KATHMANDU: The Insurance Board (IB) has issued a broker licence for 10 reinsurance companies. More than dozen companies applied to the board for demanding license of reinsurance brokers.
Rajuraman Poudel, executive director of the board informed that after completing the process, licenses has been granted to eligible companies. According to him, the committee has started giving licenses to companies since May this year.
Among the companies that have applied for licenses, the board has identified JB Boda Insurance & Reinsurance, Hub Reinsurance Broker, Alliant Reinsurance Brokers Pvt Ltd, Federal Reinsurance Brokers Pvt Ltd, Global Insurance & Reinsurance Brokers Pvt Ltd, Trust Insurance Brokers Pvt Ltd, STC Reinsurance Brokers Pvt Ltd, Shubh Licensed to Re Insurance Services and Avon Re Insurance Broker.
Federal Re Insurance, which got a license on May 17 from the committee, has also called the first general meeting.
According to the guidelines, the term of the reinsurance broker company will be one fiscal year. The Insurance Board has fixed a paid-up capital of 50 million rupees to run the reinsurance brokerage company.
In the guidelines issued by the board, there is a provision that the authorized capital of the organization to operate the insurance business should be 100 million rupees in the company. There is a provision to maintain 50 percent of the capital as paid-up capital.
According to the principle of insurance, the insurance company should not bear all the risks. Risk must be distributed. Therefore, insurance companies only transfer certain risks to other companies with the remaining risk retained by them.
According to the regulatory body Insurance Board, non-life insurance companies are allowed to take a maximum risk of 5 percent of their net worth and life insurance companies are only allowed to take 0.3 percent risk.
At present, Nepali insurance companies are doing reinsurance through foreign reinsurance brokers. According to the committee, most of the companies are getting reinsurance through Indian reinsurance brokers.
The companies have been doing reinsurance through Indian brokers such as JB Boda (India), Pioneer Insurance Broker (India), Frost Policy Insurance Broker (India).
Similarly, Swiss Re (Switzerland), General Insurance Corporation (GIC) Reinsurance, Bharat Reinsurance Broker, Sridhar Insurance Broker, UNI Light Reinsurance Broker, Protection Reinsurance Broker, UIB Broker and others have been doing reinsurance.