Insurance Companies Alarmed by Heavy Fines Imposed by Nepal Insurance Authority

Kathmandu — A recent directive from the Nepal Insurance Authority (NIA) has raised serious concerns among insurance companies after they were asked to pay hefty fines for failing to comply with regulatory requirements under the Insurance Act.

More than a dozen life and non-life insurance companies received letters on Sunday and Monday warning of fines amounting to several millions of rupees. The letters cite delays in the timely submission of financial statements in accordance with Sections 84 and 138 of the Insurance Act, as well as non-compliance with written instructions issued during financial approvals.

According to Authority sources, nearly 18 companies have been asked to provide written explanations. Under existing regulations, companies that fail to submit financial statements on time may be fined over NPR 100,000 per day, with some companies now facing penalties exceeding NPR 10 million.

The move has triggered concern across the insurance sector, with many stakeholders questioning whether the Authority’s leadership fully understands the technical challenges faced by the industry. The absence of actuarial professionals within Nepal has long hindered timely compliance, particularly for life insurance companies that rely on actuarial valuations to finalize their financial reports.

Insurance executives argue that there is currently no certified actuary working in Nepal, including within the Insurance Authority itself. All actuarial assessments are outsourced to India, a process that typically takes six months to a year due to logistical delays and a limited number of affordable actuaries.

Insurance expert Dr. Rabindra Ghimire pointed out that insurance cannot be treated like other sectors when it comes to financial reporting. “Delays in financial statements are often linked to delays in actuarial assessments. Insurance is a business of assessing risk, and that assessment must be based on sound actuarial analysis,” he said.

Observers have noted that the Authority’s top leadership — including the chairman, executive director, and directors are relatively new and may lack sufficient technical grounding in insurance operations.

The issue of penalties over actuarial delays was previously raised during the tenure of former chairman Surya Prasad Silwal but was later shelved after practical challenges were acknowledged.