Risk-Based Capital Now Mandatory for Insurance Companies in Nepal

Kathmandu – Insurance companies in Nepal must now maintain risk-based capital in addition to the minimum paid-up capital set by regulatory authorities. This requirement is outlined in the Insurance Regulations 2081, recently published in the Gazette.

The new regulation mandates insurers to maintain risk-based capital alongside their minimum paid-up capital. The Insurance Authority has indicated that this may lead to an increase in paid-up capital requirements due to capital pressure.

Currently, life insurance companies must have a minimum paid-up capital of NPR 5 billion, while non-life insurance companies require NPR 2.50 billion. However, some insurers have yet to meet this threshold.

Additionally, insurance companies must establish separate insurance funds to manage risks for each type of insurance portfolio, ensuring better financial stability and policyholder protection.