June 7: The Nepal Insurance Authority (NIA) had introduced a policy in April to allow Nepali insurers to open branches abroad. However, no insurer has sought permission to open a branch abroad so far, citing that there has been no homework regarding the process. 

With the release of the 'Directive on Insurance Branch Offices, 2079' by NIA, insurers who have fulfilled the conditions will be allowed to open their offices in other countries and expand their business with approval of the regulatory body. According to the guidelines, the insurer should inform the authority about opening an office within six months after receiving the final approval from the authority.

NIA claimed that the business of Nepali insurers abroad can become a good source of foreign exchange earnings in the near future. However, almost two months after the issuance of the guidelines, no insurer has applied for permission to open a branch abroad, according to Raju Raman Paudel, spokesperson of NIA. 

“As per the guidelines issued by the authority, if any company meets the criteria and applies for permission to open a branch, the authority will give approval after necessary study,” said Paudel, adding, “The provision provides that the insurance companies must comply with the prevailing laws of the country where the branch is to be opened in addition to maintaining the capital determined by the regulatory body there. As far as the authority has understood, the insurers are in the process of studying the prevailing laws of the country where they will open a branch, resulting in no response even after two months of availability of the facility.”

Bishwa Nath Adhikari, information officer of Sagarmatha Lumbini Insurance Company says that the company has not done its homework about branches abroad. “The customers of life insurance companies can be Nepali workers working abroad, but it is necessary for non-life insurance to identify the main customers and also study the potential of the business. Since the company is still new in the field, it has not proceeded towards homework,” he said.

Umesh Prasad Mainali, information officer of Suryajyoti Life Insurance says that there is no immediate plan to open a branch abroad. “The opening of branches abroad should be discussed in the board itself. There is no discussion on the matter as of now,” said Mainali.

Former Chairman of the then Insurance Board Nepal Chiranjeevi Chapagain believes that insurers are not willing to open branches abroad because it is not 'feasible'.

“The target group of companies is Nepali workers abroad. For that, companies already have the option of foreign employment insurance. Although there is an option, opening a branch abroad will increase the cost of operation. This is preventing them from opening a branch in other countries,” said Chapagain.

Chapagain says that when any agency makes a policy, it should be made only after studying the demands and needs of the company as well as the market demand. “For the sake of cheap popularity, various agencies are now making policies without studying the demands and needs of the market,” he added.