Nepal Insurance Authority Tightens Rules on Dividend Distribution for Insurance Companies

Kathmandu – The Nepal Insurance Authority (NIA) has introduced stricter guidelines for dividend distribution among insurance companies, mandating additional compliance measures before approving dividends. Under these new regulations, insurance companies must meet updated standards, including submitting an audit report in accordance with the authority’s criteria, before they are permitted to announce dividends.

The NIA now requires companies to provide comprehensive financial documentation, including a “long form” audit report from an external auditor, alongside quarterly financial statements for the fourth quarter of the fiscal year. Additionally, companies must submit a detailed variance report that highlights discrepancies in the financial position, profit and loss statement, and other comprehensive income statement. Any differences of 10% or more in these financial headings must be accompanied by an explanation from the companies.

According to the Insurance authority, without meeting these revised regulatory standards, insurance companies will be prohibited from declaring dividends.