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Insurance Co expansion a tough nut to crack
KATHMANDU, AUG 07 -
Insurance companies will now be required to fulfill minimum infrastructure requirements for their expansion. The regulatory body, Insurance Board of Nepal (IBN), is all set to introduce a new provision that will fix the minimum infrastructure requirements for branch expansion.
According to IBN, the provision is needed as companies are branching out without meeting requirements. “The board is working on it for the past three months,” IBN Chairman Fatta Bahadur KC told the Post. Equipment, materials, human resources and technology that may be needed would be clarified in the provision. “All insurance companies must detail the required infrastructure for expansion,” said KC.
He added that the provision would be finalised after suggestions from all companies are had. Although companies had to get prior permission from the board to open branches, specifications of the required infrastructure are still not determined.
“Lately, the trend of utilising the branches as just collection centres has been on the rise,” said one insurance entrepreneur. He added that such branches lack minimum facilities and cannot deliver minimum services to customers, though the network seems larger when one looks at it.
Ramesh Kumar Bhattrai, vice-chairman of Professional Insurance Agents Association of Nepal, also stressed the
need of infrastructure for
uniformity of facilities and services.
“Branches should be able to deliver the required services, though it might not meet the standards of commercial banks,” Bhattarai said. The rise in competition among companies has led to the opening of new branches.
However, non-life insurance companies are still urban-centric though life insurance ones are expanding their wings in different districts.
“The expansion depends on the number of customers in the area,” said KC. “However, most of the companies serve rural customers from their urban branches.”
The lack of sufficient customers in the rural areas has limited non-life insurance companies to urban areas.
Posted on: 2010-08-08 07:38
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