New Investment Guidelines Issued for Insurance Companies in Nepal

Kathmandu, September 3, 2025 - The Nepal Insurance Authority has introduced new investment guidelines for insurance companies, mandating that at least 35% of their total investment be allocated to government securities or bonds issued by the Nepal Rastra Bank (NRB). Previously, this requirement was set at 25%. If companies are unable to invest in the specified sectors, they may invest in fixed deposits of commercial banks and infrastructure development banks licensed by the NRB, subject to approval.

Increased Limits for Fixed Deposits and Equity Investments

The new directive raises the investment limit in fixed deposits of development banks from 10% to 15% and in finance companies from 5% to 7%. Similarly, the cap on investments in ordinary shares of listed public companies has been increased from 10% to 15%. However, investments in shares of unlisted public companies and other unspecified sectors have been removed from the permissible categories.

The requirement to invest in bonds or securities issued by provincial or local governments has also been eliminated. Additionally, a new provision allows insurance companies to invest up to 1.5% of their total investment in private equity funds and venture capital funds approved by the Securities Board, with a maximum of 1% in a single fund.

New Rules for Non-Life and Micro-Insurance

Non-life insurance and reinsurance companies must now invest at least 30% of their total investment in government or NRB securities, up from the previous 20%. For micro-life and micro-non-life insurers, the minimum investment requirement in these securities has been raised from 25% to 35% and 30%, respectively.

The investment limit in commercial banks and infrastructure development banks has been increased from 30% to 35%.

Mandatory Investment Management Unit

Insurance companies are now required to establish an Investment Management Unit under a senior management official with relevant experience. This unit will ensure the safety of investments, assess risks, manage liquidity, and ensure diversification. It will also prepare quarterly progress reports for submission to the Insurance Authority.

Companies must adopt an investment policy covering risk management, asset-liability management, and procedural guidelines. Investments in government securities and NRB bonds will face no restrictions or caps.

Investments in Subsidiary Companies

With prior approval from the Insurance Authority, insurance companies can invest up to 5% of their total investment in subsidiary companies operating in sectors such as public companies, agriculture, storage, energy, education, health, and investment firms. However, such investments require the insurer to meet minimum paid-up capital, solvency margins, and profitability for the past three years, with no accumulated losses and a positive net worth. Additionally, the chairperson, board members, or their immediate family members must not hold directorial or managerial roles in the subsidiary.

These new guidelines aim to make insurance companies’ investments more structured and secure.