Kathmandu: Domestic insurance companies have not been able to get a reinsurance claim of Rs. 3 billion amid reinsurance arrangement with the financially poor reinsurers from African Nations.
The issue has been long pending as some of the non-life insurers opted for reinsurance support from African reinsurers for cheap reinsurance premium. Since, the companies could not collect about Rs. 3 billion from their respective reinsurers, many insurance companies have been delaying the claim settlement.
Addressing a press meet today, according to Surya Prasad Silwal, Chairman of the Insurance Board, domestic insurers have been transferring the risk to financially poor reinsurers from third countries, so now there’s an arrangement to re-insure only with reinsurance having credit rating of ‘A’ from AM Best Rating, Fitch Rating, S&P Rating or any other recognized global reinsurer. The provision of credit rating for Indian re-insurer GIC Re is not applicable.
The Board has given three years time to the insurance companies to collect their due claim with the foreign reinsurers. Nepal is a very risky in terms of catastrophe loss, Chairman Silwal said, the tariff of engineering insurance has been revised to pave way for the domestic reinsurers to get strong reinsurance support offering good reinsurance premium. He claimed that the rate of engineering insurance is still lower than in India.
Nepali insurance companies are currently facing the most problems due to the past practice of insuring at cheap rates and not having enough reinsurance arrangement to transfer the risk.