Kathmandu. The Nepal Insurance Authority (INSURANCE) has issued the ‘Directive on Recommendation for Foreign Exchange Exchange of Insurers, 2082 BS’. The directive has been issued to make the exchange of foreign currency systematic as it is desirable to make the process of recommending foreign currency exchange to be paid by the insurer, retrocession, consultancy service imported from abroad, transparent and systematic.
In exercise of the powers conferred by Section 166 of the Insurance Act, 2079 BS, the Insurance Authority has issued guidelines recommending the exchange of foreign currency of the insurer. The insurer has to pay the reinsurance fees and insurance claim amount, dividend refund, consultancy service to foreign insurers or foreign service providers providing services to foreign insurers or insurers in Nepal directly or with the involvement of insurance brokers.
Similarly, in addition to this directive, the insurer will also have to comply with the prevailing laws related to foreign investment and the instructions issued by the Nepal Rastra Bank regarding foreign exchange management. Also, when the insurance companies seek recommendation pursuant to Sub-section 910 of 930, they will have to seek recommendation for payment only in Indian currency in the case of India and in the case of other countries in the prevailing domestic currency of that country or convertible US dollars.
When the insurer seeks foreign exchange recommendation for reinsurance fee, the insurer will have to submit a summary containing the details and self-declaration mentioned in Schedule-1 where the remaining risk has been handed over 100 percent except the share of risk held by the insurer. If you get the prevailing tax, service fee, reinsurance commission or any such exemptions while asking for exchange recommendation, then the recommendation should be sought for remittance through banks and financial institutions licensed from Nepal Rastra Bank for the payment of the net amount.
Similarly, while seeking foreign currency exchange for reinsurance or retrosession rated as per the guidelines, recommendations will be made only for foreign reinsurers and reinsurance brokers listed as per the reinsurance guidelines of the insurer issued by the Authority and re-insurers with ratings as per the same guidelines. Provided that this provision shall not be deemed to have hindered the application or grant of foreign exchange recommendations for payment of funds related to insurance or reinsurance agreements made prior to the implementation of the Insurer’s Reinsurance Guidelines, 2080.
The signature of the chief executive officer of the insurer has been made mandatory while seeking recommendation from the AUTHORITY for exchange of foreign currency as provided in the directive. The insurer will have to preserve the documents submitted for the foreign exchange recommendation and the approval letter for at least five years from the date of completion of the work. The Nepal Insurance Authority (INSURANCE) has issued the ‘Directive on Recommendation of Foreign Exchange Exchange of Insurers, 2082’ to make the recommendation of foreign currency exchange to be paid by the insurer for reinsurance, retrocession and consultancy services imported from abroad transparent and systematic.
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