Everest Insurance Company will now have to answer to the insurance
regulator — Insurance Board (IB) — for shutting down its business for
the last two weeks.
The board, which had been observing the situation passively so far, is preparing to summon the company’s management and board. “Everest Insurance has not been operating its normal business since the last 12 days without informing the regulator the reasons behind it and it is now time for us to stop waiting for them to approach us,” said chairman of IB Dr Fatta Bahadur KC.
Trouble at Everest Insurance had started in late August 2012, after it was found to have paid the insurance claim made by Himalayan Snax even before the submission of the surveyor’s final report. Back then, the board had slapped a monetary fine on the company and suspended its fire insurance portfolio after it was found guilty on 18 counts.
Moreover, the regulator has not renewed the company’s operating licence for this year. “The Insurance Act does not allow the regulator to issue an operating licence if company is being penalised,” said Dr KC.
“There has not been any proper effort made by the company to provide satisfactory explanations for its doings to the regulator to withdraw the ban imposed on its fire portfolio,” he added.
Himalayan Snax’s factory had met with a fire accident in July 2011 and its claim worth Rs 40 million was paid by the company by the end of September 2011 — before the surveyor had submitted the final report. Since Himalayan Snax and Everest Insurance are promoted by Khetan Group, the regulator was suspicious of the hasty transaction.
“The suspension of the fire portfolio which was the major chunk of our business has made us unable to operate profitably,” said CEO of the non-life insurance company Kebal Krishna Shrestha.
“We — the management — have never made any announcement to shut down the company and it is because of the staff who have launched a protest programme due to the non-renewal of the company’s licence by the regulator that we are unable to undertake day-to-day operations,” he said.
However, agitating employees blame the management and the company’s board that are hell-bent on shutting down the company which has compelled them to take drastic measures.
“The management has not initiated any step towards correcting the mistakes pointed out by the regulator on purpose,” said EIC’s employee union chief Shamsher Rokka. “When IB suspended the fire insurance portfolio the company should have shifted towards other portfolios but it did not and even stopped getting policies reinsured since some time back citing lack of renewed licence,” he added.
The company’s chairman Ratan Lal Sanghai declined to comment on the matter.
This is not the first time that Everest Insurance has shut shop. In September 2013, following the promulgation of the Corporate Governance Regulation by IB that forbade insurance companies to insure firms that have the involvement of their directors, Everest Insurance had threatened to shut shop for the provision drying up its business. Later, it withdrew the plan.
Being a public limited company, voluntary liquidation of the company is not easy. Unless the annual general meeting of the company passes the special resolution for the closure it will be illegal if the company’s management and board shuts down the company. Its shares are still being traded at the stock exchange.
src THT
The board, which had been observing the situation passively so far, is preparing to summon the company’s management and board. “Everest Insurance has not been operating its normal business since the last 12 days without informing the regulator the reasons behind it and it is now time for us to stop waiting for them to approach us,” said chairman of IB Dr Fatta Bahadur KC.
Trouble at Everest Insurance had started in late August 2012, after it was found to have paid the insurance claim made by Himalayan Snax even before the submission of the surveyor’s final report. Back then, the board had slapped a monetary fine on the company and suspended its fire insurance portfolio after it was found guilty on 18 counts.
Moreover, the regulator has not renewed the company’s operating licence for this year. “The Insurance Act does not allow the regulator to issue an operating licence if company is being penalised,” said Dr KC.
“There has not been any proper effort made by the company to provide satisfactory explanations for its doings to the regulator to withdraw the ban imposed on its fire portfolio,” he added.
Himalayan Snax’s factory had met with a fire accident in July 2011 and its claim worth Rs 40 million was paid by the company by the end of September 2011 — before the surveyor had submitted the final report. Since Himalayan Snax and Everest Insurance are promoted by Khetan Group, the regulator was suspicious of the hasty transaction.
“The suspension of the fire portfolio which was the major chunk of our business has made us unable to operate profitably,” said CEO of the non-life insurance company Kebal Krishna Shrestha.
“We — the management — have never made any announcement to shut down the company and it is because of the staff who have launched a protest programme due to the non-renewal of the company’s licence by the regulator that we are unable to undertake day-to-day operations,” he said.
However, agitating employees blame the management and the company’s board that are hell-bent on shutting down the company which has compelled them to take drastic measures.
“The management has not initiated any step towards correcting the mistakes pointed out by the regulator on purpose,” said EIC’s employee union chief Shamsher Rokka. “When IB suspended the fire insurance portfolio the company should have shifted towards other portfolios but it did not and even stopped getting policies reinsured since some time back citing lack of renewed licence,” he added.
The company’s chairman Ratan Lal Sanghai declined to comment on the matter.
This is not the first time that Everest Insurance has shut shop. In September 2013, following the promulgation of the Corporate Governance Regulation by IB that forbade insurance companies to insure firms that have the involvement of their directors, Everest Insurance had threatened to shut shop for the provision drying up its business. Later, it withdrew the plan.
Being a public limited company, voluntary liquidation of the company is not easy. Unless the annual general meeting of the company passes the special resolution for the closure it will be illegal if the company’s management and board shuts down the company. Its shares are still being traded at the stock exchange.
src THT
