No More “Double Money Plans”: Nepal Insurance Authority Moves to Stop Misleading Sales Tactics
Kathmandu — The Nepal Insurance Authority has issued strict directives to life and micro-life insurers to control mis-selling and other improper practices in the sale of insurance plans.
The Authority has prohibited insurers and agents from presenting and selling insurance plans as “Fixed Deposit Plans,” “interest-paying plans,” “double money plans,” or deposit and investment schemes offering guaranteed investment returns.
The Authority stated that insurance is a sensitive service directly related to the transfer of financial risks and the financial security of policyholders. Therefore, insurers must provide policyholders with accurate, clear, complete and factual information when selling insurance plans.
Under the new directive, insurers and agents will not be permitted to promise guaranteed bonuses, returns, amounts or other benefits beyond the terms and conditions of the insurance policy and the benefits approved by the Authority.
Similarly, agents will not be allowed to independently promote insurance plans through social media or other platforms using promotional materials other than those approved by the insurance company.
The Authority has stated that when presenting an insurance proposal, customers must be clearly informed that an insurance plan is not a deposit or a Fixed Deposit.
The Authority has also directed insurers and agents to recommend suitable insurance plans based on the policyholder’s needs, financial capacity, age, source of income and insurance objectives.
Likewise, insurance companies will be required to review the sales materials used by agents, analyze and address customer complaints, and regularly monitor insurance-related promotions conducted through social media.
Mis-selling complaints to be reported quarterly
The Authority has also directed insurers to maintain separate records of complaints related to mis-selling. Insurers will be required to submit quarterly reports to the Authority detailing the number and nature of such complaints, their resolution and the action taken in response.
Following the Authority’s latest directive, regulatory monitoring is expected to become stricter against agents who sell insurance plans by portraying them as bank deposits, offer customers incentives of guaranteed returns, or use promotional materials that have not been approved.