Kathmandu, January 9 - Non-life insurance firms will be required to clarify their business status along with the balance sheet that they submit to the Insurance Board (IB) – the insurance sector regulator of the country – from the current trimester of this fiscal year.
As per the guidelines set by the IB, the non-life insurance companies are required to submit their balance sheet showing the annual growth of business, net increment on insurance premium and the investment of the insurance firm in the sectors that they are allowed to invest in.
All insurance firms are allowed to invest in government bonds, primary shares of public companies and purchase equity of infrastructure companies.
From now on, the non-life insurance firms would have to submit the details of the investment ratio – whether it increased or decreased when compared to the same period of last fiscal year.
Similarly, non-life firms would have to present the details of the ratio of capital and net assets to the regulator. Paid-up capital and reserve fund can be counted as capital, while long-term and short-term assets can be calculated as the assets of the company.
Santosh Karki, chief of the financial analysis division of the IB, informed that the regulator initiated the new form of reporting for risk-based supervision of the insurance firms. “It will help us in conducting sector-wise analysis of the company, and this type of supervision will show the real position of the company,” Karki said.
Likewise, insurance firms have to show the ratio between total investment in shares of a public company and total assets of the company. Moreover, they have to show the ratio of total amount which is to be received from the reinsurance companies and total reinsured amount of the current fiscal.
The total expenditure of the insurance firms and their liability for claim settlement also needs to be presented separately. Likewise, the non-life insurance firms will have to show the ratio of total promotional expenditure and collection of premium within the trimester.
The move is in line with the earlier announcement of IB that it would begin the risk-based supervision of insurance firms. To implement its earlier decision, the regulator has started new type of reporting system for the non-life firms. “The risk-based supervision will be started for the life insurance companies in the near future,” Karki said.
Source: The Himalayan Times