Only four insurers - one life and three non-life - have to date raised their paid-up capital to the required minimum level, ahead of a deadline for insurance companies to meet the requirement.
According to the Beema Samiti which is the insurance sector regulator, Nepal Life Insurance is the only firm among 18 life insurers in operation to have raised the paid-up capital as required till date. In the non-life sector, Himalayan General Insurance, Shikhar Insurance and Neco Insurance have met the regulatory capital requirement out of 20 non-life insurers in the market, according to a report in The Himalayan Times.
As per a directive titled ‘Insurer registration and operation of insurance business’ issued by Beema Samiti two years ago, insurance companies have to raise their paid-up capital to NPR1bn ($9.1m), four times the previous requirement of NPR250 million for non-life insurers, and to NPR2bn from the previous NPR500m for life insurers by 15 July 2018.
The directive, however, provides for insurers to apply for an extension. The Beema Samiti can then allow an additional three months for insurers to meet the paid-up capital requirement.
Mr Chiranjibi Chapagain, Beema Samiti chairman, though, said that the regulatory body will encourage insurance companies to merge if they are unable to raise their paid-up capital to the required level within the given time. Beema Samiti has barred the promoters of the insurers to obtain loans from financial institutions to raise the capital.
The regulator granted licences to nine new life insurance companies and three non-life insurers last year. They joined nine life insurers and 17 non-life insurance companies already in operation.