Nepali reinsurance brokers, established to provide mediation between insurance and reinsurance companies and offer expert technical consultancy services, have remained idle. Despite receiving licences from the Nepal Insurance Authority two years ago, Nepali reinsurance companies have not engaged brokers for business. Moreover, the brokers' inability to transact in foreign currencies has hindered their growth in dealing with international reinsurers.
"Most companies, except a few, are limited to operating with interest from their paid-up capital," said Bishaldeep Adhikari, Deputy CEO of Lord Buddha Insurance Broking Company. "Nepali companies do not use brokers, and we lack permission for foreign currency transactions to conduct business internationally."
Adhikari noted that while some companies are engaged in domestic reinsurance and others operate as agents for foreign reinsurers, the volume is minimal.
In 2022, the then Insurance Board of Nepal issued the Reinsurance Broker Guidelines 2021 and granted licences to 10 companies in July/August 2022. According to the guidelines, a reinsurance broker's minimum authorised capital is set at Rs 100 million, with at least 50% (Rs 50 million) as paid-up capital. Additionally, 25% of the authorised capital must be earmarked and deposited in a fixed account with a commercial bank.
Although these 10 companies met the authority’s criteria and obtained licences, officials acknowledge that the companies have yet to make notable progress in their operations. Rajendra Marhajan, Head of the Reinsurance Division at the Authority, stated that Nepali brokers are limited to assisting foreign broker companies.
"Nepali reinsurance brokers are unable to conduct direct transactions due to the lack of foreign currency transaction permissions," he said. "Some companies are reportedly working in cooperation with foreign entities." He added that efforts are underway to secure approvals for foreign currency transactions for broker companies.
Insurance expert Dr Rabindra Ghimire mentioned that since Nepali reinsurance companies are newly established, it will take time for them to expand their operations. "Foreign reinsurance brokers have been active in the Nepali market for years," he said. "It will take time for local brokers to build the capacity to compete."
No Data with the Authority
Despite two years since licensing, the authority has not maintained data on the business transactions of reinsurance brokers. As per the guidelines, brokers must submit quarterly reports detailing their business dealings, including information about the insurers and reinsurers involved, transaction details, and audited annual financial statements.
However, no company has submitted such details till date. Adhikari from Lord Buddha Insurance Broking Company stated that brokers have been unable to report details due to a lack of significant business activities.
What is a Reinsurance Broker?
According to the guidelines, a reinsurance broker acts as an intermediary between insurers and reinsurers for risk reinsurance. Their responsibilities include mediating between the insurer and reinsurer regarding liabilities arising from issued policies, providing technical and expert consultancy, analysing market data, and facilitating claims settlements. They also assist in preparing reinsurance agreements and reconciling receivables and payables.
Licensed Local Reinsurance Broker Companies
- Trust Insurance Broker
- Federal Insurance Broker
- Hub Insurance Broker
- Global Insurance and Reinsurance Broker
- Alliant Insurance Broker
- Shubha Insurance Broker
- Avon Insurance Broker
- Allied Insurance Broker
- JB Boda Insurance and Reinsurance Broker
- Lord Buddha Insurance Broking Company
- Shridhar Insurance Broker
- First Policy Insurance Broker
- Marvel Insurance Broker
- Synergy Insurance Specialist
