Insurance Agents Urge Central Bank to Reject Bancassurance Revival Proposal

Kathmandu — Representatives of Nepal’s insurance agents have urged Nepal Rastra Bank (NRB) Governor Bishwo Nath Poudel not to move forward with proposals to revive the bancassurance model, arguing that its return would undermine the livelihoods of insurance agents and revive past market distortions.

The agents’ appeal comes after a senior official at the Nepal Insurance Authority (NIA) recently stated at a public event that there were no regulatory obstacles to reintroducing bancassurance. Following those remarks, representatives of insurance agents met with officials at the Authority to express their concerns, objecting to calls for reinstating a system that NRB had discontinued through its FY 2019/20 Monetary Policy amid widespread market irregularities.

Claiming that the Insurance Authority has repeatedly taken positions contrary to the interests of agents, the representatives subsequently met Governor Poudel and formally requested that the central bank refrain from reviving the bancassurance framework.

During the meeting, the agents highlighted the problems experienced when bancassurance was previously in operation, including widespread policy surrenders and their long-term impact on the insurance industry and the livelihoods of insurance agents. They argued that the sector has yet to fully recover from those disruptions.

According to the agents, Governor Poudel assured them that Nepal Rastra Bank would not introduce measures that would have a direct adverse impact on the insurance sector.

Meanwhile, the Life Insurers’ Association Nepal has maintained that, despite the shortcomings of the previous model, bancassurance could benefit the industry if appropriate safeguards and reforms were introduced. The association believes that allowing banks to distribute insurance products would help life insurers expand their business. However, several complaints and unresolved cases related to the previous bancassurance regime remain pending before the Insurance Authority.

Insurance agents say they remain vigilant as discussions on reviving bancassurance have resurfaced after the model was suspended following prolonged protests and negotiations with insurers and regulators. They argue that banks effectively acted as insurance agents under the previous system, encroaching on their role and income.

The Life Insurers’ Association had earlier formally requested Nepal Rastra Bank to reopen the bancassurance channel. Insurance agents, however, have warned against any policy that could threaten their employment, arguing that they have spent years building public awareness about insurance and should not be displaced by banks entering the distribution business.