Kathmandu. Although the evaluation service related to financial strength of insurance companies is running in the domestic financial market, the insurer rating related to measuring claim payment capacity has not yet started.
All the three rating agencies licensed by the Securities Board of Nepal (SEBON), Care Ratings Nepal, ICRA Nepal and Infomerics Nepal have announced to launch this service, but they have not yet started this service. All the three agencies have given a brief description of the proposed service and rating process under the rating service of the insurer.
Rating agency CARE Ratings Nepal has said on its website that under the proposed service, they have an intensive method to measure the claim payment capacity of the insurer, financial strength rating. This rating process covers the analysis of the insurer’s business base, competitiveness, management, stock structure, insurance regulation, risk assessment and investment strategy among the qualitative aspects.
Similarly, it studies risk acceptance, asset quality, profitability, liquidity, solvency, asset liability management methods in numerical elements.
ICRA Nepal has stated that the claim payment capacity rating of the insurer is related to the insurer’s ability to address the claims of the insured and fulfill financial obligations. Such a rating will indicate the claim payment capacity rating will represent the opinion of ICRA Nepal from the point of view of the insured.
A new change is expected in the domestic insurance sector as new players and products enter the market after the deregulation.
Against this background, the claim payment rating will be an important input influencing the insurer’s choice for the choice of insurer and policyer.
ICRA Nepal’s rating process covers the professional base of the insurer, the franchise value of the competitive state insurer, management, organizational structure, risk assessment and investment strategy. In addition, it also studies profit rates, liquidity, operations and financial leverage, capital adequacy, asset liability management methods.
It has been more than three years since two of the oldest three licensed rating agencies announced that they would start the service with regulatory approval. Infomerics Nepal, the youngest rating agency that came into operation a few years ago, announced the launch of this service, but has not yet received regulatory approval.
Since it is related to the rating of the insurance company, first of all, prior approval from the Nepal Insurance Authority has to be taken. After obtaining approval from the AUTHORITY, they can start the rating service of the insurance company only after getting approval from SEBON.
All three rating agencies have said that they will start such a service after getting regulatory approval, but none of them has been able to start the service.
