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1. Introduction to Insurance Law in Nepal

The insurance law framework in Nepal is categorized into three main types: life insurance, non-life insurance, and reinsurance. These categories are regulated by the Insurance Board, which governs their respective provisions.

Life insurance includes products such as whole life insurance, endowment life insurance, and term life insurance. The Board has the authority to introduce additional categories as necessary. Non-life insurance covers various risks, including fire, motor, marine, engineering, aviation, and miscellaneous insurance. The Insurance Board regulates the terms and conditions of both life and non-life insurance policies. Reinsurance facilitates insurers in transferring their risks to other insurance companies.

Insurance Law in Nepal

1.1. Laws and Authorities Governing Insurance Law in Nepal

The key laws governing insurance in Nepal include:

• Insurance Act, 2079 (2022)

• Insurance Regulations, 2049 (1993)

The primary regulatory authority overseeing insurance in Nepal is:

Nepal Insurance Authority

2. Categorization and Regulation of Insurance Business in Nepal

According to the Insurance Regulations 2079, the insurance business in Nepal is categorized into three main types:

2.1. Life Insurance Business

Insurers are authorized to offer various life insurance products, such as:

• Whole Life Insurance

• Endowment Life Insurance

• Term Life Insurance

The Board retains the power to introduce new categories within the life insurance sector as required. The Board also regulates the terms and conditions of life insurance policies.

2.2. Non-Life Insurance

Non-life insurance provides coverage for a variety of risks unrelated to life. These categories include:

• Fire Insurance

• Motor Insurance

• Marine Insurance

• Engineering and Contractor’s Risk Insurance

• Aviation Insurance

• Miscellaneous Insurance

The Board also regulates the terms and conditions of non-life insurance policies.

2.3. Reinsurance Business

Reinsurance allows insurers to mitigate their risks by transferring a portion of their liabilities to other insurance companies. The Board determines specific reinsurance categories and additional arrangements.

3. Regulatory Framework for Corporate Entities in the Insurance Industry

Any national or foreign corporate entity intending to engage in the insurance business must apply to the Board. The application must be accompanied by an insurer registration fee of fifty thousand rupees.

Upon receiving the application, the Board will conduct necessary inquiries and may request further details from the applicant. Insurers must renew their Certificate of Registration by submitting the required application and renewal fee of fifty thousand rupees.

Failure to renew the Certificate within the stipulated time results in automatic revocation of recognition. Entities whose recognition has been revoked may apply for re-registration as insurers.

The corporate body must submit the following documents:

• A statement ensuring that the total liability in the insurance business does not exceed the entity’s total assets.

• For foreign corporate bodies, proof of adequate assets within Nepal to cover insurance liabilities.

• A certificate providing the name, address, and qualifications of the designated manager responsible for the insurance business.

• For foreign insurers, an authorization certificate from the relevant foreign authority permitting insurance operations in compliance with that country’s laws.

4. Licensing Procedure and Criteria for Insurance Intermediaries

4.1. Process of Licensing Insurance Agents in Nepal

Individuals or corporate entities with a qualified director seeking to become insurance agents must apply to the Board with a recommendation from the concerned insurer.

The Board will verify the applicant’s qualifications and, upon approval, register them in the Registration-book. After registration, the Board issues an Insurance Agent’s License upon payment of a five hundred rupees fee.

4.2. Qualifications of an Insurance Agent

Minimum educational qualification of passing SLC or equivalent. Completion of an Insurance Agent training program conducted by the Board or a recognized institution. Insurance agents must renew their licenses by paying a prescribed fee of two hundred rupees. If a license is canceled due to non-renewal, agents will still receive commissions for work completed before the renewal period.

4.3. Procedure and Requirements for Surveyor Licensure

Individuals or corporate bodies who meet the qualifications and wish to work as surveyors must apply to the Board. The Board will verify the applicant’s qualifications and, upon approval, register them as surveyors.

Surveyors are classified based on their experience into Class "A" to "D," determined by their years of regular work as surveyors. If a surveyor’s license is canceled, they are ineligible for reapplication for five years from the cancellation date.

4.4. Qualifications of a Surveyor

• At least ten years of work experience in the insurance industry at an officer level in an insurer’s office.

• A Bachelor’s degree in Engineering.

• A Bachelor’s degree in Insurance from a recognized institution.

• Successful completion of the Chartered Accountancy Examination.

4.5. Procedures and Requirements for Broker Licensure

Individuals who meet the qualifications and wish to work as brokers must apply to the Board. The Board will conduct an inquiry and verify the applicant’s qualifications. Approved applicants will be registered as brokers in the Registration-book.

Following registration, the Board issues a Broker’s License upon payment of a twenty-five thousand rupees fee. Brokers must renew their licenses by submitting the required application and fee within the specified period.

The Board has the authority to limit the issuance of Broker’s Licenses based on market research and evaluations of the insurance sector. If a broker’s license is canceled, the individual is ineligible for reapplication for five years from the cancellation date.

4.6. Qualifications of a Broker

Recognition as a corporate entity under prevailing law. Maintenance of authorized capital as determined by the Board, with twenty-five percent deposited in a fixed deposit account. The General Manager must have at least fifteen years of experience in the insurance industry. Fulfillment of other conditions set by the Board.

5. Conclusion

Under Nepalese insurance law, corporate entities intending to conduct insurance business must apply to the Insurance Board for a license. The Board conducts necessary inquiries and may request further information before granting registration.