Impact of Dual Catastrophes on Nepal’s Insurance Sector and Future Resilience
Within a month, the country’s insurance industry, primarily non-life insurers, was severely impacted by two major incidents: the Gen Z uprising (September 8–9) and subsequent floods/landslides (October 4, 2025). A total of 3,834 insurance claims valued at Rs. 27.18 billion were lodged. The Gen Z uprising of September 8 and 9, 2025, accounted for the majority with 3,200 claims amounting to Rs. 23.40 billion. As of October 31, 2025, 18 insurers (including micro insurers) had settled Rs. 3.05 billion of these claims. Following the early October floods and landslides, 734 claims worth Rs. 3.78 billion were filed with companies, according to the Nepal Insurance Authority (NIA), the sector’s regulator.
In terms of losses and damages, this is the most significant incident since the devastating earthquake of April 25, 2015, which severely affected 14 districts, including the Kathmandu valley. Compared to the GDP size of Rs. 2,249 billion at that time, the total insurance claims were higher, reaching Rs. 16.59 billion – Rs. 16.50 billion for non-life insurance and Rs. 9.20 crores for life insurance. Professor Dr. Fatta Bahadur KC, Former Chairperson of the Nepal Insurance Authority (erstwhile, Insurance Board), noted that during that critical moment, the government had even planned a bailout for insurance companies that were unable to settle claims.
Consolidation in the insurance sector has strengthened insurers, not only in their capital base but also in their operational efficiency, talent acquisition, and outreach, among other metrics. However, the frequent and repeated destruction and devastation pose a serious threat to the resilience of the insurance industry. While insurance is inherently a transfer of risk, both human-induced destruction and natural calamities are currently straining insurers’ risk bearing capacity. According to experts, these frequent incidents have placed Nepal in a higher risk zone, which could adversely affect reinsurance placement from the country.
Settling claims
Immediately following the protest, insurance companies deployed surveyors to assess the loss and damages; claims will be settled based on these surveyors’ reports. By the end of October 2025, the 18 non-life insurers (including micro insurance companies) had already settled some claims and released advance payments based on preliminary loss assessment, totalling Rs. 3.05 billion.
The Nepal Insurance Authority (NIA) has instructed insurers to settle claims as quickly as possible. Janak Raj Sharma, Chairperson of NIA, confirmed that the regulator is monitoring claim settlement by insurers and will take necessary action based on any complaints and grievances received.
Surendra Thapa, Chief Executive Officer of Nepal Reinsurance Company Limited, stated that a joint team of surveyors and insurance companies has been deployed for on-site loss and damage assessment. He anticipates it will take another one-and-a-half months to receive and validate the surveyors’ reports. Thapa also noted that the current claim amount is based only on a preliminary loss assessment, and the actual settled claim might be around 50% to 70% of that initial figure.
He further explained that insurers retain 35% of the sum insured amount up to Rs. 10 crores and cede 65% to reinsurance companies. However, companies increase this reinsurance placement to transfer more risk when the size of the sum insured amount is higher.
According to Thapa, when considering the total of approximately 3,934 accumulated claims from the protest and flood-related incidents, the size of the claims is relatively small based on preliminary assessments.
The claim amount is quite insignificant compared to the estimated total losses and damages, which are projected to be over Rs. 250 billion; approximately Rs. 150 billion in the public sector and over Rs. 100 billion in the private sector. This disparity is because the damaged properties are largely uninsured.
When classifying the policies involved in the claims from the two major incidents of September–October 2025, a large number are related to motor insurance, accounting for 2,324 claims with a total claim amount of Rs. 3.48 billion. Additionally, there were 677 claims for property insurance destroyed during the Gen Z uprising and 382 claims for property insurance destroyed during the floods/landslides.
Business volume
The business size of the insurance industry is modest but is experiencing incremental growth. Following the devastating earthquake of 2025, there was a substantial 28% growth in premium collection. However, policy renewal is highlighted as a major concern. Although people purchased policies immediately after the catastrophe due to massive losses, insuring property risk eventually ceased to be a priority for them. As a result, the lapse ratio in Nepal’s insurance business remains high because people often do not renew policies.
For the Fiscal Year 2024/25, the annual premium collection for non-life insurers in the country was around Rs. 44.91 billion, while life insurers collected Rs. 182.27 billion, bringing the total gross premium collection to Rs. 227.18 billion.
