Nepal Insurance Authority (NIA) has directed the insurance companies that have failed to increase their paid-up capital by the mid-April, 2023 deadline to submit their applications for extension for capital increment. However, insurance companies have to furnish their clarification for not being able to raise the capital as per the deadline. According to NIA officials, insurance companies will be given three months deadline to raise their capital if the authority is satisfied with the clarification submitted by the insurers. A year ago, NIA required non-life insurers to have Rs 2 billion in paid-up capital, while it is Rs 5 billion for life insurance companies, by mid-April 2023.

After the majority of insurance companies failed to meet the deadline, NIA extended the deadline to mid-July, 2023. Only four insurance companies have been to raise their capital as per the regulatory requirement so far.

Among the life insurance companies, the paid-up capital of Nepal Life Insurance Company is above Rs 5 billion. Three non-life insurance companies, namely Shikhar Insurance, Siddhartha Premier Insurance and Sagarmatha Lumbini Insurance have also met the new capital requirement. With NIA pushing for capital increment, the majority of insurers have opted for mergers to increase their capital base. Of the 19 insurance companies involved in the merger process, six companies have merged to become three and have started their integrated business while 13 others are still in the process of completing their mergers. However, the paid-up capital of many companies is below the regulatory requirement even after the mergers. Such companies have sought to raise their paid-up capital through right share issuance and NIA has responded positively to their proposals. Those companies who've not opted for mergers have reported to NIA that they are planning to increase their capital by either bringing foreign partners or selling assets. Prabhu Insurance and Nepal Insurance have told the authority that they would complete the capital increment by mid-July 2023. NIA sources say Prabhu Insurance is trying to bring foreign partners while Nepal Insurance is planning to raise capital by selling its assets. In the case of NLG Insurance, its main investor, National Life Insurance Company, plans to increase the capital. The four new life insurance companies are gearing up to increase their paid-up capital by adding promoters' shares and IPO issuance. Citizens Life Insurance, Sun Nepal Life Insurance, Reliable Life, and IME Life Insurance have not issued IPOs so far. These companies are now planning to add promoters' shares first, and then go for IPO issuance. Some of these companies have plans to issue IPO at a premium price and then for the right share issuance to meet the regulatory requirement. As of now, Citizen Life has Rs 2.62 billion, Sun Nepal has Rs 2.24 billion, Reliable Nepal Life has Rs 2.8 billion and IME Life has Rs 2.8 billion in paid-up capital. According to NIA, foreign promoters of insurance companies such as Metlife Nepal and The Oriental Insurance are adding investments to fulfill the new capital requirement.  Meanwhile, the government-owned Rastriya Beema Company and Rastriya Beema Sansthan along with Asian Life Insurance are yet to submit their capital increment plan to NIA.