HIMALAYAN NEWS SERVICE
KATHMANDU: The government has formed a committee to finalise the capital structure, modality and operating procedure of the Insurance Pool.
The committee that will present its report in a month will also look into the possibility of the Pool’s viability as a reinsurer in the long run, according to the chairman of Beema Samiti (Insurance Board) Dr Phatta Bahadur KC.
After the September 11 terrorist attack in US, the government that has been suffering from frequent strikes and bandh has conceived the Insurance Pool.
Since the Pool has not been utilised effectively, the government has formed a committee under a joint secretary at the Finance Ministry to finalise the capital structure and its modus operandi.
The Pool established with Rs 50 million seed money from the government and Rs 50 million from the insurance agency currently has over Rs 1 billion. “However, it is under the Insurance Board,” KC said, adding that it should be empowered and made an independent agency to function well.
If the Pool can be developed as a reinsurer, the country can attract foreign businesses as well.
“In the long run, Nepal could also get the business from outside, if managed properly,” said Deep Prakash Pandey, president of Insurers’ Association of Nepal.
The country has no reinsurer, though there are 26 insurance companies — nine life insurance and 16 non-life insurance companies. “Reinsurer acts as a shock absorber and shares the risk,” he said, adding that insurance agencies sell risk to the Reinsurer as it absorbs the shock of any untoward incidents. “Thus Nepal could also build its capacity and venture in the sector.”
The Insurance Board — the regulatory authority of the insurance market — has been long pushing for the establishment of a reinsurer claiming that the country’s insurance market has already matured. “The country needs reinsurer also to support its internal market,” KC said, adding that board has already incorporated the provisions of reinsurer in the establishment of the Reinsurance Company in the draft of the new Insurance Act.
The government in the budget for the fiscal year 2008-09 had planned to grant operating license to open a reinsurance company in the country.
KATHMANDU: Nepal has received around $9 million in aviation reinsurance recently. The latest aviation accidents have generated the huge amount as the insurance claims. “There is no alternative to reinsure abroad at the current stage as the domestic insurance market has not been strong enoguh to pay the insurance claims of aviation accidents and natural calamity,” said Deep Prakash Pandey, president of Insurers’ Association of Nepal.