Nepal Re’s Decision to Slash Riot and Terrorism Insurance Commission Ignites Fury Among Insurance Companies
Kathmandu — Insurance companies are fuming after Nepal Reinsurance Company Limited made the abrupt decision to cut the commission it offers for riot and terrorism insurance. Surendra Thapa, the CEO of Nepal Reinsurance Company Limited, sent out a letter to all non-life insurance firms, announcing the reduction in commission for riot and terrorism coverage.
The move has left insurers feeling frustrated, especially since it came on the heels of significant losses linked to the Gen-Z movement. Leaders from non-life insurance companies voiced their strong discontent, pointing out that this decision was made without any prior consultation with the Nepal Insurers’ Association.
Thapa has confirmed that the commission for riot and terrorism insurance will indeed be reduced. Under the new plan, commissions will drop by as much as 20 percent, and letters have already been dispatched to implement this change. It’s also been noted that the reinsurance company reached out to the insurers’ association regarding this issue.
In the past, Nepal Reinsurance Company Limited had been offering commissions as high as 50 percent to insurance firms. However, with the new plan to cut commissions by 15 to 20 percent, insurance companies are firmly rejecting the proposal.
In a conversation with Beemapost.com, the CEO of one insurance company expressed their frustration: “We finalize our treaty agreements in the month of Shrawan. What is Nepal Re talking about now? I’m not sure if anyone at Nepal Re truly understands the law. Does business operate based on the treaty, or is it just whatever someone decides on a whim?”
The CEO has raised some serious ethical and legal questions about the recent decision.
The reinsurance company announced that they would be cutting commissions for the upcoming year, citing a surge in claims related to damages from the Gen-Z movement. However, insurance companies are pushing back against this change.
In a new mandate, the Nepal Insurance Authority has required that riot and terrorism insurance be reinsured with Nepal Reinsurance Company Limited. This means that insurance companies must match the coverage amounts for these policies with the same reinsurance company. Since all properties affected during the Gen-Z protests were reinsured with Nepal Re, the company is now facing hefty payouts.
On another note, CEO Surendra Thapa has come under fire for his management style. Reports suggest that a lack of technical know-how and decisions made without consulting experts have led to rising internal conflicts within Nepal Re.
To add to the frustration, the company has also slashed direct insurance reinsurance commissions by 10 percent, dropping them from 35 percent to a maximum of 25 percent, which has only fueled dissatisfaction among insurance providers.