The insurance regulator — Insurance Board — has asked troubled NB
Insurance to get its Due Diligence Audit (DDA) conducted to get the
details regarding the financial standing of the non-life insurer.
NB Insurance had been asked by the insurance regulator to straighten its wrongdoings one and a half years ago, but its condition has gone from bad to worse.
“IB has waited long enough for the insurance company to get its act together but there has been no improvement whatsoever, so we have asked the company to get its DDA done,” informed an official at the Insurance Board (IB).
NB Insurance had run into trouble since February 2012 after the regulator found that it had used funds worth Rs 59 million to rent a building against the regulator’s rule. Likewise, IB also discovered that the company had deposited money at different finance companies against the direct order of the regulator. Moreover, the investigations also revealed that the company’s directors had misappropriated money from the Earmarked Fund without any authority.
In addition, NB Insurance was also found to have been flouting reinsurance guidelines along with other similar cases of bad corporate governance which showed the directors were involved in embezzling the company’s funds.
NB Insurance is promoted by NB Group which also promoted Nepal Bangladesh Bank, Nepal Credit & Commerce Bank, Harisiddhi Brick and Tiles Factory, and National Hydropower Company.
Following the revelations, IB even suspended the operating licence of NB Insurance for two months in July 2012. “Since then we have provided the board and management of NB Insurance enough time to recover the embezzled funds but they have not been able to do so,” the official pointed out, “Moreover, since the IB’s findings were revealed, we have been asking the company to provide its actual financial standing but they have not done so.”
The IB official also said that the company will publish a notice for DDA soon and within three months the report will be prepared which will reveal the state of the company.
NB Insurance, with a paid up capital of Rs 141 million, needs to increase its paid up capital to Rs 250 million as per IB’s regulation. According to the fourth quarter financials, it had incurred a loss of Rs 44 million.
“Based on the DDA report, IB will take the required decisions which could be shutting down the company for good to protect policy holders. If the company remains in the current state for more time, they will be unable to settle claims,” the official informed.
Meanwhile, the insurance regulator is hopeful that their mediation will help Everest Insurance Company run smoothly. Everest is in trouble due to the ongoing tussle between the management, employees and the board for the past couple of months.
“Everest Insurance is financially strong unlike NB Insurance, so if the issues between agitating employees and management can be resolved, most of the troubles at the company can be sorted out,” said the official at IB, adding that IB has already held three rounds of formal talks with representatives of Everest Insurance.
The company has been suspended since the last one year after it was found to have flouted regulations on 18 different counts. Moreover, according to IB, it has not provided satisfactory explanations for its doings for the regulator to withdraw the ban. The employees have alleged that the management is deliberately trying to shut down the company.
source: the himalayan times,2 Oct 2013
LINK
NB Insurance had been asked by the insurance regulator to straighten its wrongdoings one and a half years ago, but its condition has gone from bad to worse.
“IB has waited long enough for the insurance company to get its act together but there has been no improvement whatsoever, so we have asked the company to get its DDA done,” informed an official at the Insurance Board (IB).
NB Insurance had run into trouble since February 2012 after the regulator found that it had used funds worth Rs 59 million to rent a building against the regulator’s rule. Likewise, IB also discovered that the company had deposited money at different finance companies against the direct order of the regulator. Moreover, the investigations also revealed that the company’s directors had misappropriated money from the Earmarked Fund without any authority.
In addition, NB Insurance was also found to have been flouting reinsurance guidelines along with other similar cases of bad corporate governance which showed the directors were involved in embezzling the company’s funds.
NB Insurance is promoted by NB Group which also promoted Nepal Bangladesh Bank, Nepal Credit & Commerce Bank, Harisiddhi Brick and Tiles Factory, and National Hydropower Company.
Following the revelations, IB even suspended the operating licence of NB Insurance for two months in July 2012. “Since then we have provided the board and management of NB Insurance enough time to recover the embezzled funds but they have not been able to do so,” the official pointed out, “Moreover, since the IB’s findings were revealed, we have been asking the company to provide its actual financial standing but they have not done so.”
The IB official also said that the company will publish a notice for DDA soon and within three months the report will be prepared which will reveal the state of the company.
NB Insurance, with a paid up capital of Rs 141 million, needs to increase its paid up capital to Rs 250 million as per IB’s regulation. According to the fourth quarter financials, it had incurred a loss of Rs 44 million.
“Based on the DDA report, IB will take the required decisions which could be shutting down the company for good to protect policy holders. If the company remains in the current state for more time, they will be unable to settle claims,” the official informed.
Meanwhile, the insurance regulator is hopeful that their mediation will help Everest Insurance Company run smoothly. Everest is in trouble due to the ongoing tussle between the management, employees and the board for the past couple of months.
“Everest Insurance is financially strong unlike NB Insurance, so if the issues between agitating employees and management can be resolved, most of the troubles at the company can be sorted out,” said the official at IB, adding that IB has already held three rounds of formal talks with representatives of Everest Insurance.
The company has been suspended since the last one year after it was found to have flouted regulations on 18 different counts. Moreover, according to IB, it has not provided satisfactory explanations for its doings for the regulator to withdraw the ban. The employees have alleged that the management is deliberately trying to shut down the company.
source: the himalayan times,2 Oct 2013
LINK
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