Nepal Insurance Authority Reviews One Year of RBC Implementation, Calls for Stronger Investment Practices and Timely Compliance

Kathmandu — The Nepal Insurance Authority held an interactive session on Monday to mark one year since the implementation of the Risk-Based Capital (RBC) framework in the Nepali insurance sector. The event brought together key stakeholders, including CEOs of life and non-life insurance companies, reinsurance executives, and regulatory officials, to reflect on the journey so far and chart the path ahead.

The program served as a platform to evaluate the impact of the RBC system, which has fundamentally shifted how insurers manage risk and capital adequacy. The RBC model, launched to align Nepal’s insurance regulation with international best practices, requires companies to maintain capital in proportion to the risks they underwrite, thereby enhancing financial discipline and customer protection.

Addressing the gathering, Chairman of the Nepal Insurance Authority, Sharad Ojha, underscored the regulatory body’s intention to begin quarterly analysis of RBC-related reports submitted by insurers. “It is mandatory under the Insurance Act that financial statements be approved by mid-January,” said Ojha.

Ojha also emphasized the importance of strategic investment decisions by insurers. “While diversification is necessary, investments must be based on sound analysis and targeted toward sectors that generate sustainable returns,” he said. “Insurance companies are custodians of public money. Investment committees must conduct thorough due diligence before moving ahead with any proposal.”

He acknowledged industry concerns about capital charges under the RBC system, noting that these were set in alignment with practices in comparable economies. However, he also assured insurers that the Authority remains open to revisiting these rates if they prove excessive. Ojha further encouraged insurers to consider investing in government bonds and advocated for the creation of a separate regulator to support that process.

Executive Director Sushildev Subedi, in his welcome remarks, described the RBC rollout as being in a “transitional phase,” and called on insurance providers to remain committed to the shared goal of mitigating systemic risk.

Director Pujan Dhungel Adhikari informed attendees that nearly all insurers have now met their RBC targets — a sign, she said, of the sector’s adaptability and resilience.

Presenting on the current state of RBC in Nepal, Deputy Director Nirmala Malla outlined both the progress made and the challenges that remain, including the need for further technical capacity building and the refinement of reporting standards. Nepal Life Insurance Association President Poshak Raj Poudel and Nepal Insurance Association President Birendra Baidwar both hailed RBC implementation as a milestone achievement, while also calling for ongoing revisions to make the model more practical and robust.

The event, moderated by Assistant Director Karuna Thapa, concluded with a call for continued collaboration between regulators and industry players.