Kathmandu. The Nepal Non-Life Insurance Entrepreneurs Association has requested the Nepal Insurance Authority (NOC) to solve the problems in the insurance system. The Association drew the attention of the NRA to the provisions mentioned in relation to the direct share given to Nepal Reinsurance Companies, the provision regarding the company in the local pension, the reserve fund and the representation in the Nepal Reinsurance Company.
The Association has urged the government to analyze the capacity and performance status of the local reinsurance company in relation to the direct share given to the Nepali reinsurance companies and make arrangements so that the local reinsurance company can be given equally or any of the two companies can be given losses or more out of the 12 percent of the mentioned 6-6 percent (8 percent including 4-4 percent in the next financial year).
According to a press release issued by the Nepal Non-Life Insurance Entrepreneurs Association, “Based on clause (c) of Sub-section (1) of Section 81 of the Insurance Act, 2079, two reinsurers established in the country must be compulsorily re-insured not less than the percentage fixed by the AUTHORITY. Since the provision is not in line with the spirit of the Act, it is requested to re-insure only the risk that may occur except for the risk agreed by the insurance companies as per the provisions of the Act. ’
Although Nepali reinsurance companies have come into operation, there is a complexity in implementing the provision of sending them to Nepal’s reinsurance company under the optional facility and sending them to foreign reinsurance companies only if they refuse to take up business. Stating that as per the current operation, Nepali reinsurance companies accept low-risk businesses and reject businesses with high risk, the association said, adding that in some cases, insurance could not be given to the insured on time due to lack of timely decision.
According to the association, the reinsurance business will suffer due to the high reinsurance fees and in such a situation, the attitude of foreign reinsurance companies evaluating Nepali companies will be negative and the reinsurance business will suffer.
The Association of Non-Life Insurance Entrepreneurs has also urged the NRA to scrap the existing provision of 50 percent reserve fund and reduce it to 20 percent. The association has also requested the operators of Nepal Insurance Company to get representation in Nepal Reinsurance Company.
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