Insurance Authority Fails in Oversight as Many Insurance Companies Remain Leaderless

Kathmandu – Questions have been raised about the effectiveness of the Nepal Insurance Authority’s regulatory oversight after it failed to address the leadership vacuum in several insurance companies whose top executives have been suspended amid ongoing investigations.

On June 11, the government filed criminal cases against nearly 100 individuals from the insurance sector based on a police investigation report. Cases were registered at the Kathmandu District Court, High Court, and Special Court, with many of the accused listed as absconding defendants. As a result, numerous insurance company chairpersons, CEOs, deputy CEOs, and other employees were suspended.

Following the suspension of senior management, companies were expected to appoint acting executives from among their senior staff to ensure continuity of operations. However, several insurers have yet to do so. At Guardian Micro Life Insurance, the entire board of directors was suspended, while the CEO, deputy CEO, and several employees were also removed from their positions. The regulator itself appears uncertain about how the company should proceed and has so far failed to provide a clear solution. Nepal Micro Insurance is facing a similar situation.

While some insurance companies have temporarily handed responsibilities to their most senior officials, others have still not been able to appoint acting CEOs. According to reports, the chairman of one life insurance company allegedly intimidated officials of the Insurance Authority and continued assigning work to suspended employees. He is also said to have traveled to Chitwan while identifying himself as a senior leader of the Rastriya Swatantra Party.

Insurance companies are public service institutions. Although private investors may have invested billions of rupees in these companies, they also manage billions of rupees belonging to policyholders. Observers have expressed concern that the Insurance Authority has remained largely passive despite several public service providers being left without effective leadership.

The Insurance Authority is currently being headed on an interim basis by Chandrakala Paudel, Secretary at the Office of the Vice President. Critics argue that it reflects poorly on the regulator that, despite being led by a senior bureaucrat with nearly three decades of government service and extensive administrative experience, several insurance companies have remained without proper leadership for the past two weeks without any decisive regulatory intervention.