KATHMANDU, Sept 18: Industrialist Rajendra Khetan has resigned from the post of chairman at Everest Insurance, paving way for reconciliation between the non-life insurer and the insurance sector regulator.
Khetan resigned to comply with the corporate governance directive issued by the Insurance Board, which, among others, bars the same individual from assuming position in boards of multiple insurance companies and restricts more than one member of a family from assuming posts in the board of the same company, a person privy to the issue told Republica.
Khetan has been replaced by Ratan Lal Shanghai who previously held the position of vice-chairman at Everest Insurance.
It is not clear why Khetan cited regulatory compliance as the reason for his resignation, as he had already stepped down from the post of chairman at Prime Life Insurance, meaning the insurance sector law did not bar him from assuming a post at Everest Insurance´s board. Besides, Prem Prakash Khetan, who maintains family ties with Rajendra, recently quit the board of Everest Insurance to join Prime Life as chairman.
Promoters of Everest Insurance told Republica that Khetan stepped down due to his heavy work schedule as he is the chairman of Gorkha Brewery, Laxmi Bank and Himalayan Snax and Noodles. He is also the honorary consul of Portugal and is affiliated with Kathmandu University, according to Everest Insurance´s website.
“Yet for a person who was doing multiple tasks in the past and for a person who had resigned from the board of Prime Life to focus on Everest Insurance, the sudden resignation has come as a surprise and raised many questions,” the source said.
Although the reasons for Khetan´s departure are not clear, others say his resignation has virtually put an end to Everest Insurance´s week-long tussle with the insurance sector regulator during which the insurance company had even threatened to shut down entire business for good.
The non-life insurance company had locked horns with Insurance Board, the insurance sector regulator, over issuance of corporate governance directive that, among others, bars insurance companies from generating business from promoters and restricts board members to be part of various internal committees.
Board members of Everest Insurance said these provisions had made it difficult for them to do business and had reduced their status to mere caretakers of the company.
As these regulatory provisions were causing the company´s promoters to fume, the Insurance Board´s decision to suspend the company´s fire portfolio added fuel to fire. This action was taken following revelation that the company had illegally extended advance payment of Rs 40 million based on a claim filed by a firm owned by one of its promoters.
But instead of correcting these mistakes, the company issued a threat of shutting down the entire business and stopped issuing new policies from Tuesday.
Following this, the Insurance Board on Thursday sought clarification from the company. In reply, the company softened its tone and said it had to temporarily stop issuing new policies to focus on settling old claims which had piled up.
The Insurance Board has now summoned all board members of Everest Insurance to its head office on Wednesday to get a clear view on the future course of the non-life insurer.
“We hope the face to face meeting with board members of Everest Insurance will help us know more about their intentions and the future course they have charted for the company,” a high ranking official of the Insurance Board told Republica on condition of anonymity.