February 1: Nepal Insurance Authority (NIA) has instructed reinsurance companies to raise their paid-up capital to Rs 20 billion under the regulatory body’s campaign to increase the capital base of insurance companies.

Executive Director of the NIA Raju Raman Poudel informed that the board meeting of the authority on Wednesday decided to raise the minimum paid-up capital of reinsurance companies. As per the decision, the two reinsurance companies operating in Nepal will have to double their paid-up capital from the existing capital base within one year.

Poudel said that the NIA decided to increase the paid-up capital of reinsurance companies for the effective management of the insurance sector.

According to Poudel, the reinsurance companies have to comply with the new provision by mid-February 2025.

At present, the reinsurance companies need to maintain a minimum paid-up capital of Rs 10 billion.

There are currenty two reinsurance companies—Nepal Reinsurance Company and Himalayan Reinsurance Limited—operating in Nepal.

The Government of Nepal had established the Nepal Reinsurance Company in 2014 to stem the massive capital outflow for insurance purposes. The company’s paid-up capital stands at Rs 12.81 billion at present. 

Likewise, the Himalayan Reinsurance Company -- the second reinsurer of the country – was set up in 2021. The company has paid-up capital of Rs 10 billion.

The NIA has issued a 15-day deadline for the reinsurance companies to come-up with their plans to raise their capital bases.