Nepal’s insurance sector has undergone a major consolidation following the regulatory increase in the paid-up capital requirement for insurance companies, implemented in two phases. Since 2017, the required regulatory capital has increased tenfold: to Rs. 2 billion for non-life insurers and Rs. 5 billion for life insurers. The paid-up capital requirement is Rs. 750 million for micro insurance (both life and non-life) and Rs. 20 billion for reinsurance companies. Currently, there are 14 life, 14 non-life, 2 reinsurance companies, and 7 micro insurers (3 life and 4 non-life) in operation. Although the annual premium collection for non-life insurers and the gross premium collection have shown an upward trend over the last five years, the premium growth for non-life insurers is merely incremental.
Ramifications
The frequent disasters and destruction, induced by both human activity and nature, will have adverse consequences for the insurance industry. The main effect could be reflected in reinsurance premiums, which in turn could impact the premiums charged by domestic insurers. Prof. K.C. noted that domestic insurers may manage to keep their premiums stable by compromising the discounts they receive from reinsurers.
K.C. advised, “Domestic insurers should focus on expanding their network instead of raising premium rates, because an increase in premium costs demotivates current clients and discourages prospective ones.” He recalls that domestic insurers previously struggled to place reinsurance due to the reluctance of reinsurers following frequent fatal air crashes in Nepal, which resulted in a rise in premiums by the reinsurers. While insurance is fundamentally a risk transfer, especially non-life insurance, which is considered protection, repeated shocks have serious ramifications for the insurance business. However, in life insurance, endowment plan policy owners participate in bonus schemes, which can be viewed as a benefit, even though insurance itself is primarily a transfer of risks, not a benefit.
The September 8–9 incident has served as a ‘silver lining on a dark cloud’ by being an eye-opener for the government. The government has since announced a plan to insure public (government-owned) properties. A Cabinet meeting decision on September 21, which addressed the reconstruction and maintenance of public properties, delivery of public services, election expenses management, economic rehabilitation, and resource realignment, specifically underlined that public properties will be insured immediately. Conversely, experts have suggested that insurance companies should explore the prospective expansion of insurance coverage, particularly in the largely uninsured houses and retail segments.
Birendra Baidawar, an insurance sector expert and CEO of Siddhartha Premier Insurance Ltd., advised the government to buy insurance rather than retain the risk themselves. This action is expected to create a ripple effect, boosting insurance literacy among the public, as insurance is considered the only financial tool for mitigating and managing insurable risks.
Most importantly, Prof. K.C. emphasised that fairness and ethical considerations in surveyors’ reports are crucial to enhancing public trust in insurance during such critical moments.
Resilience
Insurance industry leaders assert that the country’s insurance sector is resilient despite having to deal with repeated shocks. The industry proved its resilience during the 2015 earthquake, where non-life insurers settled a total of 17,000 claims worth Rs. 16.50 billion, while life insurers handled only 361 claims totalling Rs. 9.20 crores.
Despite Nepal having over 78 years of insurance history, insurance penetration remains low, with 50.8% of the country’s population still lacking any type of insurance coverage. This low coverage presents both a challenge and an opportunity for insurers. However, since the insurance sector is part of the broader economy, better economic performance is required to fully harness these opportunities. Insurance coverage expanded alongside the credit growth of banks and financial institutions (BFIs); however, the ill practice of banks is that they insure only to cover their credit volume, not the entire property.
Another critical aspect for business confidence is the control of anarchy and the penalisation of criminal offences. For the resilience of all economic elements, including the insurance industry, both human-induced and nature-induced risks must be minimised. While natural calamities are unforeseen and various risk-mitigating measures exist to minimise losses, the major priority should be on lowering and avoiding risks; insurance should only be the last resort. It is clear that their ability is limited, although crucial for protecting and covering unforeseen risks.
The economy is currently struggling under the prolonged, painful adversity of the human-induced destruction of September 8–9, which caused a colossal loss of lives and properties. To avoid and minimise such destruction, the country’s private sector umbrella bodies, such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), and Nepal Chamber of Commerce (NCC), among others, have been urging the government to prosecute criminal acts to curb anarchy and maintain the rule of law.
Additionally, insurers are advised to focus on Research and Development (R&D), innovation, the competence of human resources, and fair and ethical practices to enhance the insurance industry’s resilience.
Government should take stop loss catastrophic risk
Sunil Ballav Pant, CEO, NLG Insurance
Currently, the claim process is smooth, and advance payments are being released by Nepal Reinsurance. The Nepal Insurance Authority, the insurance sector regulator, should first establish a clear categorisation based on the ageing written-down values of properties and vehicles. Furthermore, the government should consider taking on the stop loss catastrophic risk for such perils.
