Insurance Authority Decides to Suspend CEOs and Employees Facing Criminal Charges

Kathmandu — The Insurance Authority has clarified the uncertainty over whether CEOs and employees of insurance companies should be suspended after criminal cases have been formally filed against them.

The clarification comes after the Authority decided to suspend CEOs, directors, and other officials of various insurance companies who have been charged in what is considered one of the largest fraud scandals in Nepal’s insurance sector.

Today, the Insurance Authority sent letters to all insurance companies informing them of the suspension of CEOs and other employees facing criminal charges. This has now formally cleared the way for companies to appoint acting CEOs.

The Authority made this decision after finding that some individuals who had been charged by the Office of the Government Attorney and listed as absconding were still appearing at their offices and carrying out their duties.

The Insurance Act clearly states that anyone convicted of a criminal offense and subjected to imprisonment or fines is prohibited from working in any insurance company for five years after completing the sentence or paying the penalty. Furthermore, following the police investigation and subsequent prosecution, there are currently no sufficient grounds or reasons to conclude that the criminal charges against the accused will not be substantiated. As a result, they are not in a position to continue attending office and performing their duties.

Despite the clear provisions of the Insurance Act, some CEOs had reportedly attempted to return to work. With the Insurance Authority now formally notifying companies of the suspensions, boards of directors are expected to convene immediately and assign acting CEOs to ensure continuity of operations.