Kathmandu. Nepal Insurance Authority (NIC) has issued the Unified Guidelines on Investment of Insurers, 2082 BS.
The limit of investment that insurers can make in the listed securities market has been increased from 10 percent to 15 percent. This paves the way for the insurance company’s investment in the shares listed on the stock market to increase by an additional 50 percent.
NeA has amended the investment guidelines of the insurer and issued a unified directive applicable to all types of insurers and increased the limit of investment in the stock market. Now the insurer will be able to invest up to 15 percent of his total investment in the shares of listed public limited companies.
As the interest rate on fixed deposits of banks and financial institutions is very low, the AUTHORITY has increased the investment limit in the stock market at the initiative of the insurer. The interest rate offered by the bank to institutional depositors is 2.75 percent. Even on this amount, the actual return that the insurer will get when the government collects 5 percent profit tax is still low.
Life insurers should give at least 6% return to the insured. It is not possible to give reasonable returns to the insured by investing in fixed deposits at very low interest rates.
Insurance companies in Nepal, including life, non-life, micro and reinsurance companies, have investible assets worth about Rs 800 billion. On the basis of this amount, the way has been opened for the insurer to invest more than Rs 100 billion in the listed share company. Still, the insurance company’s investment in the stock market is less than Rs 50 billion.
Life insurance companies have invested Rs 30.52 billion in the stock market till the last fiscal year 2081/82. Non-life insurers have invested Rs 4.42 billion in the shares of listed public companies.
Based on the data of the last fiscal year, life and non-life insurers alone will invest at least Rs 17 billion in the stock market to buy shares of listed companies.
Nepal Insurance Authority (NEA) has released the fiscal year 2081 BS. According to the data till the fourth quarter of 2018, 14 life insurers have invested Rs 757.36 billion.
Similarly, non-life insurance companies were formed in the last fiscal year 2081. He has invested rs 66.25 billion in various sectors. According to the NRA, both the reinsurance companies have invested a total of Rs 41.26 billion in various sectors in the fourth quarter of the last fiscal year.
NeA has also increased the limit for investment in fixed deposits of B and C category banks and financial institutions which have declared higher interest rates than commercial banks by about 50 percent. According to the new guidelines, the investment limit has been set at 15 percent in B class banks and up to 7 percent in class C financial institutions.
