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Nepal Non-Life Insurance Professionals Association has requested the Nepal Insurance Authority to solve the problems in the insurance system. The association has brought to the attention of the authority about the direct share being given to Nepal Reinsurance Company, the provisions regarding local reinsurance companies, reserve fund and representation in Nepal Reinsurance Company.
In relation to the direct share given to Nepali reinsurance companies, the association has requested to analyze the capacity and performance of the local reinsurance companies and arrange for the local reinsurance companies to be equally divided from the current 6/6% to 12% (4/4% to 8% in the coming financial year) business or any of the two companies can be given a loss or more.
In a statement issued by the Nepal Non-life Insurance Professionals Association, it is said, 'In clause (c) of sub-section (1) of section 81 of the Insurance Act, 2079, there is a provision that the reinsurers established within the country must be compulsorily re-insured at a rate not less than the percentage specified by the authority. As the arrangement is not in accordance with the spirit of the law, it is requested that the insurance companies in accordance with the provisions of the law should re-insure only the remaining risks except the assumed risks.
Although Nepali reinsurance companies are operating, they have to be sent to reinsurance companies in Nepal under optional facilities and if they refuse to take business, the association said that it is also complicated to implement the system of sending them to foreign reinsurance companies.
According to the current practice, the Nepali reinsurance company accepts business with low risk and rejects business with high risk. The association said that in some cases, insurance articles could not be given to the insured due to a lack of timely decision.
The association said that due to the high reinsurance fees, the policyholders were more upset and in such a situation, the outlook of foreign reinsurance companies evaluating Nepali companies would be negative, which would affect the reinsurance business.
Non-Life Insurance Professionals Association has requested the authority to cancel the existing provision of 50 percent reserve fund and reduce it to 20 percent. The association has also requested the directors of Nepal Insurance Company to be represented in Nepal Reinsurance Company.
