Kathmandu. The two domestic reinsurance companies are still completely dependent on domestic insurance companies for their insurance business. The government-owned Nepal Reinsurance Company and the private sector-promoted Himalayan Reinsurance have completed 11 years of operation and 3 years of operation respectively.
According to the Nepal Insurance Authority, domestic non-life insurance companies have contributed 94 percent of the total non-life insurance business of these two reinsurers. Out of the total insurance premium collected by the two reinsurers in the last fiscal year 2080.81, the contribution of foreign insurance business was only 6.28 percent. In the previous fiscal year 2079.80, reinsurance companies earned only 4.4 percent of their total premium income from accepting foreign reinsurance risks.
In the previous fiscal year 2079.80, domestic reinsurers collected a total of Rs 11.73 billion 32 million in reinsurance premiums for non-life insurance business. Out of this, the foreign share was only Rs 520 million 41 million. Similarly, in the previous fiscal year 2080.81, the foreign share was only Rs 870 million 87 million.
Indian reinsurer GIC Relay, which is considered the tenth largest in the world in terms of the size of its written reinsurance business, is receiving 35 percent of its total premiums from foreign business. It has set a target of increasing the share of foreign trade in its total business to 40 percent.
Insurers have been continuously expressing concern that the risks of Nepal’s insurance companies are more concentrated in two domestic insurers. They are concerned that if the risks are too integrated, domestic reinsurers will not be able to cope in the event of a major earthquake or any other major disaster, and the image of the entire insurance sector in Nepal will be tarnished forever. Domestic non-life insurers and general insureds are still paying the price for the serious mistake in insuring during the Corona pandemic.
The main principle of reinsurance is that an insurer with weak bearing capacity transfers the risk it has accepted to a stronger insurer or reinsurer. However, in the case of Nepal’s reinsurance business, financially weak reinsurers have been the last resort for weak insurers.
The total claim payments made by reinsurance companies to domestic insurance entrepreneurs from non-life insurance were limited to Rs. 6.2 billion in the fiscal year 2079.80, but they had to pay Rs. 6.67 billion in the fiscal year 2080.81.
Thus, on average, Nepali reinsurance companies pay foreign insurance companies Reinsurance companies were retroceded Rs 1.25 billion in the fiscal year 2079.80 and Rs 1.34 billion in the fiscal year 2080.81. It appears that payments worth Rs 400 million in the fiscal year 2079.80 and Rs 740 million in the fiscal year 2080.81 were received through reinsurance claims.
Domestic reinsurers paid Rs 390 million in the last fiscal year 2080.81 for accepting risks from foreign insurance businesses. In the previous fiscal year 2079.80, a total of Rs.400 million had to be paid.
Nepal Insurance Authority In Nepal, reinsurers have collected Rs. 3.29 billion in reinsurance premiums from domestic insurance business from life insurance in the last fiscal year. In the previous fiscal year 2079.80, such income was a total of Rs. 3.12 billion. Domestic life insurance companies have received a total of Rs. 1.66 billion in claims payments in the fiscal year 2080.81. In the previous fiscal year, life insurance companies had received a total of Rs. 1.66 billion in claims payments.
Two domestic reinsurers have been transferring the risks they have accepted. Under this, two reinsurers here received Rs 50 million in claims for retrocession of Rs 160 million in the fiscal year 2080.81.
