- What is insurance?
- Why do we do insurance?
Insurance is the risk transfer mechanism between the insured and insurance company.
An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
Some of the main reasons why insurance is important are:
- Financial Security
- Transfer of risk
- Peace of mind
- Some insurance policies are mandatory eg. Third party liability
- Helps to reduce financial burden
- Insurance keeps commerce moving
As per Insurance Act of Nepal, “Life Insurance Business” means the business relating to a contract regarding to the life of any person under which he/she or his/her heir in the event of his/her death, will be paid a particular amount in case a specified amount is paid in installment on the basis of his/her age.
As per Insurance Act of Nepal, Non-Life Insurance Business” means other Insurance Business other than the Life Insurance Business
There are two types of insurance companies in Nepal.
- Life Insurance Company
- Non-life Insurance Company
There are 19 Life insurance and 20 non-life insurance companies in nepal.
As per the Insurance Regulation, 1993 A.D, Non-Life Insurance companies can do following businesses:
- Fire Insurance,
- Motor Insurance,
- Marine Insurance,
- Engineering and Contractor’s Risk Insurance,
- Aviation Insurance,
- Miscellaneous Insurance
As per the Insurance Regulation, 1993 A.D, Life Insurance companies can do following businesses:
- Whole Life Insurance,
- Endowment Life Insurance,
- Term Life Insurance.
Premium means the Insurance Premium to be collected by the Insurer from the insured in consideration of the Insurance Business.
Reinsurance is re-insuring the portion of the risk which is excess of the risk to be hold by the Insurer.
Reinsurance is a process whereby reinsurer takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment. In other words, it is a form of an insurance cover for insurance companies.
A company which insures an insurance company is known as reinsurer. Reinsurance companies are reinsurers.
- To Increase Underwriting Capacity
- Risk Capital Improvement and Diversification
- Surplus Relief
- Catastrophic Protection
- To Finance New Business
- Growth in Economy
- Job Creation
Retrocession is re-insuring the portion of the risk which is excess of the risk to be hold by the reinsurer.
Insured takes the policy from insurance market through insurers, then insurers goes to reinsurance market to get reinsurance from reinsurers. Reinsurers with the help of reinsurer intermediary goes to the market with retrocession with the retrocessionaire.
There are two types of treaty.
A proportional reinsurance agreement, also known as “Pro Rata” reinsurance, obligates the reinsurer to share a percentage of the losses. The reinsurer receives a prorated share of the insurer’s premiums.
Non-proportional reinsurance, or excess of loss basis, is based on loss retention. The ceding insurer agrees to accept all losses up a predetermined level. The reinsurer agrees to reimburse the ceding insurer for losses above the predetermined level and up to the reimbursement limit provided for in contact.
Ministry of Finance.
5th floor, Central Business Park, Thapathali, Kathmandu, Nepal
- Economic growth potential
- Social welfare schemes
- Demand for financial solutions
- Demand for reinsurance expertise, service and knowledge transfer
- Technological leaps,
- Increase in Annual Premium Revenue,
- Impart of Knowledge & Capacity Development,
- FOREX Saving & Incoming Remittance,
- Increment of Premium Retention (both Ceding and Re)
Yes. It does the retro cession and also accepts the international treaty and facultative business.
Nepal Re provides the services for facultatve and treaty reinsurance for fire, property, engineering, aviation, marine, agriculture, miscellaneous and motor portfolios along with different kind of pools such as covid, RSDMDST etc.