Kathmandu: The chairman of the Insurance Board(IB) Surya Prasad Silwal has questioned about the re-insurance support received from Nepal Re-insurance by the insurance companies of Nepal.
He has questioned that being a promoter of the re-insurance company, is it justifying in principle to get re-insurance support from own company? In his opinion according to the insurance principle and practice, the promoters of an insurance company cannot receive service from their own company. Chairman Silwal raised the question on an interaction program organized by the Nepal Re on Friday.
Nepal Re-insurance Company currently has the investment of 25 insurance companies in it’s promoter share. Nepal Re has been providing re-insurance support to all these companies.
In principle, the promoters and major shareholders are not allowed to get services from their own company on the basis of speculation that there may be conflict of interest.
But experts opine that the concept behind the establishment of Nepal Re cannot be kept aside while arguing on such issues.
The regulatory authority which was quite silent before the emergence of private sector player Himalayan Reinsurance Company, has raised question now. Insurers have taken it meaningfully.
Such a question raised by Chairman Silwal may result to a big loss to the business of Nepal Re. Moreover, Chairman Silwal has also argued that Nepal Re will get the facility of direct session only for the next three years. Both these steps are not in the interest of state-owned Nepal Re.
Nepal Re needs to pay special attention to its business expansion and effective service delivery.
Chairman of Nepal Re, Rabindra Ghimire, argues that although the principle that promoters can not insure in their own company is correct, the same principle does not apply to reinsurance. He opines that there is a practice of re-insurance companies making investments on other insurance company, but in case of Nepal Re, questions has been raised at the insurance companies have promoted the re-insurance company.