Insurance Board to come tough on insurance companies; cooling period of 6 month for CEOs to be rolled out; no playing around with loop hole as cooling period for deputy CEO as well

The Insurance Board is all set to bring 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, the insurance board is also currently under necessary homework to implement similar regulation in the insurance sector in the nation.

Learning from the experience of commercial banks, when few banks including Nabil Bank which exploited the loop hole of NRB’s regulation by appointing the potential CEO first as deputy CEO until the cooling period gets over, the insurance board is reportedly mulling to impose similar cooling period of 6 months even to get appointment as deputy CEO thereby allowing little room for the companies to play around with legal weakness. The new directive is also expected to address the issue regarding qualification and experience of CEO and deputy CEO which the insurance companies should follow before hiring new topmost executive for their companies.