Nepal’s life insurance scene is set to witness intense competition with a slew of new companies readying to join the fray. The government has given the go-ahead to 10 life insurance companies to begin operations, bringing their total number to 19.

Finance Minister Krishna Bahadur Mahara made the decision to issue new permits on Wednesday while Prime Minister Dahal is expected to step down this week. 

The move drew flak from experts as a number of insurers are currently being questioned for their inability to pay out claims on time. The existing insurance companies are also in the process of increasing their paid-up capital.

The new entrants are Citizen Life Insurance, Star Life Insurance, Sun Nepal Life Insurance, Sanima Life Insurance, Reliance Life Insurance, Reliable Life Insurance, IME Life Insurance, Mahalaxmi Life Insurance, Jyoti Life Insurance and Union Life Insurance. 

The applications of two other hopefuls, Standard Life Insurance and Unilife Life Insurance, were rejected for failing to fulfil the required criteria, according to the Insurance Board (IB).

Ananda Dhakal, joint secretary at the Finance Ministry, said the government had agreed in principle to allow these insurers to operate. “The recommendation was made by the IB.” IB Director Shree Man Karki said the board issued the recommendation after assessing their documents. The IB needs to get the ministry’s approval to grant licences. “However, the board can award licences to non-life insurers on its own.”

Karki said the board would initiate the necessary legal procedures to allow the new companies to begin operations.

The newly approved life insurance companies had applied to the IB for a licence a decade ago. The then IB chairman Fatta Bahadur KC turned them down as he wanted to strengthen the capital base of the existing insurers first.  

In a bid to reform the market, KC had even forced insurance companies to merge after they failed to raise their capital within the stipulated time.

Last month, the IB instructed life and non-life insurance companies to boost their paid-up capital fourfold. Life insurers have to increase their paid-up capital to Rs2 billion from Rs500 million and non-life insurers have to increase their capital to Rs1 billion from Rs250 million. 

The board has given insurance companies until mid-July 2018 to fulfil the requirement.

Meanwhile, the IB is also considering giving licences to four new non-life insurers whose applications have been pending for more than a decade. 

“The board has started processing the documents of four among the five hopefuls,” Karki said.