KATHMANDU, July 3: Nepali life-insurers can now reinsure their businesses to the domestic reinsurance companies, with the Insurance Board (IB) issuing a circular on Friday, allowing the domestic companies to accept up to cent percent of the insured amount.
There are two reinsurance companies—Nepal Reinsurance Company and Himalayan Reinsurance Company–operating in the country. With the new rule in place, these companies cannot disapprove the businesses of the domestic insurance companies if they approach to reinsure the life-insurance policies purchased by their clients. While accepting the reinsurance, the company concerned needs to assume at least 20 percent of the risk of the insurers.
In case of the domestic reinsurers failing to accept a facultative proposal fully or partially, the reinsurance can be done with foreign companies that have achieved a high credit ratings. But the condition of credit rating is not needed if the foreign reinsurance companies are state-owned and are from SAARC countries, reads the IB circular.
The regulator has also asked the life insurers to close all their transactions with foreign reinsurers within the next three fiscal years, if the foreign companies do not have credit ratings.