New investment guidelines expose to risk for insurance companies

Kathmandu: The new investment guidelines for the insurers issued by the insurance sector regulator Nepal Insurance Authority have been exposed to a threat. Insurers are allowed to invest a total of 10 percent in tourism, hydropower, road, and other infrastructure.

Insurance companies, particularly life insurance companies, are still rigid in traditional risk-free investment options like fixed deposits, Govt Bonds, etc.

It has been found that some of the insurers have made huge investments in hydropower projects, agriculture, and hotels. All these sectors are comparatively at high risk from the perspective of investment. These projects seek long-term investment and make a delayed return to the investors.

Prior to the execution of the Investment Guidelines for the Life Insurers 2079, most of the investments were concentrated on long-term deposits of A-class commercial banks. With the introduction of new investment guidelines, the promoters and management of the insurance companies are opting for more risky sectors for investment with the hope of a better return on their equity investment.

According to media sources, Asian Life Insurance is all set to ink a pact to make an investment in Yeti Airlines. Yeti Airlines is suffering from huge losses amid poor business following the recent aircraft crash in Pokhara. Sources confirmed that the proposal submitted by the company for investment in the aviation industry is under consideration at the office of the Authority. It has been learned that the Authority is positive to give its consent for investment in Yeti Airlines. Yeti Airlines is the second largest market player in the domestic aviation industry with around 20 percent of the market share.

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