May 20: Five new companies have submitted applications to the Insurance Board for establishing a new reinsurance company. The board had called for applications to establish a new reinsurance company with private investment.
The Insurance Board has received five applications until the last day for submission of applications on May 19. It had published a notice on April 29 seeking applications from the private sector. Applications were sought for opening a new reinsurance company to make the insurance market more competitive, effective and productive.
Companies namely Kathmandu Reinsurance Company, Annapurna Reinsurance Company, Prudential Reinsurance Company, Himalayan Reinsurance Company and Genuine Reinsurance Company have submitted applications to the board.
Raju Raman Poudel, executive director of the board, confirmed that applications have been received from five companies. The board will study the applications properly before taking any further steps.
Currently only one state-owned reinsurance company -- Nepal Reinsurance Company -- is in operation in the country.
Poudel said that the board received more applications that they were expecting.
"During the evaluation process, the company receiving the highest marks will get the license for operation," he added.
Former Finance Minister Yuba Raj Khatiwada had been stressing on the need of a new reinsurance company. Since then, the board had been studying this prospect by forming a committee. The study had recommended the need of an additional reinsurance company. Then the board started preparations to set up a new reinsurance company.
According to Poudel it is not possible to ask the companies that have submitted applications to collaborate and come together. It would have been possible if the number of applicants were few. He said that only one of the five applicants will receive a license to set up a new reinsurance company.
The board has also set various criteria and conditions for the new reinsurance company. The companies will be evaluated on the basis of those criteria. The proposed company should have a paid-up capital of Rs 10 billion. Likewise, investors of Nepal Reinsurance Company, which is currently in operation, are not allowed to invest in the proposed company.