April 30: Insurance Board—the insurance regulatory authority of Nepal—is preparing to allow the establishment of another reinsurance company in the market. It has called for applications from interested individuals and companies from the private sector to send proposals in this regard.

The interested individuals and companies can submit applications within 21 days by fulfilling the criteria set by the board. One of the applicants will be granted permission to set up a reinsurance company, according to Surya Prasad Silwal, chairman of the Insurance Board.

A state-owned reinsurance company is currently in operation. Preparations are on to establish a reinsurance company from the private sector to make the insurance sector more competitive, effective and productive, said Silwal.

Various companies and entrepreneurs have shown keen interest to establish re-insurance companies in the country. Former Finance Minister Yuba Raj Khatiwada had stressed on establishing a new reinsurance company. Subsequently, the Insurance Board formed a committee to study into this matter. The study had recommended the need of another reinsurance company in the country.

After Insurance Board initiated the study to establish a new reinsurance company, various entrepreneurs have made preparations to submit applications to establish four reinsurance companies namely - Annapurna Reinsurance Company, Kathmandu Reinsurance Company, Prudential Reinsurance Company and Genuine Reinsurance Company.

Raju Raman Poudel, executive director of the Insurance Board, said only one reinsurance company will be given approval for the establishment. Decision will not be taken based on the preparations that are underway in the market. "Study has shown only one company is required in the market. In this case, it would be better if all the proposed companies come together," he said.

Likewise, Insurance Board has also set various conditions for the new reinsurance company. Only the company that fulfills the set criteria will be eligible to submit application.

The proposed reinsurance company should have a minimum paid-up capital of Rs 10 billion. Investors of current reinsurance company are not eligible to invest in the proposed company.

Proposal that receives the highest marks will get the initial approval.

Proposals need to be submitted within a given deadline. "Though prohibitory order is in place to control coronoavirus, the Insurance Board will remain open during this time so that the proposals can be submitted," Silwal added.