Kathmandu. Insurance companies will have to spend at least Rs 20 million within a year to implement The Nepal Financial Reporting Standard 17 (NFRS-7), which the Nepal Insurance Authority (NEA) has been pressing the insurance companies to implement.
According to the proposal submitted by the service providers willing to provide technical and consultancy services for the implementation of NFRS-17 standards, an average of Rs 20 million has to be spent. The total expenditure to be incurred by the 14 licensed life insurers for the full implementation of this standard is estimated to exceed Rs 280 million.
Most of this expenditure will go out of Nepal for consultancy and services.
Life Insurance Association Nepal had invited bids from interested service providers for implementation of NFRS-17 in life insurance companies. At the call of the Insurance Association, 12 foreign companies have registered proposals in collaboration with the local Chartered Accountants Association.
On Thursday, the association submitted a brief statement to the chief executive officer and chief financial officer of the insurer regarding the preliminary evaluation of the proposal received for the implementation of NFRS.
Under pressure from donor agencies, the insurers have been demanding that this audit method, which has been mandatorily implemented through regulatory pressure in Nepal’s financial sector (including insurance), is technically complex and difficult for Nepal’s insurers.
According to the Life Insurance Association Nepal, three different options have been presented on the technical side for the implementation of NFRS-17. Microsoft excel-based software, complete software and service providers have the option of providing data to make financial reports from them. Service providers have offered different fees for these three different options.
NFRS-17 is a more sophisticated standard than the current standard. According to experts concerned, it will take an average of 18 months to fully implement the new accounting standards.
The Life Insurance Association has assured effective coordination and policy initiatives among the Nepal Insurance Authority, service providers and insurers institutionally to implement this standard.
Under pressure from foreign donors, the Government of Nepal has been continuously pressurizing through regulator Nepal Insurance Authority to implement this accounting system. Although it is necessary to study how much benefit this financial system, which is considered expensive, is not beneficial for nepal’s financial sector reform, it has been ignored.
