Part 2
Establishment, Duties, and Rights of the Authority
Section-3: Establishment of the Authority:
- For the regulation of the insurance business, the Nepal Insurance Authority has been established as a regulatory body.
- The central office of the Authority shall be located within the Kathmandu Valley. The Authority may, as required, establish its offices at any place inside or outside Nepal.
Section-4: The Authority as an Autonomous and Organized Institution
- The Authority shall be an autonomous and organized institution having perpetual succession and a separate legal personality.
- As a legal person, the Authority shall exercise powers, perform duties, and bear responsibilities in accordance with the prevailing laws.
Section-5: Functions, Duties, and Powers of the Authority
Except as otherwise provided in this Act, the functions, duties, and powers of the Authority shall be as
follows:
a. To act as an advisor to the Government of Nepal in matters related to insurance.
b. To prepare national insurance policy and submit recommendations to the Government
of Nepal.
c.
To grant prior approval for the establishment of insurance companies, issue licenses,
and revoke such licenses.
d. To issue necessary regulations, directives, guidelines, and orders for the regulation of
the insurance business.
e. To issue, renew, and revoke licenses of insurance intermediaries.
f.
To regulate the capital and reserve fund related to insurance business.
g. To formulate and implement necessary programs to make the insurance business
systematic, regulated, competitive, and reliable.
h. To carry out or cause to be carried out studies, research, training, orientation, and
awareness programs for the development and expansion of the insurance business.
i.
To hear complaints lodged by insured persons against insurers regarding insurance
liabilities.
j.
To mediate disputes between the concerned parties in relation to insurance.
k. To undertake necessary activities for minimizing risks in the insurance business.
l.
To develop skilled human resources for the development of the insurance business and
to formulate and implement programs for the promotion of insurance education.
m. To formulate and implement programs to promote insurance services with the objective
of expanding their access to all people.
n. To promote micro-insurance in order to extend access to insurance services to people of
low-income groups.
o. To coordinate and cooperate with other governmental and non-governmental bodies
and exchange information for the regulation, monitoring, supervision, and development
of the insurance business.
p. To cooperate with foreign insurance regulatory bodies, as well as international
organizations, associations, and institutions involved in insurance-related study,
research, and training activities.
q. To represent, on behalf of the Government of Nepal or the Authority, in international
organizations related to insurance regulation and to obtain membership in such
organizations.
r.
To operate the Insurance Policyholder Protection Fund and carry out or cause to be
carried out other necessary activities.
s. To coordinate with the provinces in matters related to insurance.
t.
To perform such other necessary activities as required in the capacity of an insurance
regulatory body.
Section-6: Formation of the Board:
1. The Authority shall have a Board of Directors consisting of the following members:
a. A person nominated by the Government of Nepal – Chairperson.
b. Joint Secretary, Ministry of Finance – Member.
c.
Joint Secretary, Ministry of Law, Justice and Parliamentary Affairs – Member.
d. One person nominated by the Government of Nepal with special knowledge in the life
insurance business – Member.
e. One person nominated by the Government of Nepal with special knowledge in the non
life insurance business – Member.
2. While appointing members pursuant to Clauses (d) and (e) of Sub-section (1), at least one of
them shall be a woman.
3. An officer of the Authority designated by the Authority shall act as the Secretary of the Board.
Section-7: Appointment of Chairperson and Members:
1. For the purpose of recommending the appointment of the Chairperson of the Board, there shall
be a committee coordinated by
- The Member of the National Planning Commission responsible for the related sector- Convener
- The Secretary of the Finance Ministry- Member
- An expert member in the insurance sector- Member. The Chairperson shall be appointed on the recommendation of such committee.
2. The committee referred to in Sub-section (1) shall recommend to the Government of Nepal the
names of three persons, from among those meeting the qualifications set forth in Section 8, for
appointment as Chairperson.
3. The Government of Nepal shall appoint one person as Chairperson from among those
recommended pursuant to Sub-section (2).
4. The appointment of the Chairperson pursuant to Sub-section (3) shall be made at least one
month prior to the expiry of the term of the incumbent Chairperson.
5. The Government of Nepal shall appoint the members referred to in Clauses (d) and (e) of Sub
section (1) of Section 6 from among the persons meeting the qualifications under Sub-section
(1) of Section 8. While making such appointments, at least one member shall be a woman.
