Insurance Authority Tightens Grip on Illegal Cashback Practices in Non-Life Insurance

Kathmandu – An ongoing investigation into unauthorised cashback practices has sent shockwaves through Nepal’s non-life insurance industry, with the Insurance Authority intensifying its oversight and aiming to eliminate the practice entirely.

Cashback—an illegal incentive offered to secure large insurance deals—has long been a poorly kept secret within the sector. Although prohibited under insurance regulations, the practice has continued informally, often disguised as program sponsorships, hotel payments, inflated employee costs, or commissions under an agent’s name.

According to sources within the industry, senior executives, particularly CEOs and heads of accounting and marketing departments, are now under pressure as the Insurance Authority’s inspection teams conduct on-site investigations at multiple companies. The crackdown comes just weeks before insurers close their financial books for the fiscal year, heightening concerns about potential reputational and financial fallout.

The Insurance Authority is currently reviewing financial records and cashback-related expenditures of 14 non-life and micro non-life insurance providers. Officials confirm that they are closely monitoring suspicious transactions and irregular sponsorship spending.

The authority has also clarified that it is not just monitoring but actively working toward reducing cashback practices to zero. It believes this move will strengthen transparency and allow credible companies that focus on claim settlement and service quality to thrive.