Longstanding plans to convert the Insurance Pool into a reinsurance company has inched forward with the completion of a due diligence audit (DDA) to find out its actual financial situation. The organization had been formed in 2003 to provide insurance coverage for damaged caused by terrorism. With the end of the Maoist conflict, such claims have fallen, prompting moves to turn it into a reinsurance company.
The DDA has put the net worth of the Insurance Pool at Rs 2 billion. The Pool is now preparing to hold its annual general meeting (AGM) in April which is expected to endorse the proposal to convert it into a reinsurance company.
Chief Executive Officer Ramesh Lamsal said that the proposal would go to the cabinet for its endorsement after it is okayed by the AGM. “Then the registration process will begin,” he added.
After the AGM gives the go-ahead, a committee headed by insurance expert Bhoj Raj Sharma will proceed with converting the Insurance Pool into a reinsurance company.
The committee has been preparing a draft of the memorandum of article to register the company at the Office of the Company Registrar (OCR).
“After the Pool’s board decides the size of the capital, we will incorporate it in the memorandum of article before registering the company at the OCR,” said Sharma. Currently, pool is undecided over the size of the capital.
Lamsal said that most probably its cash resources amounting to more than Rs 2 billion would be converted into paid-up capital and it would have an issued capital of Rs 3 billion. The committee headed by Sharma is preparing to include the tasks of both the Insurance Pool and reinsurance in the memorandum of article.
Sharma said that once the reinsurance company is registered, the cabinet should immediately scrap the current regulation governing the Insurance Pool. Although it had been planned to transform the Insurance Pool into a reinsurance company before the Dashain festival in 2012, the decision to carry out a prolonged DDA delayed the entire process.
With the DDA finally over, Lamsal hoped that the reinsurance company would be established within the current fiscal year and start operating from the next fiscal year.
In 2011, a taskforce formed by the government had suggested turning the pool into a company to provide reinsurance in a bid to check the massive outflow of money in premiums which amounts to more than Rs 2.4 billion annually.
The taskforce headed by Bishnu Lamsal, then joint secretary at the Finance Ministry, suggested that the pool could be used as a share investment to establish the company. Subsequently, the government incorporated the provision in its annual budget.
The pool was established in 2003 with a 50/50 resource contribution by the government and the private sector to cover damage caused by terrorism.
At that time, the Maoist insurgency was at its height, and foreign reinsurance companies were hesitant to cover damage caused by the activities of the then rebel Maoists.
Currently, the pool has cash resources of around Rs 2.3 billion. It collected premiums of Rs 1.11 billion in the last fiscal year, according to Lamsal. “Due to lower claims in recent years following the end of the conflict, the financial resources of the pool have been swelling,” he added.
source: the kathmandu post,13 march 2014
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The DDA has put the net worth of the Insurance Pool at Rs 2 billion. The Pool is now preparing to hold its annual general meeting (AGM) in April which is expected to endorse the proposal to convert it into a reinsurance company.
Chief Executive Officer Ramesh Lamsal said that the proposal would go to the cabinet for its endorsement after it is okayed by the AGM. “Then the registration process will begin,” he added.
After the AGM gives the go-ahead, a committee headed by insurance expert Bhoj Raj Sharma will proceed with converting the Insurance Pool into a reinsurance company.
The committee has been preparing a draft of the memorandum of article to register the company at the Office of the Company Registrar (OCR).
“After the Pool’s board decides the size of the capital, we will incorporate it in the memorandum of article before registering the company at the OCR,” said Sharma. Currently, pool is undecided over the size of the capital.
Lamsal said that most probably its cash resources amounting to more than Rs 2 billion would be converted into paid-up capital and it would have an issued capital of Rs 3 billion. The committee headed by Sharma is preparing to include the tasks of both the Insurance Pool and reinsurance in the memorandum of article.
Sharma said that once the reinsurance company is registered, the cabinet should immediately scrap the current regulation governing the Insurance Pool. Although it had been planned to transform the Insurance Pool into a reinsurance company before the Dashain festival in 2012, the decision to carry out a prolonged DDA delayed the entire process.
With the DDA finally over, Lamsal hoped that the reinsurance company would be established within the current fiscal year and start operating from the next fiscal year.
In 2011, a taskforce formed by the government had suggested turning the pool into a company to provide reinsurance in a bid to check the massive outflow of money in premiums which amounts to more than Rs 2.4 billion annually.
The taskforce headed by Bishnu Lamsal, then joint secretary at the Finance Ministry, suggested that the pool could be used as a share investment to establish the company. Subsequently, the government incorporated the provision in its annual budget.
The pool was established in 2003 with a 50/50 resource contribution by the government and the private sector to cover damage caused by terrorism.
At that time, the Maoist insurgency was at its height, and foreign reinsurance companies were hesitant to cover damage caused by the activities of the then rebel Maoists.
Currently, the pool has cash resources of around Rs 2.3 billion. It collected premiums of Rs 1.11 billion in the last fiscal year, according to Lamsal. “Due to lower claims in recent years following the end of the conflict, the financial resources of the pool have been swelling,” he added.
source: the kathmandu post,13 march 2014
LINK
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