Nine insurance companies missed the mid-July deadline set by the Insurance Board to raise their paid-up capital.

The regulator had directed insurers to increase their paid-up capital from Rs500 million to Rs2 billion by issuing the Regulation on Insurer Registration and Operation of Insurance Business in March 2017. Non-life insurance companies were told to increase their capital from Rs250 million to Rs1 billion.

Since then, the Insurance Board has extended the deadline three times to allow insurance companies falling behind to fulfil the requirement. The board had set the final deadline of mid-July, and even warned insurers they would be forced to merge if they failed to increase their capital.

According to the board, four life insurance companies—Surya Life, Gurans Life, Prime Life and Rastriya Beema Sansthan—are yet to meet the capital requirement. Lumbini General Insurance, Prudential Insurance, United Insurance, NLG Insurance and Rastriya Beema Company have also missed the deadline.

The regulator said it did not intend to punish insurance companies failing to carry out its directive. Insurance Board Chairman Chiranjibi Chapagain said they had asked the nine insurance companies who are overdue to submit an explanation.

“We plan to make these companies submit a written commitment to the board, explaining their action plan and time frame when they can meet the target,” said Chapagain. According to the board, the insurers had been complaining that they were delayed by its new Nepal Financial Reporting Standards. “But now they are blaming the credit rating procedures for the delay,” said Chapagain.

Chapagain said the companies had moved to complete official procedures like those related to the Office of the Company Registrar and the Securities Board of Nepal. According to him, many of the companies stated in their their capital increment plan submitted to the board that they intended to meet the capital requirement by issuing rights shares.

There are a total of 39 insurers in the country. Among them there are 18 life insurance companies, 20 non-life insurance companies and one reinsurance company.

The board had no answer when asked what action would be taken against the state-owned insurance companies—Rastriya Beema Sansthan and Ratriya Beema Company. The board ordered insurers to raise the paid-up capital citing an expanding insurance business.

As per the board, insurance coverage has reached 20 percent of the country’s population. In the last fiscal year, insurance companies collected premiums totalling Rs95.25 billion—Rs71 billion in life insurance premiums and Rs24.20 billion in non-life insurance premiums.