December 9: The Insurance Board is preparing to form a special task force to resolve the dispute over a directive that requires mandatory reinsurance from domestic reinsurance companies.

The board had issued a directive on November 25 asking all non-life and life insurance companies to purchase reinsurance policy with the domestic reinsurance company. The board had ordered the companies to reinsure with a foreign company only in case the domestic company refuses to take reinsurance policy. The directive was criticised by all the insurance companies and stakeholders and sought for its immediate withdrawal.

Following its widespread protest, the board is preparing to form a special task force to resolve the issue. Rajuraman Poudel, CEO of the board, said that a special task force is being formed to resolve the dispute. "The stakeholders will be summoned for discussion where they need to present their recommendations. We will take necessary decisions in this regard on the basis of the investigation by the task force,” he said.

After two weeks since the directive was issued, Life Insurance Association and the Nepal Insurers Association have submitted a memorandum to the Insurance Board against it. Poudel confirmed that they have received memorandum from both organizations. 

The associations have also demanded withdrawal of the directive stating that it was against the principles of insurance. According to them, the directive could create more problems as reinsurance companies do not have the capacity to take cent per cent reinsurance. They may not be able to pay the claims so the board must withdraw the directive and that the insurance companies should be allowed to conduct business independently.

The board will also discuss about the memorandum with the task force. "Stakeholders should come to the task force and have their concerns reported. Then it will be easier for us to make decisions," Poudel added.