Kathmandu. It has been three years since the Nepal Insurance Authority (NEA) unveiled its second strategic plan 2023-2027. The eight strategic pillars aimed at making the insurance sector modern, transparent and risk-based by 2027 have made some encouraging achievements till May 2026, while some fundamental challenges remain.
Risk-based arrangement
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The most important achievement of this scheme is the introduction of ‘risk-based capital’ and ‘risk-based supervision’. The authority has replaced the traditional compliance-oriented system with an international standard solvency standard through the new directive issued in 2025.
Number decreased, capital increased
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Another successful pillar of NEA is the strategy to reduce the number of insurance companies and strengthen the capital base. By early 2026, most life and non-life insurance companies have completed the merger process. This has increased the risk appetite of companies. However, there have been mixed results in the effectiveness of staff management and branch network.
Access & Inclusion
As a result of the strategy of providing insurance to the local level, insurance penetration has reached close to 4 percent of GDP. The service has also been expanded through provincial offices in remote areas like Karnali and Sudurpaschim. Although priority has been given to micro insurance and agricultural insurance, a large population is still outside the scope of insurance.
Technology and transparency
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There has been a significant improvement in the use of information technology under Strategic Pillar No. 4. NEA has made e-billing and digital payment system mandatory from April 2026. Although an online system has been implemented to make the claim payment process transparent, the old complaint of ‘delay in claim payment’ is still not fully resolved.
Human Resources and Infrastructure Development
The plan to establish an insurance academy to meet the shortage of skilled manpower in the insurance sector is in the final stage of implementation. Although the process of including insurance subject in the curriculum of various universities and school level has started, it will still take time to prepare practical and technical human resources.
Mirror of Reality: Where did the Authority go wrong?
Comparing the points of the strategic plan with the current situation, some serious realities have emerged:
- Delay in Claim Payment: Although the goal is to strengthen the claims management mechanism, many customers are still forced to wait months to receive a claim. The process of claim settlement is even more complicated, especially in agriculture and livestock insurance.
- Insurance Literacy: Insurance is still seen only as an investment or tax saving tool. Literacy programs have been accused of being center-oriented.
- Policy Confusion: Volatility in the stock market and the ever-changing policies of the Ministry of Finance continue to pose risks to the investment portfolio of the insurance sector.
Looking at the situation up to mid-May 2026, Nepal’s insurance sector has become ‘structurally’ strong. However, the test of ‘service delivery’ and ‘public trust’ is yet to be met. For the full success of all eight pillars by the end of 2027, the focus should now be on ‘implementation’ and ‘monitoring’ rather than ‘policy’.
