Insurance Authority Calls for Five-Year Review of Insurance Act to Remove Legal Inconsistencies

Kathmandu — The Nepal Insurance Authority has urged Parliament’s Finance Committee to amend the Insurance Act every five years and eliminate inconsistencies between the Act and other prevailing laws, arguing that periodic legislative updates are essential to keep pace with the sector’s evolving regulatory needs.

Speaking at a meeting of the Finance Committee under the House of Representatives on Tuesday, Executive Director Sushil Dev Subedi said the current legal framework contains contradictions that need to be addressed to improve regulatory effectiveness and support the industry’s long-term development.

Subedi told lawmakers that Nepal’s insurance penetration has now exceeded 51 percent, while the industry’s total fund size has crossed Rs. 1 trillion.

He said Nepal currently has 37 insurance companies in operation, comprising 14 life insurers, 14 non-life insurers, seven microinsurance companies, and two reinsurers. By mid-June, the industry had collected Rs. 223 billion in gross insurance premiums and paid more than Rs. 66 billion in claims.

According to the Authority, the insurance sector now contributes 3.69 percent to Nepal’s gross domestic product (GDP), exceeding the global average of 3.50 percent. The industry directly employs around 13,000 professionals, while more than 400,000 insurance agents and over 1,200 surveyors are engaged across the sector. Nearly 16.7 million insurance policies are currently in force nationwide.

Subedi said the Authority significantly stepped up its regulatory oversight during fiscal year 2025/26. Regulatory action, including warnings and penalties, was taken against 18 insurance companies, while the licence of one reinsurance broker was suspended and the business operations of one reinsurer were temporarily halted. The Authority also completed 79 on-site inspections and resolved 276 complaints, representing a notable increase from the previous year.

To strengthen regulatory standards, the Authority has introduced more than four dozen directives and guidelines. During the year, it revised or issued new regulations covering insurance agents, surveyors, anti-money laundering (AML), and the Risk-Based Capital framework. Subedi noted that AML reforms received particular attention as part of Nepal’s efforts to avoid being placed on the FATF grey list.

The Authority has also expanded insurance literacy by incorporating insurance-related content into the national curriculum for Grades 5, 8, 10, and 12. On the technology front, it has introduced paperless decision-making, digital signatures, and an online examination system. The ALIS software has been deployed to improve the administration of agricultural insurance, while a system to electronically transmit police reports directly to insurance companies is in its final stage of development.

Subedi said the regulator is currently studying the introduction of hydropower insurance, the establishment of an Insurance Information Centre, and the underlying causes of life insurance policy lapses. He expressed confidence that the proposed information centre would help curb insurance fraud and other criminal activities within the industry.

Acknowledging delays in the financial reporting and audit processes of the state-owned Rastriya Beema Company, Rastriya Jeevan Beema Company, and Nepal Reinsurance Company, Subedi said the Authority has directed the institutions to expedite corrective measures. These include increasing capital, completing account reconciliations, and holding annual general meetings on time.