Establishing a disaster fund is key to address future crisis
Kamal Gautam, CEO, United Ajod Insurance
The Gen Z protest caused unprecedented damage, resulting in the largest insurance claim in Nepal’s history. The widespread destruction of private, public, and government properties triggered a surge in insurance claims. So far, United Ajod Insurance has received a total of 234 claims, with an estimated reported loss of Rs. 627.08 million. In terms of the claim amount, these losses are almost equally divided between motor and property insurance, though the number of motor claims is slightly higher.
The company has already settled or paid in advance about half of these claims. Unfortunately, many government buildings and public infrastructure were found to be uninsured, resulting in substantial financial losses for the state. This outcome underscores the urgent need for a stronger risk management system moving forward.
The main challenge faced has been documentation and verification. In catastrophic situations, expecting complete paperwork from every claimant is unrealistic. Additionally, the RSMD (Riot, Strike, Malicious Damage) risk is reinsured solely with Nepal Reinsurance Company, which may be facing financial pressure. Managing liquidity and ensuring timely settlement remain major challenges for them. Despite these issues, the company has not faced any major difficulties in settling claims so far. However, surveyors have reported delays in receiving the necessary documents to complete their assessments.
Currently, the Nepal Insurance Authority has set fixed tariffs for all risks, including RSMD, based on the nature of the property. In some countries, however, political violence is treated separately and not included under standard insurance coverage. In my opinion, RSMD premiums should not be tariffed. Premiums should be determined not only by the type of property but also by its location and the insurer’s risk profile, especially its political exposure.
Given the scale of recent losses, it is likely that reinsurance premiums will rise. Reinsurers base their pricing on loss experience, frequency, and severity of claims. These events have significantly increased insurers’ loss ratios, which will influence future reinsurance pricing and underwriting terms. Reinsurers may also reassess risk accumulation, deductibles, and premium adequacy during upcoming treaty renewals.
Nepal has suffered major losses of government property in past disasters. For example, the earthquake is estimated to have damaged around Rs. 17 billion worth of government assets, while the Gen Z protest caused over Rs. 250 billion in damage to government property. The government should learn from these events and allocate a dedicated budget for insuring public assets.
I recommend insuring all government buildings and infrastructure under a unified coverage plan. Establishing a disaster fund would also help manage future crises more effectively. Moreover, stronger collaboration between the government, regulator, insurers, and reinsurers is essential to design better coverage for risks such as political unrest and civil commotion.
Frequent civil unrest causes reputational impact in international insurance market
Birendra Baidawar, CEO, Siddhartha Premier Insurance Ltd.
Siddhartha Premier Insurance Limited (SPIL) has registered 397 claims with an estimated total amount of Rs. 5.49 billion. Out of this total, the company has settled (advance as well as final settlement) Rs. 1.28 billion to date.
The claim settlement process following the Gen Z protest has faced significant challenges, outlined as follows:
A. Deployment Difficulty: There was difficulty deploying expert surveyors to access the relevant losses.
B. Capacity Strain: The sheer volume of claims and the scale of the losses have stretched the processing capacity of the insurers.
C. Reinsurance Bottleneck: The reinsurance risk arrangement was placed with a single reinsurer. Consequently, all insurance companies (cedents) are compelled to rely on this single domestic reinsurer for on account payments, which has created a bottleneck in cash flows.
The insurance business is heavily driven by international reinsurance support. Given the magnitude of these claims and the risk of similar large-scale civil unrest, reinsurers may likely increase the reinsurance premium.
Such incidents are bound to impact the global insurance market
Toton Chakraborty, CEO, The Oriental Insurance
The impact of incidents like this will never remain confined to the local market; it is bound to spread globally. The insurance market is no longer a local arrangement. It has become globalised. Consequently, a single event in a remote location is certain to impact the global insurance market at the macro level. Under this scenario, an increase in the cost of insurance is highly expected.
At a minimum, the government should begin a proper valuation of its assets and consider insuring them on a need basis. To start, all assets belonging to Public Sector Undertakings (PSUs) should be insured first, if this has not been done already.
‘We have also received full support from our reinsurance partners’
Chunky Chhetry, CEO, Sagarmatha Lumbini Insurance Company Ltd. (SALICO)
The entire insurance industry, and indeed the nation, was significantly affected by the recent Gen Z uprising. Our company received loss reports across multiple insurance portfolios as a result of this event.
