Nepal Reinsurance Faces Setback as Foreign Employment Insurance Pool Takes Effect

Kathmandu – The implementation of a new regulatory framework by the Nepal Insurance Authority has raised concerns about its impact on government-invested companies, particularly Nepal Reinsurance Company. The decision to introduce the Foreign Employment Insurance Pool has drawn criticism for its legality and potential consequences on the insurance sector.

The Nepal Insurance Authority, under the leadership of Chairman Madan Dahal, recently revised the operational structure of foreign employment term insurance. This change removes Nepal Reinsurance Company from its leadership role in the insurance pool for the next four years, significantly affecting its financial stability. It is estimated that Nepal Reinsurance Company will lose approximately NPR 1.5 billion annually as a result.

Under the new system, private reinsurance companies and newly established micro-insurance firms will also be included in the insurance pool. Previously, life insurance companies competed in the foreign employment term insurance sector, but the revised approach allocates business shares through a regulated contract.

This decision follows a controversial precedent set by former Nepal Insurance Authority Chairman Surya Prasad Silwal, who was previously accused of financial misconduct in relation to foreign employment insurance. In a similar move, the authority had issued directives allowing the inclusion of various insurance entities, including life insurance, microinsurance, and reinsurance firms, in the insurance pool framework.

In response to inquiries, Chairman Dahal stated that the decision was made based on a proposal from Nepal Reinsurance Company itself. He mentioned that pool was already in place before his tenure and that the changes followed existing proposals. Meanwhile, Nepal Reinsurance Company’s CEO, Surendra Thapa, acknowledged an agreement with the insurance authority, though details remain undisclosed.

The foreign employment term insurance sector generates an annual turnover of approximately NPR 3 billion. With the new provisions in place, micro-insurance companies, which recently received operating licenses, are expected to benefit significantly.