Insurers told to reduce number of unsettled claims by half
RUPAK D SHARMA
KATHMANDU, May 28: The Insurance Board has instructed all non-life insurance companies to reduce the number of unsettled claims by half within the next six months after a deluge of compensation-claim applications remained unapproved for months, and even years, upsetting customers who had bought policies in hope of being rescued at times of trouble.
The insurance sector regulator issued the instruction by calling CEOs and claim department chiefs of 16 private non-life insurers, that insure cars to cargos, to its head office in Chabahil.
“We had to issue the order after we found that many companies were simply harassing their clients by not honoring valid compensation claims and releasing payment on time,” Binod Aryal, executive director of the Board, told Republica, adding,“Such practices will not be tolerated anymore”.
He also warned of action against companies if they fail to settle outstanding claims within next six months. He, however, did not mention the kind of “action” the Board is planning to take.
Data compiled by Republica show that 14 publicly-listed non-life insurance companies have piled up 19,296 unsettled claims worth Rs 2.57 billion till the first nine months of the current fiscal year - up 25.6 percent in terms of number and 39 percent in terms of amount from nine-month period of last fiscal year.
The other two non-life insurers, which are not listed in the stock market - National Insurance and The Oriental Insurance - have 665 and 800 unsettled claims, respectively, to their names, according to data provided by the Board.
The order issued by the Board means non-life insurance companies will have to fork out over Rs 1 billion to settle more than 10,000 claims by November.
“I don´t think this is impossible,” Aryal said. “All they (insurers) need to do is add more staff to the claim department if they are facing shortage of human resources to settle insurance claims on time.”
The Insurance Board, during a recent survey, had found that most of the claims waiting to be settled incorporated motor-vehicle insurance claims.
Although statistics on the overdue amount are not available, the Board said even small payments of less than Rs 20,000 were kept pending for years.
“What was even more disturbing was the practice of pestering clients time and again to submit various documents under the pretext of investigation,” an official of the Board had told Republica on condition of anonymity last week. “This shows dominance of unprofessional management at insurance companies.”