Section-8: Qualifications and Disqualifications of Chairperson or Members
1. A person to be appointed as the Chairperson or a Member of the Board shall meet the following
qualifications:
a. Holding at least a Master's Degree or equivalent in insurance, finance, banking,
accounting, commerce, management, public administration, statistics, mathematics,
economics, or law, and having at least five years of high-level managerial experience
in the related field.
b. Possessing high moral character.
c.
Not being disqualified under Sub-section (3).
2. Notwithstanding anything contained in Sub-section (1), the qualifications mentioned therein shall
not be required in the case of the Members referred to in Clauses (b) and (c) of Sub-section (1) of
Section 6.
3. The following persons shall be deemed disqualified for appointment or continuation as
Chairperson or Member:
a. A non-Nepali citizen.
b. An employee, director, advisor, or incumbent staff of any insurer.
c.
A person who, or whose immediate family member, is a promoter shareholder in
any insurer, has a financial interest in an insurer, or is a promoter shareholder of an
institution having financial interest in an insurer.
d. A person who has been declared insolvent under prevailing laws.
e. A person unable to discharge duties in the Board due to physical or mental
incapacity.
f.
A person convicted by a court of corruption, banking or insurance-related offenses,
fraud, human trafficking, money laundering, organized crime, or any other criminal
offense reflecting moral turpitude.
g. A person blacklisted under prevailing laws, until three years have passed since
removal from the blacklist.
h. A person punished by a court or by a regulatory body established under prevailing
laws.
i. A person who has obtained permanent residency in a foreign country.
j. A person who has served as the Chairperson, Member, Chief Executive, or high-level
managerial officer of the Board of Directors of any insurer, until two years have
passed since separation from such position.
Section-9: Term of Office of Chairperson and Members
1. The term of office of the Chairperson and the Members appointed pursuant to Clauses (d) and
(e) of Sub-section (1) of Section 6 shall be four years from the date of appointment.
2. The Government of Nepal may, if it deems appropriate, reappoint the Chairperson or Member
for one additional term.
Section-10: Conditions of Service of Chairperson and Members
1. The Chairperson shall be a full-time executive of the Authority.
2. The remuneration, facilities, and other conditions of service of the Chairperson and
Members shall be as prescribed.
Section-11: Oath to be Taken
Before commencing their duties, the Chairperson and the Members appointed pursuant to Clauses (d)
and (e) of Sub-section (1) of Section 6 shall take an oath of office and secrecy before the competent
Minister of the Government of Nepal in the form prescribed in the Schedule.
Section-12: Circumstances for Vacating Office of Chairperson or Members
1. The Chairperson or a Member shall vacate their office under any of the following circumstances:
(a) If the person submits a resignation in writing to the Government of Nepal.
(b) If the person becomes disqualified to hold office under Sub-section (3) of Section 8.
(c) If the Government of Nepal removes the person from office on grounds of misconduct,
incapacity, or failure to perform official duties.
2. In the event the Government of Nepal needs to remove the Chairperson or a Member under
Clause (c) of Sub-section (1), an Inquiry Committee shall be formed on the recommendation of
the Government for appointment of a successor as follows:
(a) One person appointed by the Government from among retired judges of the Supreme
Court- Chairperson.
(b) Two persons appointed by the Government from different fields, holding at least a
Master’s Degree and having at least ten years of experience in the insurance or related
sector- Member.
3. Chairperson or member against whom inquiry is being made by Inquiry committee shall remain
ipso facto suspended for the period of inquiry made by the committee so formed.
4. The term of office of the Selection Committee formed under Sub-section (2) shall not exceed
three months from the date of its formation.
5. If due to any reasons, the post of Chairperson or member of the inquiry committee formed
under Sub section (2) becomes vacant, the Government shall appoint any person to that
vacancy for the remaining tenure by fulfilling the same procedures as the person was appointed.
Section-13: Functions, Duties, and Powers of the Chairperson
Except as otherwise provided in this Act, the functions, duties, and powers of the Chairperson shall be as
follows:
a. To act as the Chief Executive and the principal administrative officer of the Authority.
b. To prepare the insurance policy of the Authority, other policies, regulations, guidelines,
operational plans, and developmental programs, and submit them to the Board for
approval.
c.
To implement or cause to be implemented the insurance policy, other policies,
regulations, guidelines, operational plans, and developmental programs of the
Authority.
d. To manage and supervise the operation of the Authority.
e. To ensure that the activities of the Authority are systematic and in accordance with the
law.
f.
