Section 101: Insurer Deemed to be Problematic

1) Notwithstanding anything contained elsewhere in the prevailing laws, the Authority may declare an insurer as problematic for the sake of interest of the insured if the following conditions exist:

(a) In case the insurer fails to maintain the minimum paid-up capital and capital fund to be maintained,

(b) In case the ratio of total assets and liabilities (solvency margin) is not maintained,

(c) In case it is proved that the promoter shareholders of the insurer have established the insurance company with the earnings through fraud or embezzlement, money laundering, corruption, financial investment in terrorist activities, human trafficking,

(d) In case it is proved that the insurance company was established or the license was received by the insurer by deceiving, forgery, or providing false statements or preparing or submitting fake documents,
(e) In case acts performed against the interest of the insured, shareholders, creditors of insurers or the general public repeatedly,

(f) In case the insurer did not follow the instruction provided by the Authority to be merged with another insurer,

(g) Violating this Act or Rules and By-laws framed under this Act, as well as existing laws, terms, and conditions mentioned at the time of issuing the license or the instructions and orders issued by the Authority, repeatedly,

(h) In case insurance fraud is conducted by the insurer,

(i) If the regulation, inspection, monitoring performed by the Authority or audit report or actuary report discloses the inability of the insurer to fulfil its liabilities or being impossible the same,

(j) In case information on the situation pursuant to sub-section (3) of Section 105 is provided,

(k) If it is observed that the insurance business may not be operated continuously due to disputes between the directors regarding the operation and management of the insurer,

(l) Being failure to submit evidence of improvement within the prescribed period as per the instruction provided by the Authority while imposing a full or partial ban on the insurance business being operated by the insurer,

(m) The insurer failed to fulfil its liability repeatedly.

2) Before declaring an insurer as problematic pursuant to sub-section (1), the Authority shall provide notice of 15 days to the insurer to submit clarification with evidence to prove that there is any reason for not declaring so.

3) In case the insurer being failure to submit the clarification within the given period in accordance with sub-section (2) or the clarification provided by the insurer is not deemed satisfactory and reliable, the Authority shall declare such insurer as problematic insurer and publish the information about the same through at least two national daily newspapers and Authority’s own website.

4) Any insurer which has become insolvent or there is the possibility of occurring such situation as per the prevailing laws, being failure to make payment of the liability to the insured, which is to be paid or net assets being decreased to half or less of the paid-up capital, shall inform immediately to the Authority.