Nepal’s life insurance market is set to witness intense competition with a slew of new companies entering the sector. The government has given the go-ahead to 10 life insurance companies to begin operations, bringing the total number of these insurers in the market to 19.
The new entrants are Citizen Life Insurance, Star Life Insurance, Sun Nepal Life Insurance, Sanima Life Insurance, Reliance Life Insurance, Reliable Life Insurance, IME Life Insurance, Mahalaxmi Life Insurance, Jyoti Life Insurance and Union Life Insurance, reported Kathmandu Post.
Finance Minister Krishna Bahadur Mahara made the decision to issue new permits in May. The move has been criticised by experts as a number of insurers are currently being questioned about their inability to pay out claims on time. Existing insurance companies are also in the process of increasing their paid-up capital.
The applications of two other hopefuls, Standard Life Insurance and Unilife Life Insurance, were rejected for failing to meet the required criteria, according to the Insurance Board (IB).
Mr Ananda Dhakal, Joint Secretary at the Finance Ministry, said the government had agreed in principle to allow these insurers to operate. “The recommendation was made by the IB.”
Existing insurers told to increase their capital fourfold
The newly approved life insurers had applied to the IB for a licence a decade ago. Then IB Chairman Fatta Bahadur KC turned them down as he wanted to strengthen the capital base of the existing insurers first. In a bid to reform the market, KC had even forced insurance companies to merge after they failed to raise their capital within the stipulated time.
In April, the IB instructed life and non-life insurance companies to raise their paid-up capital fourfold. Life insurers have to increase their paid-up capital to NPR2 billion (US$195,000) from NPR500 million and non-life insurers have to increase their capital to NPR1 billion from NPR250 million. The regulator has given insurance companies until mid-July 2018 to meet the capital requirement. A