Actuarial Valuation made mandatory for Non-Life Insurers too

Kathmandu: With the implementation of NFRS system, actuarial valuation has also been made mandatory for non-life insurance companies too. According to the old rules, actuarial valuation was not mandatory for non-life insurance companies before submitting their financial statements. In which the audit report could be prepared after provisioning as prescribed by the Insurance Board(IB).

But with the implementation of the NFRS, there is a provision to test liability. For this, it is necessary to mention in the financial statement as much as the liability identified by the appointed actuary. That is why insurance companies have to do actuarial assessment before preparing audit reports and financial statements.

For this, first of all, insurance companies have to prepare internal financial statements. So far, only four companies have prepared financial statements for the last fiscal year (FY) 2077/78 and obtained in-principle approval for actuarial valuation. One company has just applied and is yet to receive approval.

According to the IB, NLG Insurance Company, Ajod Insurance Company, Sanima General Insurance Company and Premier Insurance Company have so far received in-principle approval from the IB. Prudential Insurance Company has just applied and is yet to get approval. Fifteen companies have not yet prepared their internal financial statements. They have to get in-principle approval from the IB for actuarial assessment. Due to this, the general meeting of non-life insurance companies will also be delayed.

The IB also instructs to correct any objections found in the financial statements submitted for in-principle approval. The company itself has been making excuses saying that it was delayed due to non-preparation of financial statements in time. Most of the banks and financial institutions have so far prepared financial statements and submitted them to Nepal Rastra Bank(NRB).

Non-life insurance companies will start declaring dividends for the last fiscal year 2077/78 only after the actuarial valuation.

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