Kathmandu: The Insurance Board(IB), regulatory body of the insurance sector, has issued six directives in the 2 quarters of of current fiscal year. In order to make the insurance service sector systematic and effective, the IB has worked to revise, update the old guidelines and prepared and issued new guidelines on additional issues.
According to the semi-annual review report issued by the IB, Risk Based Capital and Solvency Directives 2078 for determining the risk based capital of the insurer has been issued. This is the first time that this arrangement is being implemented in the insurance sector of Nepal.
As per this guideline, the provision of equal paid up capital for all non-life insurers or all life insurers will be gradually changed and the paid up capital will be determined on the basis of the risk borne by the concerned insurer. According to the directive, by 2084, all insurers will have to manage risk-based paid-up capital. Earlier, the Insurance Committee had been managing risk on the basis of solvency margin.
In addition, for the first time, the IB has issued Climate Risk Directives 2078 to address the potential risks to the insurance sector due to climate risk, which has become a major concern in the world due to increasing exploitation of natural resources due to increasing population density.
In order to make the business of re-insurance in Nepal systematic and to guide the re-insurance treaty being done by the indigenous insurers, Guideline for Re-insurance of Insurers 2078 has been issued. The regulatory authority, which has issued a circular on obligatory cession beyond the provisions of this directive, has also amended the directive within less than six months.
Apart from this, the IB has issued Accidental Insurance Directive, Coffee Farming Insurance (based on harvesting).
By making general amendment to the Institutional Good Governance Directive of Insurers, it has been prohibited to issue any kind of cash loan to the life insurance agency.