Kathmandu: Insurance companies are all set to formally approach the Nepal Insurance Authority to extend the deadline for new regulatory capital. At the meeting of the Nepal Insurers’ Association(NIA), the CEOs of general insurance companies raised the agenda for the need for a time extension.
One of the executive members of the NIA shared that the Association will formally approach the Authority for the extension of the deadline. Further, it has been agreed that the association of life insurers, Jiwan Bimak Sangh Nepal(JEBISAN) too will approach the Authority with the same request.
The Authority has set a deadline for the new regulatory capital for the insurers. As per the directions issued by the Authority, the general insurers must maintain a minimum of Rs. 2.5 billion and life insurers must maintain a minimum of Rs. 5 billion paid-up capital by the end of Chaitra 2079. Less than forty days left before the deadline but the majority of insurers have yet to meet the lower limit of paid-up capital.
Upon the instruction of the Authority, all the insurers submitted their ‘Capital Plan’ with the commitment to meet the deadline for the regulatory capital. Nepal Life Insurance(NLIC) is not in the race for capital increment since its paid-up capital is already above the lower limit. The branch of Indian insurers, National Insurance and Oriental Insurance, and American insurer MetLife’s Nepal branch too are not in the race.
Out of the 17 general insurers, only Shikhar Insurance (Rs. 2.65 bn) and Siddharth Premier Insurance (Rs. 2.80 bn) could meet the regulatory capital to date. The paid-up capital of the Ajod Insurance and United Insurance will not be enough even after their proposed merger. The companies, Himalayan Everest and Sanima GIC, which completed the merger, too have not been able to reach the minimum paid-up capital. IME and Prudential, Sagarmatha and Lumbini are still in the process of merger.
The Authority has adopted a strategy to encourage insurance companies to go for voluntary mergers at the end of Chaitra 2079 to meet the regulatory capital. Among general insurers, a total of six mergers including twelve insurance companies are expected to take place.
The capital plan of the state-owned Rastriya Beema Company is still not clear. Its financial audit report has been pending for a long time.