What are the main provisions of the insurer’s directive regarding the purchase and sale of fixed assets?

Kathmandu. The Nepal Insurance Authority (NIA) issued a directive on Poush 24, 2081 BS to make the purchase of fixed assets transparent. This guideline clarifies the procedures to be followed by insurers when purchasing fixed property (real estate).

Earlier, the insurer had been purchasing fixed property on the basis of the circular issued by the NRA in 2069 BS. This circular was related to the documents required for pre-approval rather than the fixed asset purchase process. The directive has made provision for in-principle approval and final approval before purchase. Provisions have also been included regarding the process to be completed before the purchase, the process to be completed during the purchase and after the purchase.

The most important thing in this directive is the provision of self-declaration whether the director or the chief executive officer of the insurer has a financial interest or not. This will help in controlling the conflict of financial interests.

Key Attributes

• Insurer may purchase or construct real estate for office purpose, business purpose and office and commercial purpose,

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• The insurer should submit an application to the Authority for in-principle approval first and then for final approval with the prescribed distribution and documents,

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• The Authority may give final approval without specifying any condition or without specifying any condition,

after examining the application received from the insurer and the attached documents.

• The insurer must purchase or construct a fixed property within the prescribed limits,

The insurer should take approval from the Authority while selling the house and land under its ownership and inform the Authority within 15 days from the date of sale

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• The insurer should make a clear provision in its Purchase and Financial Administration Bylaws regarding the purchase, construction and sale of fixed assets,

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Insurers should ensure liquidity management based on the size, nature, risk profile and operational complexity of their business and the specificity of the transaction when purchasing or constructing fixed assets,

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An insurer shall not be allowed to buy, construct or sell real estate with a person, firm, institution or partner having a financial interest.TAG_OPEN_li_18