'Claims of Rs 20 Billion Are Manageable'

The Gen Z protests of September 8–9 inflicted massive damage, triggering the largest insurance claim payout from a single event in Nepal’s history. Data from the Nepal Insurance Authority (NIA) shows that 18 insurers—14 non-life and four micro non-life companies—have received around 3,000 claims worth an estimated Rs 24 billion. The claims, filed under riot and terrorism coverage, will place a heavy burden on domestic insurers since reinsurance for such risks is retained within Nepal. Typically, companies bear 35% of the risk for riot and terrorism coverage up to Rs 100 million, with the remaining 65% ceded to Nepal Reinsurance.

Birendra Bahadur Baidawar Chhetry, president of the Nepal Insurers’ Association, the umbrella body of non-life insurers, and the CEO of Siddhartha Premier Insurance Ltd says the payouts will dent profits but not destabilize the sector. Since insurers have a combined net worth of around Rs 50 billion, he insists that covering losses exceeding Rs 20 billion is manageable. He also believes that such large-scale events would help raise public awareness and expand insurance coverage.

Against this backdrop, Prithviman Shrestha and Yadav Humagain of New Business Age spoke with Chhetry about claim facilitation after the Gen Z protests and the broader implications for Nepal’s insurance sector. Excerpts:

Q: Due to the damages caused during the Gen Z protests, Nepali insurance companies have received claims exceeding Rs 22 billion. How are companies processing these claims?

A: Although insurance companies are still receiving claims, the final amount is not expected to exceed Rs 25 billion as largest claims have already been filed.

To ensure faster payouts, the Nepal Insurers’ Association has drafted a dedicated procedure for claim settlements and submitted it to the Nepal Insurance Authority (NIA) for formal approval. Discussions are also underway to advance up to 50% of claim amounts as an initial payout, with government facilitation expected in this process.

Currently, all insurance companies are focused on expediting settlements. The association has publicly urged its members to prioritize these efforts. Given the severe impact on businesses, insurers are committed to providing timely relief and supporting recovery by treating claim settlement as a top priority.

Q: If the private sector suffered such heavy losses from the protests, why do the insurance claims appear relatively low?

A: The losses to businesses may indeed be as severe as reported. However, insurance payouts are based on the insured amount, not the total value of the loss. For example, a vehicle worth Rs 10 million may be insured for only Rs 5–6 million. In that case, the claim would be limited to the insured amount even if the vehicle is destroyed.

It is also important to note that current figures are preliminary. Insurance settlements involve technical assessments and final payouts often come in lower than initial claims. For example, during the 2015 earthquakes and last year’s floods and landslides, claims of Rs 12–13 billion were filed, but only Rs 7–8 billion was ultimately paid.

For the recent protests, we estimate total insured losses in the range of Rs 20–25 billion. While the exact figure is not yet confirmed, the final payout is expected to be slightly lower.

Most major businesses, including Hotel Hilton, the CG Group and Bhat-Bhateni, have already submitted claims. Smaller individual claims are still coming. In some cases, policyholders may not realize that their car or home loans included insurance. These will be processed gradually. Since the largest claims have already been filed, the total is unlikely to increase significantly.

Q: Do insurance companies have the capacity to meet these liabilities?

A: Yes. Based on their capital, reserves and retained earnings, Nepali non-life insurance companies are fully capable of covering these claims, even without immediate recoveries from reinsurance. While meeting claims of around Rs 20 billion may create short-term cash flow pressures, it will not risk insolvency. Nepali insurers are strong enough, and all claims will be honored.

Currently, non-life insurers hold approximately Rs 30 billion in capital and Rs 20 billion in reserves. With Rs 6–7 billion in profits, their total net worth exceeds Rs 40–45 billion. This financial base ensures that claims of Rs 20 billion are manageable. Furthermore, since these risks are reinsured, reinsurance companies will share part of the liability.

Policyholders can be assured that every claim will be honored. Nepali insurance companies have the capacity and commitment to settle all obligations.

Q: Since insurance companies retain more than one-third of the risk for terrorism and riot coverage, with the remainder reinsured domestically, what impact will the current losses have on the insurance sector?

A: As per the insurance regulator’s directive, terrorism and riot risks are reinsured through Nepal Reinsurance Company (Nepal Re). For properties insured up to Rs 100 million, insurers retain 35% of the risk while 65% is ceded to reinsurance. This means the insurer’s liability is capped at Rs 35 million. Even for properties valued above Rs 100 million, the insurer’s maximum liability remains Rs 35 million, with the rest borne by the reinsurer. In such large policies, the insurer’s share can be as little as 5%.

By this calculation, of the estimated Rs 20 billion in claims, only about Rs 4 billion will fall directly on insurance companies, while the remainder will be absorbed by reinsurance.

Q: Some private property was also damaged during protests in March. How do insurance companies view terrorism and riot risks?

