IB for repealing RBS Act 68
KATHMANDU: Insurance Board (Bima Samiti) has urged the government to revoke Rastriya Bima Sansthan (RBS) Act 1968 to promote competition in the insurance sector. The Insurance Board (IB) has called for a new act to replace the existing Insurance Act 1992.
“We want equal treatment of insurance companies operating in the land,” said Shekhar Kumar Aryal, spokesperson for the board. IB wants the new act to give equal rights to insurance companies. However, Aryal said he was not very confident about the implementation of the new legal provision, “Without the support of the government, no law is enough.” IB is looking for support from the government to bring RBS in the IB net through annulment of the RBS Act, he added.
Twenty-five insurance companies — eight in life and 16 in non-life — are operating in Nepal. RBS, governed by a separate law, is the only insurance company working in both sectors. The RBS Act is creating a problem in separating life and non-life business of the insurance company. IB is also concerned over the deteriorating situation of the state-owned insurance company. “RBS is lacking technical know-how to operate smoothly in a competitive market,” said Aryal, He wondered how the company was running without adding a single staffer since 1988.
As a result of lack of strong human resources, RBS is losing its business day-by-day. “Its performance has been falling over the years while new companies are coming aggressively into the market,” he said. Moreover, RBS has not succeeded in holding annual general meetings since the fiscal year 2004-05. “IB has not got any financial document from RBS since then,” he said. However, the insurance company is obeying the general directives of IB. Fortunately, RBS is renewing license and paying service fee on time, Aryal said.
Nepal government had established RBS on December 15, 1968 to promote insurance business through a state entity. The government has cent per cent share in life insurance sector of RBS while 12.5 per cent share of RBS’ non-life sector has been floated among the public. RBS has over 2,00,000 policy holders with the majority in life insurance sector.