Kathmandu: The Nepal Insurance Authority issued the ‘Own Risk Solvency Assessment Directive 2023‘ for the insurance industry in a bid to implement the Risk-Based Capital(RBC) model. The Authority said that the Directive will help companies to assess their own risk and solvency status.
The Directive aims to make the insurers responsible to identify their risk and solvency adequacy to meet the financial obligations raised by the risk. Before the execution of the Directive, the Authority used to evaluate and approve the solvency ratio determined by the insurance companies themselves without any proper guidelines.
The officials from the Authority have informed that the ORSA Directive will be implemented in a phased manner. In the first phase, around 5 companies will be selected for the implementation of the Directives. Life insurers with a minimum of 7 percent and general insurers with a minimum of 5 percent market share will be selected in the first phase to implement ORSA.
All insurance companies should fully execute the provisions of the Directives by March 2026. The companies selected in the first phase should get their ORSA report approved by their board of directors (BODs) by March 2025. The assessment should be done in the next three years.