Rastriya Beema Sansthan (RBS) is preparing to separate its business
es into life and non-life after resisting the Insurance Board’s (IB)
attempt to bring it under the Insurance Act for 11 years.
The amended Insurance Act requires separation of the two kinds of insurance. However, RBS’ insistence that it is governed by the RBS Act 1968 and its failure to have its books audited for several years complicated the process of separating its two business es. On the private sector front, National Life and General Insurance has been split into two entities—National Life Insurance and NLG Insurance.
Although the Insurance Act is an umbrella act, the IB has not initiated any action against RBS for not following it as it is a state-owned enterprise.
RBS is currently preparing memorandums of association for two separate organizations to deal in life and non-life insurance. “A separate company will be established under the Company Act for non-life business es,” said Ram Bahadur Khadka, administrator at RBS. “A new organ and board of directors will be formed for the non-life company.” He said the job is expected to be completed within the current fiscal year.
The insurance regulation requires a separate management, paid-up capital, terms and conditions to be put forward by the regulator and need for managing separate insurance fund for the two business es.
RBS came up with its plan to separate the two business es after the regulatory body continued to mount pressure on it for the same based on the provision of the Insurance Act.
However, it will be tougher for RBS to be split into two separate bodies because its transactions have not been audited for the last seven years. Khadka said that they would complete the audit of all years within the next six months. “After completing the audit, we have planned go ahead with increasing it’s paid-up capital,” said Khadka.
Life insurance companies have to increase their paid-up capital to Rs 500 million and non-life insurance companies are required to have a paid-up capital of Rs 250 million within the first quarter of the current fiscal year. RBS’ non-life insurance operation has a paid-up capital of Rs 99.51 million while its life insurance operation has a paid-up capital of Rs 9.3 million. Khadka said that they had a reserve of Rs 120 million generated from the net profits of the last seven years. “Most of this amount will be converted into capital requirement for non-life insurance,” he added.
As of the last fiscal year, RBS has collected premiums of over Rs 3 billion while it has invested more than Rs 13 billion. Last year, the company’s net profit was estimated to be Rs 500 million from life insurance and Rs 70-80 million from non-life insurance, according to Khadka.
RBS has estimated bonus shares worth Rs 204.5 million only in the first three years of seven years ever since the RBS to get its transactions audited. “This amount will be adequate to meet the capital requirement for non-life insurance,” said Khadka.
Source: The Kathmandu Post
The amended Insurance Act requires separation of the two kinds of insurance. However, RBS’ insistence that it is governed by the RBS Act 1968 and its failure to have its books audited for several years complicated the process of separating its two business es. On the private sector front, National Life and General Insurance has been split into two entities—National Life Insurance and NLG Insurance.
Although the Insurance Act is an umbrella act, the IB has not initiated any action against RBS for not following it as it is a state-owned enterprise.
RBS is currently preparing memorandums of association for two separate organizations to deal in life and non-life insurance. “A separate company will be established under the Company Act for non-life business es,” said Ram Bahadur Khadka, administrator at RBS. “A new organ and board of directors will be formed for the non-life company.” He said the job is expected to be completed within the current fiscal year.
The insurance regulation requires a separate management, paid-up capital, terms and conditions to be put forward by the regulator and need for managing separate insurance fund for the two business es.
RBS came up with its plan to separate the two business es after the regulatory body continued to mount pressure on it for the same based on the provision of the Insurance Act.
However, it will be tougher for RBS to be split into two separate bodies because its transactions have not been audited for the last seven years. Khadka said that they would complete the audit of all years within the next six months. “After completing the audit, we have planned go ahead with increasing it’s paid-up capital,” said Khadka.
Life insurance companies have to increase their paid-up capital to Rs 500 million and non-life insurance companies are required to have a paid-up capital of Rs 250 million within the first quarter of the current fiscal year. RBS’ non-life insurance operation has a paid-up capital of Rs 99.51 million while its life insurance operation has a paid-up capital of Rs 9.3 million. Khadka said that they had a reserve of Rs 120 million generated from the net profits of the last seven years. “Most of this amount will be converted into capital requirement for non-life insurance,” he added.
As of the last fiscal year, RBS has collected premiums of over Rs 3 billion while it has invested more than Rs 13 billion. Last year, the company’s net profit was estimated to be Rs 500 million from life insurance and Rs 70-80 million from non-life insurance, according to Khadka.
RBS has estimated bonus shares worth Rs 204.5 million only in the first three years of seven years ever since the RBS to get its transactions audited. “This amount will be adequate to meet the capital requirement for non-life insurance,” said Khadka.
Source: The Kathmandu Post
