Nepal is likely to get a reinsurance company soon as the Cabinet has given the go-ahead to the Insurance Pool to conduct reinsurance business. Nepali insurers have been paying billions of rupees annually to foreign reinsurance companies as there are no such entities in the country.
After getting the government’s green light, the Insurance Pool has moved to be registered as a reinsurance company at the Office of the Company Registrar.
“The Finance Ministry has almost finalised the memorandum of article and articles of association for the purpose,” said Ramesh Lamsal, chief executive officer of the pool. According to him, the Insurance Board (IB) will prepare a directive to form the company.
The pool was established in 2003 with 50 percent equity participation of the Nepal government and the rest of Nepali insurance companies, mainly non-life companies, to cover damage caused by terrorism. Currently, it has funds amounting to Rs 2.10 billion. Lamsal said the issued and authorised capital of the planned reinsurance company would be Rs 3 billion and Rs 5 billion respectively.
“We have planned to allow life insurance companies to obtain a share in the new company by putting up the remaining Rs 900 million of the issued capital,” said Lamsal. He added that they were now preparing a business plan for the reinsurance company.
The Insurance Pool has been covering 45 percent of the risk related to terrorism. Ever since the Maoist party came into mainstream politics, losses caused by terrorism related incidents have come down drastically, according to the pool, enabling the company to save more resources.“We are planning to cover only 15-20 percent of the risk initially once the pool is converted into a reinsurer,” said Lamsal. “The coverage will be gradually increased.”
According to IB records, most of the insurance companies have been buying reinsurance policies from companies in India, Malaysia, Singapore and some African countries.
Meanwhile, the Cabinet has also okayed the resignation tendered by Rastriya Beema Sansthan Chief Administrator Ram Bahadur Khadka. Earlier, the Finance Ministry had rejected his resignation.
The Cabinet has also decided to forward the draft of the Bilateral Investment Protect-ion and Promotion Agreement (Bippa) signed between Nepal and India to the legislature for its final approval.
Likewise, the Cabinet has asked the Ministry of Industry to issue a directive to stop ongoing exports of precious stones like diamond, ruby, aquamarine, saffire and emerald in the name of raw materials.
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