To mediate disputes between insurers and policyholders.
g. To carry out or cause to be carried out regulation, supervision, or monitoring of the
insurance business.
h. To grant approval for opening branches, sub-branches, and other offices of insurers, or
to issue orders for the same.
i. To exercise powers under Clauses (a), (b), (c), (d), and (e) of Sub-section (1) and Clauses
(b) and (c) of Sub-section (2) of Section 134 for regulatory actions.
j. To delegate powers to subordinate officers and to carry out or cause to be carried out
necessary functions.
k. To represent the Authority in international organizations and to act as its representative
therein.
Section-14: Duty to Inform the Authority
The Chairperson and Members shall, within thirty days of their appointment, inform the Authority about
the following matters:
a. Details about the profession, occupation or organization he/she is involved in.
b. Details as to whether any person or his family members had subscribed any shares of
any insurer and number of shares so subscribed if any.
c.
Details as to whether if the person or any of his family members had been a director or
any officer or auditor or Advisor of any insurer during the period of previous three
years.
d. Details as to whether if the person or any of his family members has worked as an
Insurance intermediary during preceding three years.
e. Details about the movable and immovable assets held by the person in his name or
family members.
Section-15: Prohibition of Misuse of Regulatory Opportunities
1. The Chairperson, Members, employees, or auditors of the Authority shall not, in the course of
performing their official duties, disclose to any person or reveal the source of any confidential
information obtained, whether or not legally privileged, except to those legally entitled to
receive such information.
2. Officials referred to in Sub-section (1) shall not use or cause to be used any confidential
information obtained in the course of their duties for the benefit, advantage, or gain of
themselves or any member of their immediate family.
3. The Chairperson, Members, employees, auditors, consultants, or any person working under
contract with the Authority shall not, while performing any work under the Authority’s
jurisdiction, use the Authority’s regulatory powers for the benefit, advantage, convenience, or
gain of themselves, any member of their immediate family, or any other person.
4. Any act in violation of this section shall be deemed as misuse of authority under prevailing law,
and the concerned official shall report such information to the relevant authority.
Section-16: Meetings of the Board
1. The Board shall meet as often as necessary, but not less than once a month.
2. A meeting of the Board shall be held at the time, place, and date fixed by the Chairperson.
However, if at least three Members request a meeting in writing, the Chairperson or, in the
absence of the Chairperson, the senior Member shall convene the meeting within seven days.
3. At least twenty-four hours before a Board meeting, the Secretary of the Board shall provide the
Members with the agenda and subjects to be discussed.
4. The presence of more than fifty percent of the total number of Members shall constitute a
quorum for the meeting.
5. The Chairperson shall preside over the meeting; in the absence of the Chairperson, the senior
Member shall preside.
6. Decisions of the Board shall be made by majority vote; in case of a tie, the presiding person shall
have a casting vote.
7. The Board may invite any expert or officer related to insurance matters or other relevant
subjects to attend the meeting as necessary.
8. The proceedings of the Board shall be recorded in a separate register, which shall be signed by
the presiding person and all Members present.
9. The Secretary of the Board shall properly maintain and preserve the records of the Board’s
decisions.
10. The Board shall make its own decisions regarding any other matters related to its meetings.
Section-17: Voting in Case of Conflict of Interest
1. Where any proposal in which the chairperson or members of any of their family members or any
member has director has personal or financial or professional interest, is to be discussed at the
meeting of the board, such person shall give information as to such interest to the board prior
to the commencement of discussion on such matter.
2. Such person shall not be entitled to participate in the discussion and decision of such a matter in
which such person who has any such interest as mentioned in sub section 1.
3. Any decisions made violating the provision of subsection 1 or 2 shall not be applicable to the
concerned person.
Section-18: Formation of Committees and Sub-Committees
1. The Board may, for assisting in any work or action it is required to perform under this Act or
the rules made thereunder, constitute such other committees or sub-committees as it
deems necessary.
2. The functions, duties, powers, and responsibilities of any committee or sub-committee
constituted under Sub-section (1), as well as the facilities and benefits to be provided to its
members, shall be determined by the Board.
Section-19: Provisions Relating to Employees
1. The Authority shall appoint a sufficient number of employees as necessary for the smooth
functioning of its operations.
2. The appointment, remuneration, terms of service, facilities, and other conditions of service of
the employees of the Authority shall be as prescribed.
3. Any increase in the number of employees or changes in their remuneration and facilities under
this section shall require the approval of the concerned Ministry.
