As the threat of damage to properties declined sharply following the end
of the Maoist insurgency, the Insurance Pool and local insurance
companies have decided to increase their share of insurance coverage and
reduce the share of reinsurance companies abroad.
With foreign reinsurance companies sharing 65 percent of the risk of possible damage by terrorism related incidents in Nepal, the Pool and insurance companies have now decided to bring down the share of foreign reinsurance companies and increase the share of domestic players.
Ramesh Lamsal, chief executive officer of the Pool, said domestic insurance companies will now shoulder 45 percent of the risk, up from 35 percent, beginning this fiscal year.
“ Insurance companies will share 10 percent of the risk, up from the previous 5 percent, and the Pool will share 35 percent from the previous 30 percent,” he said. He added that domestic players were more capable of dealing with terrorism related risks now compared to the insurgency days.
The Insurance Pool Nepal was established in 2003 to handle reinsurance for terrorism risks of Nepali insurers when the Maoist conflict was at its height. It has a 50 percent equity participation of the Nepal government and the rest of the stock is held by Nepali insurers.
Since the peace process began in the country in 2006, claims for damages have declined continuously. The estimated claims were around Rs 40 million in the last fiscal 2012-13, down from Rs 100 million in the previous fiscal 2011-12. “We have settled all the outstanding claims with the exception of three which have gone to court,” said Lamsal.
Going over the figures of the last eight years, payments jumped from Rs 242.52 million in fiscal 2004-05 to Rs 401 million in 2005-06. The figure then plunged to Rs 147 million in 2006-07, following People’s Movement II that paved the way for the Maoists to enter peaceful politics. Payments rose slightly in 2007-08 and then have been on a continuous decline.
About Rs 900 million had gone out of the country in the fiscal year 2012-13 for reinsurance against terrorist damage. The Pool said an estimated Rs 1 billion will go outside the country this fiscal year.
As the government plans to convert the Pool into a reinsurance company, the amount of money going out of the country for reinsurance purposes is expected to go down after the conversion.
According to Lamsal, they have planned to convert the Pool into the Reinsurance Company within the current fiscal year. As per the plan, a due diligent audit (DDA) will be completed by mid-October to determine the net worth of the company, before turning it into a reinsurance company. It plans to start the process of registering the reinsurance company in mid-March 2014.
Even after the establishment of the reinsurance company, it will not take all the responsibility of reinsurance. “We will probably take 10-15 percent of the risk initially,” said Lamsal. “As our strength increases, we will increase the degree of risk coverage.”
As per the initial plan, the paid-up capita of the reinsurance company will be Rs 1 billion. The Pool currently has funds of around Rs 2 billion.
source: the kathmandu post,27 Sep 2013
link
With foreign reinsurance companies sharing 65 percent of the risk of possible damage by terrorism related incidents in Nepal, the Pool and insurance companies have now decided to bring down the share of foreign reinsurance companies and increase the share of domestic players.
Ramesh Lamsal, chief executive officer of the Pool, said domestic insurance companies will now shoulder 45 percent of the risk, up from 35 percent, beginning this fiscal year.
“ Insurance companies will share 10 percent of the risk, up from the previous 5 percent, and the Pool will share 35 percent from the previous 30 percent,” he said. He added that domestic players were more capable of dealing with terrorism related risks now compared to the insurgency days.
The Insurance Pool Nepal was established in 2003 to handle reinsurance for terrorism risks of Nepali insurers when the Maoist conflict was at its height. It has a 50 percent equity participation of the Nepal government and the rest of the stock is held by Nepali insurers.
Since the peace process began in the country in 2006, claims for damages have declined continuously. The estimated claims were around Rs 40 million in the last fiscal 2012-13, down from Rs 100 million in the previous fiscal 2011-12. “We have settled all the outstanding claims with the exception of three which have gone to court,” said Lamsal.
Going over the figures of the last eight years, payments jumped from Rs 242.52 million in fiscal 2004-05 to Rs 401 million in 2005-06. The figure then plunged to Rs 147 million in 2006-07, following People’s Movement II that paved the way for the Maoists to enter peaceful politics. Payments rose slightly in 2007-08 and then have been on a continuous decline.
About Rs 900 million had gone out of the country in the fiscal year 2012-13 for reinsurance against terrorist damage. The Pool said an estimated Rs 1 billion will go outside the country this fiscal year.
As the government plans to convert the Pool into a reinsurance company, the amount of money going out of the country for reinsurance purposes is expected to go down after the conversion.
According to Lamsal, they have planned to convert the Pool into the Reinsurance Company within the current fiscal year. As per the plan, a due diligent audit (DDA) will be completed by mid-October to determine the net worth of the company, before turning it into a reinsurance company. It plans to start the process of registering the reinsurance company in mid-March 2014.
Even after the establishment of the reinsurance company, it will not take all the responsibility of reinsurance. “We will probably take 10-15 percent of the risk initially,” said Lamsal. “As our strength increases, we will increase the degree of risk coverage.”
As per the initial plan, the paid-up capita of the reinsurance company will be Rs 1 billion. The Pool currently has funds of around Rs 2 billion.
source: the kathmandu post,27 Sep 2013
link
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