Plan for Information Centre to Address Rising Fraudulent Insurance Claims in the Offing

Stakeholders have proposed setting up an information centre to collect data from the insurance sector and create a centralised system for information exchange, allowing insurers to identify individuals involved in fraud and place them on a blacklist.

Modeled on the Credit Information Bureau in the banking sector, the centre will help prevent scams and facilitate verification of clients’ insurance activities. Nepal Rastra Bank and banks hold shares in the Credit Information Bureau.

Stakeholders say a growing number of insurance clients have engaged in fraudulent practices, making such a centralised system increasingly necessary.

The proposed Insurance Information Centre is likely to be established with joint investment from the Insurance Board and insurance companies, according to an industry representative.

According to former chair of the Life Insurers Association and CEO of Citizen Life Insurance, Pushkar Raj Paudel, recent discussions between the regulator and insurers have led to an agreement to form an autonomous company with joint investment to operate the centre. He said they have reached consensus on collecting sectoral information, facilitating data exchange among insurers and blacklisting individuals involved in cheating and fraudulent activities.

Although the Insurance Regulations 2024 included provisions for the operation of an Insurance Information Centre nearly a year ago, the Nepal Insurance Authority (NIA) has only recently begun preparations to operationalise it. The NIA’s Executive Director, Sushil Dev Subedi, said discussions are underway to prepare the necessary legal framework for the centre. “We plan to bring the Insurance Information Centre into operation from the next fiscal year,” he said.

Paudel said legal provisions are now being finalised, after which other preparatory work will move forward. The NIA also held discussions with representatives of insurance companies in early November to determine the centre’s structure and operating modality. Suggestions gathered during the meeting will be incorporated when finalising the operational modality.

The government had already mandated the establishment of such a centre in the Insurance Act 2022, but the plan remained stalled in the absence of regulations. The Insurance Regulations 2024, issued last Falgun (mid-February to mid-March), paved the way for initiating the centre.

Section 155 of the Act requires the establishment of a centre to collect and systematise insurance-related information. Rule 108 of the Regulations outlines the centre’s responsibilities, including gathering, storing, and distributing insurance data. It also authorises the centre to blacklist or flag individuals involved in insurance fraud, forgery, false claims, or suspicious activities. The centre will also prepare periodic insurance reports and compile necessary statistics.

While the NIA has meanwhile launched the Insurance Institute, the Information Centre has remained unrealised.

The government also announced in the current fiscal year’s policies and programmes that it would establish an information centre to make insurance services more reliable and accessible.