in last fiscal year. Although the amended Insurance Act and Regulation have prohibited insurance on credit, the companies had been insuring just to show more policies amid tough competition, according to insurers. Pandey said that the amount of insurance on credit had ballooned as the corporate sectors failed to pay premium on time.
Source: ekantipur.com