Insurance Companies Directed to Maintain Risk-Based Capital within Four Years

via Logical manager

The new financial year, 2080/81, has commenced with the implementation of guidelines for risk-based capital and solvency for insurance companies, effective from today. As per these guidelines, life and non-life insurance companies are required to maintain risk-based capital within the period spanning 2080/81 to 2084/85.

If insurance companies fail to meet the required risk-based capital or solvency ratio, they must make improvements within the next four years as stipulated by the guidelines.

The authority has established a minimum paid-up capital of Rs 5 Arba for life insurance companies and Rs 2.5 Arba for non-life insurance companies. However, the guidelines emphasize that companies must maintain paid-up capital based on their individual capacities, considering the varying levels of risk.

The guidelines highlight the need to maintain risk-based capital due to the expanding scope of insurance and the increased risks associated with it, acknowledging the relatively low capital levels of insurance companies.