Kathmandu: The Insurance Board(IB) has made rating mandatory for follower re-insurers in the first amendment of the ‘Insurer’s Reinsurance Directive 2078’. The IB has made an arrangement to select the company for the follower reinsurer with specified rating while reaching to a reinsurance contract.
Prior to this, there was a provision for re-insurance for follower re-insurers regardless of the of their credit rating. But with the latest amendment, when selecting a follower reinsurer, it should be ‘B Double Plus’ under AM Best rating. Similarly, the S&P rating should be ‘Triple B’. Moody’s rating should be ‘Baa’. The Fitch rating should also include ‘BBB’.
The IB has made an arrangement that the rating provision will not be applicable in the case of Nepali re-insurers. However, according to this guideline, reinsurance cannot be done in a company with a lower rating than specified.