NIA Directs Insurance Companies to Ensure Transparency in Policy Loans

Kathmandu – The Nepal Insurance Authority (NIA) has issued a directive instructing insurance companies to provide clear, timely, and easily understandable information regarding loans taken by policyholders against their insurance policies.

The Authority has mandated insurers to inform policyholders about the loan amount, interest calculation method, repayment schedule, and consequences of non-payment through electronic or written means. Such information must be provided at least 30 days before the expiry of the loan interest payment period, using SMS, email, or letters in a language understandable to the insured.

The directive comes in response to growing complaints that insurers have failed to provide adequate details about outstanding loans and interest calculations. According to NIA, this has caused inconvenience to policyholders and beneficiaries, particularly when loan and interest deductions are made from the final maturity or claim payments.

The Authority has also reminded insurers of their responsibility to send timely reminders for loan and interest repayment. It noted that misuse of insurance loans in recent times has caused hardship to policyholders, making strict compliance with the new directive essential.

NIA believes the measure will enhance transparency and consumer protection, ensuring that policyholders who use insurance policies as collateral for loans are better informed. Insurers will now be required to provide timely updates via SMS, calls, and other digital platforms.