The Insurance Board published Directive 2078 governing reinsurance brokers. The Board issued the directive with the goal of developing the reinsurance market by setting the capital of reinsurance brokers and setting registration and guidelines for the brokers.
A reinsurance broker’s allowed capital must be at least Rs 10 crores, according to the instruction. About half of it should be kept as paid-up capital. Similarly, 25% of the allowed capital should be retained in the commercial bank’s term account.
Similarly, the Board has mandated that no one be permitted to engage as a reinsurance broker without prior authorization. The reinsurance broker will mediate with the reinsurer on the insurer’s behalf and another reinsurer on the reinsurer’s behalf regarding the responsibility arising under the insurer’s insurance policy. It will also offer reinsurance knowledge and help with claim payment.
The Board has also made provisions for overseas reinsurance brokers. According to the directive, the preceding reinsurance brokers may be permitted to build a contact office in Nepal based on their international business reputation and other essential requirements established by the Board.
After receiving the Board’s letter of intent to enable the broker in reinsurance, one must deposit USD 50,000 as a security deposit at a Nepalese commercial bank of class “A.” When reinsurance brokers open an office in Nepal in collaboration with Reinsurance Brokers of Nepal, they would be entitled to hold up to a 55 percent stake in the company.