Insurance companies in Nepal can now invest up to five percent of their total investment portfolio in their subsidiaries, according to the newly enforced Insurers’ Investment Related Directives 2025 issued by the Nepal Insurance Authority (NIA).
The provision applies to subsidiaries engaged in agricultural production, storage and distribution, cold storage, energy generation and distribution, education, health, and investment companies.
However, the regulator has barred insurers from investing in organizations run by family members of board directors. They are also restricted from investing in securities or credit instruments issued by their subsidiaries.
The directive requires insurance companies to establish an Investment Management Unit, led by senior officials and supported by technically qualified staff, to oversee their portfolios. Insurers must also maintain sufficient funds to settle liabilities arising from claims while making sector-specific investments.
Under the new rules, life insurance companies are required to maintain dedicated funds and separate mechanisms to manage income generated from premiums and other sources.
The NIA has also expanded the investment threshold for government bonds—allowing insurers to invest up to 35 percent of their total investment, up from the previous 25 percent. Insurers are permitted to invest in term deposits of commercial and infrastructure banks as well.
In order to encourage greater participation in the secondary market, the limit for insurers to invest in ordinary shares of listed companies has been raised from 10 percent to 15 percent, though investments cannot exceed 15 percent of their paid-up capital. Similarly, insurers may invest up to 5 percent in Citizen Investment Trust and mutual funds, and up to 10 percent in real estate businesses.
Insurers are required to submit their investment details within seven days of the end of each quarter to the NIA.
Additionally, the directive makes it mandatory for insurers to seek prior approval from the authority before making foreign exchange payments for services received abroad, such as reinsurance, retrocession, or consultancy fees.
