Kathmandu. The Insurance Authority of Nepal (NIA) has amended the reinsurance guidelines of the insurer for the fifth time in three years. The reinsurance is a serious issue that the authority has been repeatedly playing with the policy from the regulatory level, which has made a serious mistake by issuing insurance policies for the corona epidemic. <\/p>\n
This time too, the Insurance Authority has pushed the entire insurance sector into the pit of risk to ensure the business of reinsurance companies promoted at the government level and the private sector instead of being regulatory-neutral. <\/p>\n
The government in the current fiscal year 2083. In the budget statement of ’84, it announced that it would mandatorily make it mandatory for the domestic insurer to provide twenty percent of the direct share to the Nepal Reinsurance Company with the intention of ensuring business without competition. As per the government’s intent, the Insurance Authority has issued the fifth amendment to the directive and has re-implemented the provision that the domestic insurer should give at least 20 percent of the insured under the direct share to Nepal Reinsurance. <\/p>\n
The revised directive approved by the Board of Directors of NEA on August 23 has continued the provision of giving an additional 24 percent of the remaining insurance business i.e. 30 percent of the 80 percent reinsurance business to the domestic reinsurer. <\/p>\n
The amendment of the directive has further increased the degree of concentration of reinsurance risk. According to the pre-amendment provision, only 22 percent of the direct share per domestic reinsurer would have been given in the current financial year. But now 44 percent of the risk will be compulsorily concentrated on domestic reinsurers, including 20 percent in a single company and an additional 24 percent for domestic reinsurers. <\/p>\n
Insurers say, “Over-concentration of risk on reinsurers within the country can devastate the entire insurance sector in the event of another disaster like the Bhotekoshi flood.” ‘<\/p>\n
The Board of Directors of the Authority has amended the sub-section 1 of Section 7 of the Directive. The amendment has added a provision that at least 20 percent of the direct share of the insured issued by the insurer operating in Nepal should be re-insured by the Nepal Reinsurance Company. Earlier, both the insurers should be divided equally and the financial year 2084. There was a provision to reduce it to zero by the end of 1985. <\/p>\n
According to sub-section (2) of Section 8, after providing the direct share as per sub-section (1), at least thirty percent of the remaining share should be provided to the domestic reinsurer. Although both the Nepal Insurance Association and the Life Insurance Association have repeatedly suggested in writing to the Insurance Authority to remove this provision, the Authority has not been serious. <\/p>\n
Finance Minister Swarnim Wagle in the budget speech presented in the parliament on May 29 has ensured insurance business for Nepal Reinsurance Company through many means without competition. <\/p>\n
According to the policy provision presented in the budget, reinsurance will now be made mandatory for Employees Provident Fund, Citizen Investment Trust, Social Security Fund and Health Insurance Board. Apart from this, the decision to hand over the entire responsibility of managing the collective insurance pool to Nepal Reinsurance Company has automatically transferred the foreign employment insurance bridge to the Nepal Reinsurance Company. <\/p>\n
Nepal Reinsurance Company is currently in a huge underwriting loss. The government of Nepal, which has taken 44 percent share ownership in this company, is not in a position to get dividend for 2-3 years as the company is in losses.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The Insurance Authority of Nepal (NIA) has amended the reinsurance guidelines of the insurer for the fifth time in three years. The reinsurance is a serious issue that the authority has been repeatedly playing with the policy from the regulatory level, which has made a serious mistake by issuing insurance policies for the corona […]<\/p>\n","protected":false},"author":5,"featured_media":206532,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45159,45102],"tags":[],"class_list":["post-313238","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-news-en","category-reinsurance-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/313238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=313238"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/313238\/revisions"}],"predecessor-version":[{"id":313239,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/313238\/revisions\/313239"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/206532"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=313238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=313238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=313238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}