Insurance Board on Nepal Rastra Bank’s path; cooling period of 6 month enforced for CEOs of insurance companies; hordes of other mandatory educational and experiential requirements

In yet another instance of administering strong regulatory control, The Insurance Board has brought out new amendments to the directives on corporate governance for insurance companies of nepal after which a cooling period of 6 months will be enforced on CEOs of the insurance companies for him/her to be eligible to join new company after exiting the previous one.

Following pursuits of Nepal Rastra bank which had imposed a maximum serving period of 2 terms (4 years in a single term) for CEOs in all BFIs including the 6 month cooling period, the insurance board has also brought sweeping much-needed reforms in corporate governance in the insurance sector.

In addition, the regulation has also barred CEOs of the insurance companies to serve as company secretary. Moreover, these CEOs have also been barred to purchase the shares of the company, serve as insurance agent, moderator and in other managerial position during and until a year from their tenure.

For someone to be appointed as CEO of the insurance, s/he is now mandated to have post graduation degree in Insurance Management, economics, business management, accountancy and engineering as well as 5 years of work experience in a managerial role in a related field. In case of graduates, then one is mandated to have progressive experience of 13-15 years, as per the newly amended directives. Similarly, someone who is 70 years shall be ineligible to be appointed as CEO whereas someone who has already served as chairman of Insurance Board can’t also be appointed as CEO.

For someone to be eligible for the position of BOD,it has been made mandatory that s/he has to have minimum 5 years of work experience in national or international insurance firm or 5 years experience in an official level in government firms. Moreover, eligible candidates who are above 25 years can be nominated as BOD of insurance companies. However, those who hold constitutional positions or those who are people’s representatives in different city and village palikas cannot be nominated as BODs, as per the latest revision.