KATHMANDU, Aug 6: A number of Nepali insurance companies have failed to increase their capital bases even after missing the three-year deadline set by their regulator.
The Nepal Insurance Authority (NIA) had instructed life insurance companies to raise their paid-up capital to Rs 5 billion from the existing Rs 2 billion. Similarly, non-life insurers were directed to increase their capital to Rs 2.5 billion from Rs 1 billion.
In April 2022, the NIA directed insurers to either increase their capital base or opt for mergers if they failed to comply. Initially, it gave them 30 days to submit their capital increment plans. In response, 34 insurers submitted their plans within the stipulated period.
Following this, the NIA set a deadline of mid-April 2023 for insurance companies to raise their capital bases. However, they have yet to meet the requirement even three years after the directive was issued.
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Likewise, the NIA instructed reinsurers to increase their paid-up capital to Rs 20 billion by mid-February of the last fiscal year. Micro-insurers were told to maintain a capital base of Rs 750 million by issuing 30 percent of their shares to the public.
Although most life insurance companies have met the paid-up capital requirement, Asian Life Insurance and Rastriya Jeevan Beema Company are still lagging behind.
Asian Life Insurance has reportedly initiated the process of issuing right shares to raise its paid-up capital from the current Rs 3.39 billion to Rs 5 billion. However, the government-owned Rastriya Jeevan Beema Company has a capital base of only Rs 1.89 billion and has yet to issue primary shares.
On the non-life insurance side, five companies—Nepal Insurance, United Ajod Insurance, Prabhu Insurance, Sanima General Insurance, and Rastriya Beema Company—have failed to meet the NIA’s deadline.
Two reinsurers, Nepal Reinsurance and Himalayan Reinsurance, also missed the mid-February 2025 deadline. The regulator has now extended the deadline by one year to allow them to meet the target.
Among the seven micro-insurance companies, only three—Nepal Micro Insurance, Guardian Micro Life, and Crest Micro Life—have reached the Rs 750 million capital requirement. Protective Micro Insurance, Liberty Micro Life, Star Micro, and Trust Micro Insurance have submitted plans to raise capital by issuing primary shares.
Since the NIA adopted the capital increment policy, a total of 11 insurance companies have merged with similar entities. As a result, the number of non-life insurance companies has decreased to 14 from 20, while the number of life insurance companies has dropped to 14 from 19.
