Print Edition - 2014-12-23 | MONEY
Nepal’s first reinsurer starts ops
Dec 22, 2014-
The country’s first reinsurance company officially started its operations on Monday.
The company is expected to help curb the massive outflow of funds for reinsurance purposes.
At the inauguration ceremony, Finance Minister Ram Sharan Mahat said the company would help retain the premium that insurance companies pay to reinsurers abroad. “The government has been considering making reinsurance mandatory for insurers,” he said.
According to the Insurance Board (IB), domestic insurers paid around Rs 1.95 billion to reinsurance companies abroad last fiscal year.
The reinsurance company succeeds the Insurance Pool that was set up in 2003 with an aim to cover damages caused by terrorism amid Maoists insurgency. The pool was established with 50 percent equity from the government and the rest from insurance companies, mainly non-life insurers. The pool was formally converted into the reinsurance company on November 7.
The newly-formed company has a paid up capital of Rs 2 billion. Mahat said the government plans to raise the capital to Rs 5 billion. “This would increase the capacity of the reinsurer,” he said.
Ramesh Lamsal, chief executive officer of the reinsurance company, said it was necessary for Nepal to have a reinsurer. He said the company could also help boost the insurance business at a time when only 10 percent of the country’s people are insured.
IB Chairman Fatta Bahadur KC stressed on the need for developing necessary infrastructure to effectively implement the reinsurance business. “If necessary, the company should take initiative involve strategic partners to boost its capacity,” he said.
Finance Secretary Suman Prasad Sharma stressed on the need for a coherent business plan by the reinsurer amid insurance business boom. “The rationale of the reinsurer has changed of late amid a growing insurance business,” he said.
The government has a 45 percent stake in the newly-formed company, while 17 non-life insurers have the rest. The company plans to incorporate life insurance companies by offering them an 18 percent stake. Once life insurance companies join, the shareholding structure will change.
Published: 23-12-2014 09:44