Kathmandu: The Insurance Board mulls to issue license to few more new companies amid the on-going forceful merger under the shadow of regulatory capital increment. The Board has issued the Micro Insurance Establishment and Registration Directives 2079 to pave way for the operation of micro-insurance companies.
Prior to this directives, there was no legal provision for the establishment of micro insurance companies in Nepal. The Board has unveiled the Directives with the aim to issue license to few life and non-life insurers for the micro-insurance business.
It has been well witnessed that the regulatory body issues license to the new companies in the wake of election to raise funds for the ruling parties. Though the regulatory body had already mentioned that the existing number of insurers is beyond it’s capacity to monitor and regulate. Based on such version, the Insurance Board has directed all the insurers to maintain at least Rs. 5 billion for life insurers and Rs. 2.5 billion for the non-life insurers. Such provision has compelled most of the insurers to opt for merger to meet the deadline for minimum capital requirement.
The Insurance Board claims that the micro insurance companies will help to increase the access of poor and marginalized communities to insurance.
The proposed micro insurance companies will have their corporate offices outside the Kathmandu Valley, federal capital. Based on the concept of 7 province, the Board is expected to issue license to at least 7 life insurance and 7 non-life insurance companies for micro insurance business.
The differences between existing insurer and micro insurers will only be the paid-up capital and the limit of sum assured.