Government Approves Insurance Regulations, 2081 After Two-Year Delay

Kathmandu – After nearly two years of discussions and disputes, the government has finally approved the Insurance Regulation 2081. The regulation, which had been a major point of contention between the Insurance Authority and agents, introduces new provisions regarding licensing, commission, qualifications, and the renewal process for insurance agents.

The Insurance Agents Association had repeatedly raised concerns, arguing that the Insurance Authority had undermined their role by placing them under the Ministry’s control. Despite their attempts to amend the law sent to the ministry, no changes were made, forcing the association to continue lobbying from the Ministry of Finance to the Ministry of Law.

The current NIA chairman, Madan Dahal, formed a committee under the authority to study the issues in depth, which contributed to the finalization of the new regulation.

Key Provisions in the New Regulation

The newly approved regulation sets clear guidelines for agent licensing, commission distribution, and incentives. To become an insurance agent, candidates must have completed at least the 12th grade. Additionally, the fees for obtaining a new agent license and renewing an existing one have been revised. A new license will cost Rs 2,500, while renewal will cost Rs 1,000. This is a significant increase from the previous agent license fee of Rs 500, a change aimed at discouraging individuals from obtaining licenses without actively selling policies.

The regulation also mandates that agents renew their licenses with a recommendation from the insurer. They must submit proof of their active work, including details of new policies sold and their policy renewal percentages. Failure to renew the license will result in immediate cancellation, and the agent will lose their right to earn commissions from existing life insurance policies. Previously, agents continued to receive commissions even if their licenses had expired.

Incentives for agents who do not renew their licenses on time will be reduced, with only the remaining amount paid after deducting a percentage specified by the authority.

New Online Sales Provision

The regulation allows insurance companies to introduce online sales and policy analysis through a Wave Aggregator system, making it easier for customers to compare and purchase policies digitally.

Rapid Growth in Agent Numbers

The insurance sector has seen a surge in new agents. By the end of the 2079/80 financial year, there were 236,000 agents. In the 2080/81 financial year, an additional 93,572 agents entered the industry, bringing the total to 329,572. According to the Insurance Authority, as of shrawan month of 2081, approximately 15.1 million people in Nepal are covered under various insurance policies.