Kathmandu, March 24: The Nepal Insurance Authority has taken action against four entities, including the Chief Executive Officer (CEO) of a reinsurance company, concluding that illegal activities were carried out in the Hilton Hotel reinsurance case.
The Authority has taken action against the CEO of Nepal Reinsurance Company under the Insurance Act, 2079, and imposed fines of Rs 200,000 each on Himalayan Reinsurance and Oriental Insurance Company. Additionally, the license of Aon Insurance Broker has been suspended for three months.
According to the Authority, in violation of the provision that reinsurance related to “riot and terrorism risks” must be mandatorily conducted through Nepal Reinsurance Company, Oriental Insurance was found to have transferred the risk to the private-sector Himalayan Reinsurance through Aon Broker. As revealed by the investigation, during protests on Bhadra 23 and 24, the Hilton Hotel suffered damages, leading to insurance claims worth approximately Rs 6 billion.
The Authority concluded that there was an attempt to shift the reinsurance liability to the government-owned Nepal Reinsurance Company in order to protect the private company. The investigation found that a scheme was devised to transfer the burden to the state-owned reinsurer to save Himalayan Reinsurance. It also stated that Nepal Reinsurance CEO Surendra Thapa initially rejected the reinsurance proposal, benefiting the private company, and later attempted to shift the liability back to the government company after the loss occurred.
According to the Authority, the CEO first rejected the reinsurance proposal, thereby favoring the private company, and later tried to transfer the liability to the government-owned company after damages occurred. Based on this, action has also been taken against him.
To investigate the case, the Authority had formed a committee under the coordination of Director Dhruva Timilsina. The decision to take action was made after the committee’s report and the clarifications received from the concerned parties were found unsatisfactory.
The Authority had earlier sought explanations from the companies involved. Legal action was initiated after their responses were deemed unsatisfactory. Considering the seriousness of the case, information has also been forwarded to other agencies for further investigation.
In the background of this case, the policy remains that reinsurance for riot and terrorism risks must be conducted through Nepal Reinsurance Company, which was established by transforming the contingency insurance fund set up after the conflict period.
However, the Authority concluded that this provision was violated in the case of the Hilton Hotel. Meanwhile, the Authority has also taken action against other insurance companies for violating its directives. It clarified that under the Insurance Act, 2079, companies and officials violating directives can face penalties ranging from fines and suspension to cancellation of licenses, and emphasized that regulations will be strictly enforced.
Investigations also found that the Hilton Hotel’s reinsurance was not carried out through Nepal Reinsurance Company and that policies were issued retrospectively (backdated) through collusion among certain individuals. Evidence shows that Oriental Insurance Company arranged the reinsurance of Hilton Hotel through Aon Reinsurance Broker.
Although Aon Broker had forwarded the reinsurance related to riot and terrorism risks to Himalayan Reinsurance Company, it was revealed that Himalayan had rejected the proposal. News regarding this issue has been reported by Nepal Samacharpatra.
People’s News Monitoring Service
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