Kathmandu. The history of Nepal Insurance Authority, which once came into existence as a unit of the Ministry of Finance, has been more than half a century old.
Although the history of nepal’s insurance sector started from Vikram Samvat 2004, it was only after the establishment of the National Insurance Corporation on May 1, 2024 that the insurance committee (now Nepal Insurance Authority) was established on May 1, 2026. This committee existed as a unit under the Ministry of Finance until the promulgation of a separate Insurance Act in 2049 BS.
The Insurance Committee has been recognized as an autonomous institution after the first Insurance Act came into force on January 1, 2049. Prior to the implementation of this N, Luv Prasad Sharma took over as the first chairman on April 1, 2048. He retired from the insurance committee on April 1, 2057 after leading for three consecutive terms. From Sharma to Sharad Ojha, nea has got the leadership of nine chairpersons in its 57-year history.
As nepal’s insurance industry is developing, new dimensions of selection have started emerging in front of the Nepal Insurance Authority as a regulator. In the changing environment, its role is not limited to being limited to the regulator, but also the expansion of the benefits of insurance, the guarantee of the security of the savings of billions of rupees of the common people, institutional good governance in the insurance industry, the dissemination of international good practices, etc. Here are some of the challenges that the AUTHORITY needs to address.
Agile regulation:
Insurance companies are only trustees of the general public. Although the shareholders of the company have invested 5 to 8 billion rupees as capital, more than 1.5 billion rupees are deposited in the same insurance company as savings. With the increase in insurance business, the size of the life insurance fund is also increasing and the number of greedy sinners who are interfering with the savings of the common people has also increased. In such a situation, the NRA should not allow the self-confidence of the general public to be shaken if it is more tight and tightly regulated, it should always be vigilant to protect the insurance sector from defamation, immediate action should be taken against the bullying insurer.
The Insurance Authority of Nepal, which is entrusted with the responsibility of regulating the insurance sector, is facing challenges in implementing its own guidelines, raising questions about its regulatory effectiveness.
Competent manpower production:
It is necessary to ensure the production of skilled manpower for the long-term and effective operation of the insurance sector. For this, nea should ensure that all the employees get equal opportunity in training and training to increase the professional skills of the manpower working in the insurance sector along with policy facilitation. Apart from this, it is necessary to establish the Insurance Institute of Nepal, which is operating as a part of the AUTHORITY, as a trusted and recognized educational institution. It can provide appropriate inputs in the production of skilled manpower only when it is able to run educational programs that provide professional and educational qualifications along with regular and retail training.
Nepal’s insurance market is experiencing the need for skilled manpower not only for underwriting, policy servicing, reinsurance, claim processing but also for insurers and information technology services.
Government envisage implementation:
Along with the responsibility of tight and tight regulation, the line agency has the responsibility of implementing insurance N 2079 and Insurance Rules 2081. There is an even bigger challenge than this, to expand the easy access of all citizens to insurance as envisaged by the Government of Nepal through the insurance policy. The authority is leading the campaign to include the common people in the ambit of insurance.
Research on insurance:
Research work in nepal’s insurance sector has been very limited. Although the Nepal Insurance Authority (NEA) has repeatedly published notices to prepare research documents for the development of nepal’s insurance sector, the investigation work was halted as the proposal was not registered. There is a need to carry out necessary research, research and development work for the long-term promotion of the insurance sector, easy access to insurance, inclusive insurance and the development of insurance plans that are timely and address to market demand.
Use of technology:
With the increasing use of technology in the insurance sector, data security and cyber security challenges have also been added. Compared to the amount of investment that insurers have added to the technology infrastructure, the investment in cyber security is very small. At any time, the core software or data system of any insurer here is in danger of being hacked and taken under the control of unrelated parties.
In order to address these challenges, the Insurance Authority of Nepal should ensure that the information technology of the insurer is streamlined as well as free from the risk of unauthorized access or external aggression. The information system (IAS) audit of the insurer should not be limited to a ritual audit, but it should be able to put pressure on the insurer to address the shortcomings pointed out in the report immediately. Policy arrangements should be put in place to make the companies listed for the IAS audit fully responsible for the audit they conduct.
Institutional documentation:
It is the responsibility of the AUTHORITY to collect and preserve documents related to the history of nepal’s insurance sector. The licenses, circulars, policy directives and guidance documents issued by the AUTHORITY have not been preserved in such a way that they are safe and useful in the long run. The directives or circulars issued by the AUTHORITY four decades ago in the more than five-decade-long history section are not in the collection of the AUTHORITY.
In recent times, there is such a situation within the AUTHORITY that all the branches have issued instructions and circulars on their own, without consulting the law branch. Such documents issued without consulting the law branch are not only likely to be disputed, but there is also the risk of not collecting documents that apply to the law. Although it is common practice for any branch or department to consult the law branch before issuing any directive or circular, there is chaos in the AUTHORITY now.
Climate change choice:
The rainy season, which starts in June, ends in Bhadai. But nowadays, when climate change disrupts the climate cycle badly, there are severe floods and landslides in the month of September. The common people and the country have also suffered huge losses due to unseasonal disasters. At present, the BP Highway has been blocked due to the flooding of the river in the month of Baishakh and passengers are missing after the vehicles were washed away.
These events have made the prediction of nature and mass more and more complex. The volume of the disaster has increased. In such a situation, the AUTHORITY, which is in the regulatory role, should also address the risks related to climate at the regulatory level.
It is important to encourage insurers to promote investment for climate adaptation and climate protection. Although the authority has instructed the insurers to consider the risk of climate change in their every important decision, the insurers have not been serious in practice. Important aspects related to climate change are still ignored by the insurer in any area, including the insurance rate determination of the policy, determining the format of the policy, risk management, investment diversification. This is evidenced by hardly fifty words about climate change risks in the insurer’s annual report.
