Plans to Open Overseas Branches by Nepali Insurers Remain Stalled

Plans of several Nepali insurance and reinsurance companies to open branches abroad have stalled, despite receiving prior approval from the regulator more than a year ago.

According to the Nepal Insurance Authority (NIA), two reinsurance companies—Nepal Reinsurance Company and Himalayan Reinsurance—as well as three life insurers—Nepal Life Insurance, Sanima Reliance Life Insurance and Sun Nepal Life Insurance —had obtained prior approval around one and a half years ago to open contact offices overseas. However, none of the companies has moved ahead with further procedures so far, said Shambharaj Lamichhane, director at the authority’s Regulation Department.

“The five companies sought prior approval soon after the authority issued guidelines allowing insurers to open overseas branches,” Lamichhane said. “But we have not received information that any of them has proceeded further.”

The authority issued the Insurer’s Branch Office Directive, 2023 in mid-February to mid-March 2023, allowing insurers to open branches, contact offices or representative offices abroad. Under the directive, only companies that have maintained the prescribed paid-up capital and have not faced regulatory action—or have completed at least six months after such action—are eligible to apply for overseas expansion.

Lamichhane said the requirement to obtain approval from regulators in host countries has made the process complicated. “Approval from the regulator of the country where the branch is to be opened is mandatory, and companies also need permission to take investment abroad from Nepal,” he said. “Given the complexity, overseas expansion is not likely to proceed easily.”

With the aim of expanding business beyond Nepal, the country’s two reinsurance companies had planned to open branches in Malaysia. Life insurance companies, meanwhile, had explored expansion in countries with large Nepali migrant populations, including Malaysia, Qatar and the UAE. However, they have been unable to secure approvals from the respective foreign authorities.

CEO of Sanima Reliance Life Insurance Company, Shivanath Pandey, said the company has not taken steps beyond obtaining prior approval. “The prior approval was taken before my tenure,” he said. “I can comment on why the process did not move forward only after further review.” He also noted that obtaining approval from foreign regulators is difficult for Nepali companies, making overseas expansion challenging.

Insurance expert Rabindra Ghimire, a former chairman of Nepal Reinsurance Company, said overseas branches are not essential as insurance business can be expanded through brokers and agents. “Reinsurance business can come through brokers, and life insurance can be operated through agents,” he said. “So opening branches abroad is not necessary.”

At present, Nepal has 14 life insurers, 14 non-life insurers, seven micro-insurance companies and two reinsurance companies, bringing the total number of insurance companies operating in the country to 37.