Insurance Authority Tightens Oversight of 28 Insurers Amid Growing Concerns
Kathmandu – The Nepal Insurance Authority has ramped up regulatory oversight on 28 insurance companies following growing concerns over policy violations, especially among non-life insurers. The Authority has completed on-site supervision of 12 companies and plans to finish two more within the current fiscal year. Supervision of life insurance companies will begin from the month of Shrawan.
The inspections come after it was discovered that some non-life insurance companies were offering illegal cash-back incentives of up to 16 percent to lure clients and boost sales. This practice directly violates the Insurance Act, which prohibits such inducements and mandates clear premium payment procedures.
According to Authority officials, insurers were found issuing policies backed by bank guarantees for periods exceeding the legal 30-day limit, and in some cases, collecting partial or no payments before issuing policies.
Supervision has so far covered major companies including IGI Prudential, Neco Insurance, Shikhar Insurance, Sagarmatha Lumbini, and Himalayan Everest Insurance. After completing inspections of all 14 non-life insurers, the Authority is expected to initiate action against those violating regulatory standards.
The inspection teams are focusing on top management practices, risk control, fund management, IT systems, and corporate governance. Both scheduled and targeted inspections are being conducted under the Authority’s risk-based supervision framework.
Supervision is divided into five types: initial, scheduled, comprehensive, targeted, and special. While scheduled and comprehensive reviews are part of the annual plan, special inspections are triggered by complaints or red flags raised through data analysis.
The Authority’s supervision department has reiterated its commitment to enforcing financial discipline across the insurance sector. The upcoming annual report will reflect findings from these inspections and guide future reforms.