KATHMANDU, MAY 28, 2012
The Insurance Board has initiated the process of transforming Insurance Pool, Nepal into a reinsurance company. Following consultations with the Finance Ministry and the pool, the board has formed a committee headed by Bhoj Raj Sharma to study the process of registering it as a reinsurance company.
“We plan to register the pool as a reinsurance company within the current fiscal year based on the report of the committee and start operations from the next fiscal year,” said Ramesh Lamsal, chief executive officer of the pool.
With massive amounts of money going outside the country as payment for reinsurance premiums, establishment of a domestic reinsurance company is expected to stem the flow.
The pool provides reinsurance coverage for damage caused by terrorism. It was created in 2003 during the conflict as foreign reinsurance companies refused to provide such reinsurance coverage.
A year ago, a task force formed by the government suggested turning the pool into a company to provide reinsurance in a bid to check the massive outflow of money in premiums which amounts to more than Rs 2.4 billion annually. The task force headed by Bishnu Lamsal, then joint secretary at the Finance Ministry, suggested that the pool could be used as a share investment to establish the company.
The pool currently holds funds worth more than Rs 1.5 billion in which 17 non-life insurance companies and the government have an almost equal stake. Initially, the pool with a capital of Rs 110 million was created with a 50-50 investment by non-life insurance companies and the government.
The pool has also initiated discussions about increasing the paid-up capital in a bid to become financially stronger. “It is necessary to have at least Rs 5 billion to start a reinsurance company,” said Lamsal. “But we can start with Rs 2 billion.” He added that the committee led by Sharma would recommend the required size of the paid-up capital.
Earlier, the task force had recommended that the proposed company have a paid-up capital of Rs 2 billion and an authorized capital of Rs 5 billion. The task force had also advised the government to allow foreign investors, particularly international insurance companies and brokers, to hold a 25 percent stake.
Source: The Kathmandu Post
The Insurance Board has initiated the process of transforming Insurance Pool, Nepal into a reinsurance company. Following consultations with the Finance Ministry and the pool, the board has formed a committee headed by Bhoj Raj Sharma to study the process of registering it as a reinsurance company.
“We plan to register the pool as a reinsurance company within the current fiscal year based on the report of the committee and start operations from the next fiscal year,” said Ramesh Lamsal, chief executive officer of the pool.
With massive amounts of money going outside the country as payment for reinsurance premiums, establishment of a domestic reinsurance company is expected to stem the flow.
The pool provides reinsurance coverage for damage caused by terrorism. It was created in 2003 during the conflict as foreign reinsurance companies refused to provide such reinsurance coverage.
A year ago, a task force formed by the government suggested turning the pool into a company to provide reinsurance in a bid to check the massive outflow of money in premiums which amounts to more than Rs 2.4 billion annually. The task force headed by Bishnu Lamsal, then joint secretary at the Finance Ministry, suggested that the pool could be used as a share investment to establish the company.
The pool currently holds funds worth more than Rs 1.5 billion in which 17 non-life insurance companies and the government have an almost equal stake. Initially, the pool with a capital of Rs 110 million was created with a 50-50 investment by non-life insurance companies and the government.
The pool has also initiated discussions about increasing the paid-up capital in a bid to become financially stronger. “It is necessary to have at least Rs 5 billion to start a reinsurance company,” said Lamsal. “But we can start with Rs 2 billion.” He added that the committee led by Sharma would recommend the required size of the paid-up capital.
Earlier, the task force had recommended that the proposed company have a paid-up capital of Rs 2 billion and an authorized capital of Rs 5 billion. The task force had also advised the government to allow foreign investors, particularly international insurance companies and brokers, to hold a 25 percent stake.
Source: The Kathmandu Post
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