Nepali reinsurance companies will have to increase their paid-up capital to Rs 20 billion following a decision of the Nepal Insurance Authority (NIA) to increase the capital base of the reinsurers.
According to the NIA, the board meeting of the authority held on Wednesday decided to raise the minimum paid-up capital to double of the existing amount. As of now, the reinsurance companies need to maintain Rs 10 billion as their paid-up capital.
Currently, two reinsurance companies—Nepal Reinsurance Company (NRIC) and Himalayan Reinsurance Limited (HRL)—are operating in the country.
Targeting to stem massive capital outflows for insurance purposes, the government established the NRIC in November 2014. The Insurance Pool set up in 2003 to cover damages caused by terrorism was converted into the first reinsurance company with a paid-up capital of Rs 2.1 billion. At present, the NRIC has its paid-up capital of Rs 12.81 billion.
Likewise, the HRL received license as the second reinsurer of the country in June 2021. The company has paid-up capital of Rs 10 billion.
The NIA has given a 15-day deadline to the reinsurers to come-up with their plans to raise their capital bases. The reinsurance companies have been asked to meet the given threshold within the next one year.
