In the first 11 months of the fiscal year ending on 15th July 2017, Nepal Reinsurance, the only reinsurer in Nepal has collected NPR100 million (US$970,000) in premiums from abroad due to expanding the business internationally.
Nepal Re’s customers are spread over a total of 15 countries, including SAARC member states except India. The company has clients in the UAE, Bahrain, Papua New Guinea and a number of African countries including Kenya, reported Kathmandu Post. “We have aimed to increase premium collection to NPR150 million by the end of this fiscal year,” said Nepal Re's CEO Mr Chirayu Bhandari. Four of its foreign clients are reinsurance companies based in Kenya and Bhutan.
In the last fiscal year, the reinsurer collected premiums totalling NPR3.5 billion from its domestic and foreign clients. The company says that they provide all types of insurance except aviation and life.
The government established Nepal Re in November 2014 in a bid to stem massive capital outflows of funds from reinsurance business. NepaL Re was converted then from a terrorism insurance pool set up in 2003. Its first deal with a foreign insurer was signed in October 2015.
The reinsurer has a paid-up capital of NPR5 billion. The government owns 43.5% of its shares while 17 nonlife insurers hold 39.4% and life insurers hold the remaining 18.1%.
“We are planning to make it mandatory for life and non-life insurers to buy stock in Nepal Re in coordination with the government,” said Mr Bhandari. “By involving life insurance companies as stakeholders, we can make them buy reinsurance from the domestic company.”
In the Budget Speech delivered in May, the government mentioned that they will be encouraging Nepali insurers to buy reinsurance domestically for the fiscal year ending 15th July 2018.
“Since Nepali insurance companies have been sending large amounts of money to foreign reinsurance companies to buy reinsurance coverage, a mandatory arrangement will be made for Nepali life and nonlife insurance companies to buy most of their reinsurance coverage from Nepal Reinsurance Company,” the Budget statement said.
According to Nepal Re, it has been conducting retrocession transactions with Sava Reinsurance of Slovenia, GIC Re India and Hannover Re of Germany.