Foreign Reinsurance Partnerships Recommended to Reduce Risk in Insurance Sector

Kathmandu — The High-Level Economic Advisory Reform Commission has recommended that Nepal adopt a hybrid reinsurance model by partnering with foreign reinsurance companies to better manage risks and modernize the insurance sector.

In its report submitted to the Government of Nepal, the Commission, chaired by Finance Secretary Rameshwor Prasad Khanal, highlighted the potential vulnerabilities of relying solely on domestic reinsurance. It emphasized that reinsurance limited to the national level may fail to adequately diversify risk, particularly during large-scale disasters or economic shocks.

“Allocating a certain percentage of reinsurance to foreign companies can significantly reduce overall exposure to concentrated risks,” the report stated. It further noted that collaboration with international reinsurance firms would not only enhance risk management but also facilitate the transfer of modern technologies, practices, and updated knowledge into Nepal’s insurance ecosystem.

The Commission also underscored the importance of developing skilled human resources to support the sector’s growth. It proposed the establishment of an Insurance Academy through a public-private partnership model to build professional capacity and meet the growing demand for insurance expertise.

Additionally, the report called for regulatory reforms to boost financial inclusion and strengthen the role of insurance in capital mobilization. It recommended enhancing the autonomy, capacity, and efficiency of the Insurance Authority to ensure robust oversight and consumer protection.