KATHMANDU, Aug 27: The Insurance Authority (IB) has opened licenses for microinsurance companies, contradicting its own policy to reduce the number of insurers operating in the country.
IB, the country’s insurance regulator, is pressuring existing insurance companies to merge, arguing that there isn’t enough business for a large number of insurers. But on the other hand it opened the license for new companies.
On Friday, the IB issued a 35-day public notice calling on companies willing to start microinsurance businesses. According to the IB, it issues insurance licenses to seven companies. Of these, three will work in life insurance, while the remaining four will be non-life insurers.
The regulator has set a requirement of Rs 750 million as paid-up capital for the new insurers. Likewise, the interested companies should not have cross-shareholdings to obtain new licenses.
The government is said to have granted the new insurer licenses to bow to pressure from the country’s big business groups, which include Vishal Group, IME Group and Chaudhary Group. Many of them submitted their proposals for obtaining insurance licenses before the IB issued the public call for microinsurance companies.
Muktinath Insurance, Mahalaxmi General Insurance, Annapurna General Insurance, Manakamana Insurance, Abhiyaan General Insurance and Upakar General Insurance have submitted their non-life insurance claims. Similarly, Uni Life Insurance, Standard Life Insurance and Upakar Life Insurance have all attempted to acquire new life insurance licenses.
With a deadline of mid-April 2023, the IB has urged insurers to either increase their capital base or merge if they don’t. According to the regulator, life insurance companies must increase their paid-up capital to Rs 5 billion from the existing Rs 2 billion. Similarly, non-life insurers need to increase their capital from Rs 1 crore to Rs 2.50 crore.
As of now, Himalayan Everest Insurance, the entity formed by the merger of Himalayan General Insurance and Everest Insurance, has already commenced its integrated transaction. Prabhu Life Insurance and Mahalaxmi Life Insurance have also signed a merger agreement.
Prabhu Insurance Limited and Ajod Insurance Limited have also agreed to merge. Similarly, Prime Life, Union Life and Gurans Life have already signed merger agreements. Sagarmatha Insurance Company and Lumbini General Insurance Company have also signed a letter of intent to merge.