The Insurance Board (IB) has told non-life insurance companies that they have to charge a premium of at least 2.75 percent when insuring the business of banks.
The IB said it had fixed the minimum rate and amended the Banker’s Indemnity Policy in a bid to shield insurance companies as many insurers had been charging less than 1 percent. IB Director Shreeman Karki said they issued the directive after finding out that a number of insurers had been charging the minimum premium rate due to a fiercely competitive market. “We have enforced the directive mainly to protect insurers.”
The new directive has also barred insurers from changing the insurance amount for the duration of the insurance policy. The IB created the provision after banks were seen to be increasing the insurance amount when risks were higher.
“Banks used to raise the insurance amount during festivals like Dashain when cash transactions were greater. As a result, insurance companies have to cover a higher risk,” said Karki.
According to the amended Banker’s Indemnity Policy, insurance will cover losses to bank property like ATM counters, mobile counters and branchless banking counters. Similarly, losses to collateral stored at the bank due to any reason like fire or theft or robbery by bank staff or outsiders will be covered by insurance.
The coverage will also extend to damage, theft or looting of cash or collateral during transportation. There has been increased cases of looting of cash in transit in recent years.
Similarly, insurance will cover losses caused to banks by fake documents including counterfeit cheques, drafts and other commercial papers. Insurers will also cover losses to collateral held by banks. If the damage has been caused by bank staff, compensation equal to the insured amount or the cost of the damage will be paid. However, insurance will not cover losses caused by the board members or partners of banks. Likewise, no compensation will be paid for losses arising from stolen passwords or improper use of the software or any other computer-related application.
As per the revised policy, the insured can claim compensation for damage not identified during the insurance period but found later. Insurers are required to compensate for losses which were identified within six months after the expiration of the policy. Such damage should have occurred a maximum of two years ago before detection in order to receive compensation, said the IB.
The valuation of losses will be done on the basis of the market price at the time when they were detected. In case the market price cannot be determined for that particular day, the valuation should be fixed based on mutual consent. If this cannot be done, the price will be fixed by a mediator.
According to the new regulation, insurance will not cover losses caused by natural calamities like earthquake, volcanic eruption, flood, typhoon and other climatic reasons. Likewise, the policy will not include losses due to war, foreign intervention, civil war or other types of army operations.
source: the kathmandu post,7 april 2014
LINK
The IB said it had fixed the minimum rate and amended the Banker’s Indemnity Policy in a bid to shield insurance companies as many insurers had been charging less than 1 percent. IB Director Shreeman Karki said they issued the directive after finding out that a number of insurers had been charging the minimum premium rate due to a fiercely competitive market. “We have enforced the directive mainly to protect insurers.”
The new directive has also barred insurers from changing the insurance amount for the duration of the insurance policy. The IB created the provision after banks were seen to be increasing the insurance amount when risks were higher.
“Banks used to raise the insurance amount during festivals like Dashain when cash transactions were greater. As a result, insurance companies have to cover a higher risk,” said Karki.
According to the amended Banker’s Indemnity Policy, insurance will cover losses to bank property like ATM counters, mobile counters and branchless banking counters. Similarly, losses to collateral stored at the bank due to any reason like fire or theft or robbery by bank staff or outsiders will be covered by insurance.
The coverage will also extend to damage, theft or looting of cash or collateral during transportation. There has been increased cases of looting of cash in transit in recent years.
Similarly, insurance will cover losses caused to banks by fake documents including counterfeit cheques, drafts and other commercial papers. Insurers will also cover losses to collateral held by banks. If the damage has been caused by bank staff, compensation equal to the insured amount or the cost of the damage will be paid. However, insurance will not cover losses caused by the board members or partners of banks. Likewise, no compensation will be paid for losses arising from stolen passwords or improper use of the software or any other computer-related application.
As per the revised policy, the insured can claim compensation for damage not identified during the insurance period but found later. Insurers are required to compensate for losses which were identified within six months after the expiration of the policy. Such damage should have occurred a maximum of two years ago before detection in order to receive compensation, said the IB.
The valuation of losses will be done on the basis of the market price at the time when they were detected. In case the market price cannot be determined for that particular day, the valuation should be fixed based on mutual consent. If this cannot be done, the price will be fixed by a mediator.
According to the new regulation, insurance will not cover losses caused by natural calamities like earthquake, volcanic eruption, flood, typhoon and other climatic reasons. Likewise, the policy will not include losses due to war, foreign intervention, civil war or other types of army operations.
source: the kathmandu post,7 april 2014
LINK
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