Kathmandu. As per the directive of Nepal Insurance Authority, the Board of Directors has to approve the annual reinsurance policy of the insurer for the coming fiscal year by mid-July. There are only two weeks left for the deadline to expire.
As per the provisions of the Reinsurance Directive, 2080, the business of 2 percent of the direct share should be transferred to both domestic reinsurers (Nepal Reinsurance Company and Himalayan Reinsurance).
Himalayan Reinsurance, one of the domestic reinsurers, is at risk of continuing the suspension action even after mid-July as its reinsurance business has been suspended. In such a situation, there is confusion whether the insurer will formulate a reinsurance plan to provide direct share business to Himalayan Reel or not.
Directive 16 (3) of the Insurer’s Reinsurance Directive, 2080 BS states that the insurer should prepare the reinsurance policy before the end of the fiscal year and approve it by the Board of Directors and implement it.
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A case has been filed against promoter shareholders of Himalayan Reinsurance Company Dipak Bhatta and Sulav Agrawal, former promoters Shekhar Golchha and Sahil Agrawal on charges of money laundering, banking fraud and insurance charges. With this case, the authority has banned the reinsurance business from April to mid-July citing the company’s financial condition is critical.
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The insurer will re-insure the contract for the next fiscal year 2083. For 84, both the reinsurers will have to transfer the business at the rate of 2 percent each for direct share.
Stating that the corrective action taken against Himalayan Reinsurance Company would not continue after the month of June, the authority should instruct the insurer to prepare an annual policy for the transfer of business as per the reinsurance directive. Or the authority can untie the policy knot by amending the reinsurance directive.
