Insurance Board finally closes NB Insurance business
NB Insurance that has been in news for failing to comply with the regulatory norms have finally been closed down today, according to the insurance market regulator, Insurance Board.
The Nepse-listed insurance company that has sold some 6,867 policy in the current fiscal year 2013-14, has around 900 claims. But after repeatedly bypassing the regulatory directives, the regulator today padlocked the non-life insurer that is promoted by the notorious NB Group.
The central bank had also freezed its accounts some two months ago after the Insurance Board sought the Nepal Rastra Bank's help, as it failed to get its act together despite repeated regulatory calls.
The Insurance Board had asked the central bank to freeze the NB Insurance accounts also because it failed to implement reforms in various sectors despite repeated calls in the last one-and-a-half years.
The insurance company landed in trouble in February 2012 after it's controversial payment of Rs 59 million – paid as house rent without taking regulator's consent – was revealed. The insurance companies are not allowed to make expenses in excess of Rs 2 million without taking the Board's permission. It had also managed to siphon off over Rs 70 million from the reserve.
Earlier to the Board had suspended the operating licence of NB Insurance for two months in July 2012. But the company instead of improving its past mistakes and ensure good corporate governance, went on making new mistakes.
The non-life insurance company has also not renewed, and has deposited Rs 35.30 million in the crisis-hit World Merchant Bank and Finance that is under central bank scanner. The insurance company has also not increased it paid up capital to Rs 250 million, according to the regulatory requirement and still has only Rs 141 million paid up capital. It has incurred a loss of Rs 44 million last fiscal year. NB Insurance per unit Rs 100 paid up share was traded at Rs 80 at the Nespe also due to its suspicious transactions.
In October, the Board had also asked the troubled NB Insurance to get its Due Diligence Audit (DDA) to get its real financial picture.