Following the Nepal Rastra Bank's (NRB) prohibition on banks and financial institutions selling insurance policies, insurance companies are now focusing on cooperatives to expand their business. Companies have signed agreements with cooperative associations and organizations to promote the sale of insurance policies.

Previously, banks and financial institutions acted as institutional agents selling insurance policies. However, the NRB banned this practice in the monetary policy of the fiscal year 2019/20 due to increasing complaints that banks were compelling customers to purchase insurance when taking out loans.

In 2021, the then Insurance Board issued a directive allowing companies and organizations to sell insurance policies as institutional agents. The "Directive on Institutional Insurance Agents-2078 B.S." states that a company whose articles of association and regulations include the role of an insurance agent can be designated as an institutional agent. Despite this, the NRB has not permitted banks to undertake such services till date. Insurers have been lobbying to lift this ban. With the NRB's tightened restrictions, insurance companies are now prioritizing cooperatives.

The Nepal Savings and Credit Central Cooperative Association (NEFSCUN), the central umbrella organization of savings and credit cooperatives, has signed agreements with Citizen Life Insurance and Prabhu Insurance. Similarly, the Nepal Agricultural Central Cooperative Association has entered into an agreement with Sanima Reliance Insurance.

In addition to these associations, insurance companies are also partnering with other cooperatives to sell insurance policies.

Poshakraj Poudel, president of the Nepal Life Insurance Association, stated that agreements have been made to insure cooperative members. He argued that bancassurance provided through banks and financial institutions should continue. "If someone has committed wrongdoing in bancassurance, they should be held accountable," he said. "However, it is wrong to terminate the program solely because of individual misconduct."

The NRB, on the other hand, has mandated that banks insure only the property pledged as collateral for loans through an insurance company chosen by the borrower during the loan disbursement process. For loans disbursed on unsecured personal guarantees, the NRB has directed that borrowers obtain periodic life insurance for the loan term.

Khem Bahadur Pathak, President of the Central Association of Agricultural Cooperatives, noted that it is easier and more convenient for organizations to conduct business when the association acts as an agent. He mentioned that the commission received from acting as an agent contributes to the association's income and is utilized for the capacity development of the organizations.