Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Nepal Insurance Authority has issued a unified directive on investment for life, non-life, and micro-insurance companies, introducing significant changes to existing practices. The new rule, titled “Directive on Investment of Insurers, 2082”, replaces the four separate directives that were previously in force.
The revised guidelines mandate insurers to establish a dedicated investment management unit, overseen by a senior management official with expertise in investment. This unit will be responsible for compliance, purchase value, process, and post-investment outcomes. Accountability is clearly assigned to the board of directors, top management, chief executive, and the head of the investment unit.
Under the new rules, insurers are not required to seek prior approval from the Authority when investing within the specified limits and conditions outlined in the directive, except where explicitly required under the Insurance Act 2079.
Investment Areas and Limits
The directive specifies the fields and ceilings for insurance company investments. Investments beyond the set areas are prohibited. However, there are no restrictions or limits on investments in government securities and Nepal Rastra Bank bonds.
Insurance companies may also invest in subsidiary companies under certain conditions. With prior approval from the Authority, insurers can invest up to 5 percent of their total investment in sectors such as:
Public companies licensed by the Securities Board of Nepal,
Agriculture production, storage, and distribution,
Warehouses and cold storage,
Energy generation, transmission, and distribution,
Education, health, and investment companies.
To qualify for investing in subsidiaries, insurers must maintain the Authority’s prescribed paid-up capital, hold at least 130 percent risk-based solvency margin, be in continuous profit for three years, and have a positive net worth.
Key Adjustments
The Authority has revised some investment limits while keeping others unchanged. For example:
Up to 20% of total investment in government securities and NRB bonds, development bonds, and “A” class commercial banks.
Up to 15% in ‘B’ class banks and financial institutions.
Up to 10% in ‘C’ class financial institutions, mutual funds, debentures, housing, and project-specific investments in energy, agriculture, education, and health sectors.
Up to 20% in listed public companies’ shares.
The new directive is expected to improve investment governance, enhance transparency, and promote diversification in the insurance sector while aligning with Nepal’s broader financial market reforms.
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