A: Insurance, by definition, is a business of risk. The greater the risk, the wider the scope of insurance is. Our role is to assess that risk properly and charge premiums accordingly. It is not about avoiding or refusing to underwrite such portfolios. Risks also cannot be judged based on a single year’s event. Losses of this scale have occurred after nearly a decade. While claims have arisen from earthquakes, floods and landslides, major claims from riots and vandalism had been absent for many years. During that period, insurers collected premiums without significant payouts which strengthened the sector. That is why it would be misleading to conclude, solely from current losses, that the risk has become excessive or uninsurable.

Q: What is the likelihood that domestic and foreign reinsurance companies will raise premiums following the recent fires and vandalism?

A: It is only natural. In any business, prices fluctuate with supply and demand. As risks increase, premiums rise. This happens globally, not just here. For example during Australia’s bushfires and California’s forest fires, insurance companies also raised premiums.

That said, in my personal view, rather than increasing premiums based on losses from a single year, the focus should be on expanding the overall scope of insurance. This requires the involvement of all stakeholders. Insurance companies have been promoting awareness through CSR initiatives and management efforts, and the recent events have further raised public consciousness. As a result, the scope of insurance is likely to expand further. The broader the coverage, the easier it becomes for companies to manage such liabilities in the future.

Q: Based on current data, Siddhartha Premier Insurance has received the second-highest number of claims. Which clients have filed the largest claims?

A: We have received significant claims from several Bhat-Bhateni Group outlets and from CG Digital Park. Together, claims from these two groups amount to around Rs 3.75 billion, out of a total of about Rs 5 billion filed so far.

Of this, approximately Rs 1.4 billion comes from CG Digital Park. Among the Bhat-Bhateni outlets we have insured, some suffered total losses while others sustained partial damage. CG Digital Park, meanwhile, was almost completely destroyed, with only a few structures left intact.

Q: How practical is it to provide a 50% advance payment, as decided by the government?

A: We are in discussions with the regulatory body. According to preliminary data, while total claims could reach Rs 20–25 billion, the actual figure may be closer to Rs 14–15 billion. Providing a 50% advance would therefore require around Rs 7 billion.

The key issue is whether insurers are in a position to pay Rs 7 billion immediately. Most premiums are invested, and cash flow is primarily maintained for regular claim settlements. Our plan is to provide advances for large claims while fully processing smaller claims. Since large claims require detailed documentation, settlement will take more time.

Q: How long does it take for companies to receive payment from reinsurance?

A: The Nepal Insurers’ Association has long argued that risks should not be concentrated solely within Nepal. When both insurers and reinsurance companies operate in the same geography, a major loss impacts both. The company from which reinsurance support is sought is itself affected.

In this case, insurers must pay roughly Rs 4 billion from their own resources, while the local reinsurer must cover the remainder. Had the risk been spread among foreign reinsurers or multiple companies, the process would have been smoother.

Take last September’s event, which caused Rs 12–13 billion in damages, as an example. At that time, paying Rs 7–8 billion posed no major issues because most reinsurance was with foreign companies. They provided about 75% of the advance within a month. This avoided liquidity problems and ensured timely settlements.

The current challenge arises because the risk is concentrated in one local reinsurer. The question now is whether it can immediately provide Rs 4–5 billion across all companies. This concentration creates the bottleneck.

However, Nepal Re is financially strong. Based on its capital, reserves and investments, it has the capacity to bear the risk. Its financial statements show Rs 22–23 billion in investments, Rs 13 billion in capital and sufficient reserves. Therefore, it is inaccurate to claim that the company cannot meet its Rs 15–16 billion liability or that it is in severe trouble. The challenge is significant but manageable.

However, delays in compensation could send a negative signal about insurance. COVID-19 insurance payouts have not been fully completed because of the government's failure to honor its commitments. Now, if reinsurance payouts for protest-related claims are delayed, it will frustrate policyholders and undermine trust in insurers.

Q: There is currently no practice of insuring government properties. What is your view on this?

A: As insurance professionals, we believe all structures should be insured. If the government insures its assets, it sends a strong, positive message to the public. When people see the government take insurance seriously, they are more likely to insure their own property. In many cases, individuals remain uninsured even when they understand its importance. Making insurance mandatory in certain cases is therefore appropriate. Every year, in our recommendations for government policies and programs, and fiscal budget, we advise that government structures be insured and that mandatory insurance for public assets be implemented.

Q: What impact will the current claims have on the financial health of insurance companies?

A: Some analyses suggest insurers are on the verge of collapse, which has affected the stock market. In reality, the picture is different. Preliminary financial statements up to the last fiscal year show that profits decreased by only about 5% , even after companies processed claims from two major events.

The current protest-related claims are larger and could reduce profits by up to 15%. For instance, a company with Rs 4.5 billion in profit might see a 15–20% decline, leaving Rs 3.75 billion. A company that once delivered a 20% return might now be able to deliver only 12–15%. But it is wrong to assume insurers will collapse. Analyses that overlook capital, reserves and retained earnings exaggerate the risk. Profits will certainly decline, but not as severely as some market assessments suggest.

This interview was originally published in October 2025 issue of New Business Age magazine.