The Rastriya Beema Company, the state-owned non-life insurance company, has been found to have accepted insurance risks without receiving the corresponding insurance premiums. The auditors' reports for fiscal years 2016/17 and 2017/18 made this revelation.

The report draws attention to violations of clear legal provisions under the Insurance Act, 1992. Section 27 of the Act mandates that insurance risk should not be accepted until the premium is received. Additionally, Regulation 26(c) stipulates that a transaction between the insurer and the insured is not valid until the insurance premium is paid. Despite these provisions, the auditors found instances where the company accepted insurance risks while leaving premium amounts outstanding.

The report also criticized the company's practice of recognizing insurance income without receiving the corresponding premiums. It emphasized that such actions undermine the financial discipline and integrity of the company.

Further issues were flagged regarding the company's opening balance adjustments under insurance income. In Fiscal Year 2017/18, the opening balance of Rs 47.715 million was increased by Rs 29.916 million, bringing the total to Rs 70.632 million. However, the report highlighted that no confirmation of this balance was obtained from third-party verification, raising concerns about the accuracy and reliability of the records.

Meanwhile, the Ministry of Finance recently directed the government-owned Rastriya Jeevan Beema Company Limited to complete the audit of the past eight fiscal years within the next four months.

According to the Nepal Insurance Authority, the sector’s regulatory body, the life insurance company has completed its annual audit only up to the fiscal year 2015/16. Due to the lack of an audit, the company’s capital increase plan has been unable to move forward.