Kathmandu: The Insurance Board has written to all the life and non-life insurance companies and instructed them to provide equal business to the two local reinsurance companies. According to the instructions issued earlier by the Board, it has re-instructed two reinsurance companies to provide equal reinsurance business.
The Board has drawn attention to the instructions issued by itself from over time, including the Reinsurance Guidelines 2078, and has written correspondence to comply with the same.
It has also ordered that the equal share of all new and renewed insurance policies issued by the insurance companies be made available immediately to the two indigenous reinsurance companies and to provide the information to the Board within 7 days. Prior to this, the regulatory authority had directed all insurance companies to allocate 20 percent of their direct cession to both re-insurers, Nepal Re and Himalayan Re, based on the decision made by the Ministry of Finance. Though the decision was made in favor of state-owned Nepal Reinsurance Company only, the Board has generalized it to favor the private sector’s Himalayan Reinsurance too.
Himalayan Re had also taken away the market of the said direct cession through the government. Apart from this, the companies should provide an additional 10/10 percent business to the two reinsurance companies. The Board has requested details from the companies to see if this arrangement has been implemented or not. It has also threatened to take action if the insurers disobey instruction for reinsurance business sharing.
The Insurance Board has concentrated all the risk on two indigenous reinsurance companies. Since, Nepal is prone to natural catastrophe amid the climate change, risk concentration on the two reinsurance companies is not a wise decision.
