Higher Third-Party Motor Insurance Limit Expected to Boost Non-Life Insurance Business

Kathmandu — The government’s decision to increase the third-party motor insurance coverage limit is expected to contribute to the growth of Nepal’s non-life insurance sector.

While presenting the budget for the upcoming fiscal year, Finance Minister Swarnim Wagle announced that the maximum third-party insurance coverage for motor vehicles will be doubled from NPR 500,000 to NPR 1 million.

The increase in the coverage limit is expected to raise insurers’ risk exposure. As insurance companies adjust premiums to reflect the higher liability, vehicle owners and operators (particularly those involved in public transportation, including buses, microbuses, taxis and trucks) are likely to face higher insurance costs.

According to data published by the Nepal Insurance Authority, non-life insurers had generated NPR 12.63 billion in motor insurance premiums as of mid-May. Industry observers believe that the increase in third-party coverage could significantly expand premium income for non-life insurance companies in the coming fiscal year.

Commenting on the budget measure, Birendra Baidwar Kshetri, President of the Nepal Insurers Association, said the government has finally addressed an issue that had remained unimplemented for a long time.

However, he stressed that discussions with transport-related stakeholders are essential before the measure is fully implemented, given its potential impact on transport operators and vehicle owners.