Authority Directs Insurers to Apply Reinsurance Rates in PI Insurance Policies

Kathmandu — The Nepal Insurance Authority has instructed insurance companies to apply reinsurance rate structures to Professional Indemnity (PI) insurance policies. The move comes after insurers were found to have engaged in irregular practices in issuing such policies, prompting the authority to revise the existing guidelines.

As part of the directive, insurers have been told to ensure adequate reinsurance arrangements while determining premium rates for policies covering professional liability and indemnity risks.

The authority has amended provisions under Clause 3.4 of the Professional Liability and Indemnity Insurance Directive, 2016 and Clause 6 of the minimum premium rate framework for non-tariff insurance business. These have been replaced with a new provision stating that insurers themselves must set premium rates for PI insurance, ensuring sufficient reinsurance backing.

The revision aims to standardize practices and strengthen risk management in professional indemnity insurance.