General Insurance Association of Nepal Calls for Policy Reforms in Nepal’s Insurance Sector

Kathmandu — General Insurance Association of Nepal (GIAN) has urged the Insurance Authority (NIA) to address pressing challenges in the country’s insurance system, emphasizing the need for policy reforms that could enhance investor confidence and improve operational efficiency.

In a meeting with newly appointed NIA Chairman Sebantak Pokharel, the association highlighted concerns over existing provisions related to direct share allocations for Nepal’s reinsurance companies, regulations for local reinsurers, reserve fund requirements, and representation in Nepal Reinsurance Company.

Association Chairman Rajendra Malla stressed that reforming these policies is essential to end recurring issues in the sector. “Maintaining the current promoter-public shareholding ratio of 70–30 percent for insurance companies and a 51–49 percent ratio for public-private partnership companies would safeguard the interests of general investors,” Malla said.

He also further noted that improving the policy framework would help curb the trend of establishing companies solely for short-term profits and reduce investment risks for ordinary shareholders.

One of the key issues raised was the provision under Section 81(1)(c) of the Insurance Act 2079, which mandates that a fixed percentage of reinsurance be placed with domestic reinsurers. At present, two Nepali reinsurance companies are allocated a direct share of 6 percent each, with the amount set to gradually decline. The association argued that this approach does not align with the Act’s intent and has created operational difficulties.

According to the association, domestic reinsurers often accept only low-risk business while rejecting high-risk cases, leading to delays in issuing insurance policies. High reinsurance costs have further inconvenienced policyholders, while also potentially affecting how foreign reinsurers perceive Nepali insurers — a development that could hurt the country’s reinsurance business.

The association proposed that local reinsurance companies should receive business on an optional basis and, if they decline, insurers should then be allowed to approach foreign reinsurers.

Additionally, the association called for the reduction of the current 50 percent reserve fund requirement to 20 percent and requested that domestic insurance operators be granted representation in Nepal Reinsurance Company’s governance.