Kathmandu: Reinsurance brokers listed by the Nepal Insurance Authority will now be required to establish branch or liaison offices in Nepal by the end of the fiscal month of mid-July 2027, following a second amendment to the Insurers’ Reinsurance Directive 2023.
The revised provision, included under Clause 13 of the directive, mandates that all brokers holding a listing number from the Authority must set up either a branch, contact office, or joint venture presence within the country by the new deadline.
This is not the first time the Authority has revised the timeline. Earlier, through the directive’s first amendment, brokers had been instructed to establish offices by the end of Poush 2025. However, after failing to see compliance within the stipulated period, the regulator has now extended the deadline to Asar of the following year, offering additional time for implementation.
Under the Reinsurance Directive 2023, any foreign broker seeking to conduct reinsurance business with Nepali insurers or reinsurers must first register with the Authority and establish a physical presence in Nepal.
In line with this requirement, the Authority initially issued a notice on 23 March 2025, urging listed foreign reinsurance brokers to open branch offices, granting them a three-month window. When no companies complied, a further 10-day extension was provided at the end of mid-July 2024. Although some firms responded via email, none proceeded to establish offices on the ground.
Subsequently, the Authority issued a second notice granting a six-month deadline. With continued non-compliance even after that extension, the regulator opted to amend the directive once again, formally pushing the deadline further.
The directive also outlines strict requirements for foreign reinsurers and brokers to be listed with the Authority. Applicants must submit proof of licensing from their home country regulator, along with details such as license validity, registration number, date of establishment, financial statements, business portfolio, company profile, contact information, and authorized representatives. They must also provide credit rating details and certification from recognized agencies.
For reinsurance brokers specifically, an updated copy of professional indemnity insurance must also be submitted. Upon review, the Authority assigns a listing number to eligible applicants. However, companies rated ‘A++’ by AM Best are exempt from requiring separate approval, while those holding a ‘AAA’ rating from S&P, Moody’s, or Fitch are also not required to register separately, provided their rating status is verified by the Nepali insurer engaging with them.
Foreign reinsurers are required to renew their listing annually with the Authority. Additionally, once granted a listing number, reinsurance brokers must establish a joint venture, branch, or contact office in Nepal within six months. Domestic insurers and brokers are permitted to transact only with those foreign entities that are officially listed. The Authority publishes the list of approved foreign reinsurers and brokers on its website.
The directive further requires insurers to formulate a reinsurance policy for each fiscal year, secure board approval before the fiscal year ends, and implement it accordingly. For foreign insurers without a head office in Nepal, their local office must prepare and implement the reinsurance policy with approval from the management team.
Provisions related to foreign reinsurance brokers are also included in the Reinsurance Broker Directive 2078. According to this framework, foreign brokers interested in engaging in reinsurance transactions with Nepali insurers, reinsurers, or international firms may apply for permission to open a branch or liaison office in Nepal. Approval is granted based on criteria such as global business reach, reputation, and other standards set by the Authority.
Once granted a letter of intent, brokers must deposit USD 50,000 as a security deposit in a Class ‘A’ commercial bank in Nepal before commencing operations. Foreign brokers entering joint ventures with Nepali partners are allowed to hold up to a 55 percent equity stake in the company.
In terms of staffing, such firms may appoint a chief executive or senior manager, along with other high-ranking officials, and may hire one foreign IT expert if needed. However, all other staff positions must be filled by Nepali citizens, ensuring local participation in the sector.
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