Claims registered include: Property (Rs. 1,103,965,662), Motor (Rs. 466,466,528), Miscellaneous (Rs. 7,918,000), and Engineering (Rs 9,849,100), totalling reported losses of Rs. 1,588,199,290. Among these claims, a total of Rs. 7.74 crores has been settled so far.
Thus far, we haven’t faced any challenges in the claim settlement process. We have also received full support from our reinsurance partners and, to facilitate timely settlements, we have even received advance payments from them. Following this support, all the claims will be settled very soon.
In my view, such large-scale incidents have the potential to impact reinsurance pricing in the future. When significant losses occur across multiple portfolios, reinsurers may reassess their risk exposure, which could lead to higher premiums. However, the actual impact will depend on the frequency and magnitude of such events, as well as the overall risk management and mitigation measures implemented by insurance companies.
Most importantly, we would suggest that the government consider comprehensive insurance coverage for public assets, including buildings, infrastructure, and vehicles. Additionally, adopting a risk management framework that includes regular risk assessments, preventive measures, and disaster preparedness plans can help mitigate potential losses. Collaborating with insurance and reinsurance companies to design tailored coverage solutions can ensure that both public and private assets are better protected against unforeseen events in the future.
‘The government should be proactive towards future risk mitigation’
Bir Krishna Maharjan, CEO, Nepal Insurance
Higher claim ratios and geographical concentration may impact reinsurance premiums. The frequency of human-induced destruction in Nepal places us in a risky zone concerning riot/strike/malicious damage/terrorism (RSMDT) exposure. As public properties are often targeted by mobs, the government should be proactive towards future risk mitigation. So far, a government decision has been made to initiate the insurance of government properties.
‘We remain fully committed to honouring our obligations with empathy and efficiency’
Anju Shrestha, CEO, Himalayan Everest Insurance Ltd.
In terms of the nature of registered at Himalayan Everest Insurance, we are seeing three main categories:
Commercial/Private Property Damage: This category primarily includes retail outlets, shopping complexes, banks, hotels, communication/data centres, and small businesses that suffered from vandalism, looting, or fire incidents. A total of 67 claims has been registered, with an estimated loss value of Rs. 60.21 crores.
Motor Insurance Claims: A significant number of private and commercial vehicles were damaged during the unrest, mostly due to mob activity or arson. A total of 203 vehicle claims has been registered, with an estimated loss value of Rs. 34.44 crores.
Other Insurance Claims: This includes damages to construction contract-related machinery and electronic items of banks during vandalism.
Our claims and survey teams have been deployed nationwide, working closely with local authorities and clients to ensure that verification is transparent and settlement is timely. While the scale of the losses is substantial, we remain fully committed to honouring our obligations with empathy and efficiency.
Naturally, with events of this magnitude, there are a few challenges. The first is claim validation and documentation; many affected businesses and individuals were unable to secure full evidence of their losses immediately due to safety and security issues. Our surveyors or loss assessors had to rely on a mix of physical inspections and photographic evidence, which is a time-consuming process.
The second challenge relates to volume and geographic concentration; several hundred claims originated from the same areas within a very short span of time. Coordinating site visits, assessments, and client communication in such circumstances has been logistically demanding.
From a reinsurance standpoint, our partners have been highly supportive. However, the deputation of a joint survey by Nepal Reinsurance is expected to take more time, which will consequently extend the final settlement process. We have shared detailed preliminary loss data with the reinsurer, Nepal Reinsurance, and the response has been positive. The good news is that our reinsurance protection remains strong, ensuring that our clients’ claims are not affected by these technical delays. Nonetheless, we are in constant coordination with them and expect full recovery as per treaty terms.
The aspect of reinsurance premiums in light of recent unrest is a critical element. Over the past decade, the riot/strike/malicious damage/terrorism (RSMDT) line has generally been a profitable one in Nepal, though publicly available loss-ratio data are limited. Our internal analysis at Himalayan Everest Insurance has shown consistent profitability in this line, which has allowed us to maintain competitive pricing and broad coverage.
The recent Gen Z protests in September were unprecedented in scale for our industry in Nepal: to date, we are seeing claims of around Rs. 2,200-2,500 crores lodged by the non-life industry. Citing media reports, from a reinsurer’s perspective, this kind of single-event shock is significant for a relatively small market like Nepal. As noted by rating agency AM Best, Nepal’s non-life market (worth roughly Rs, 45 billion) is particularly exposed given its limited scale.
We note that in neighbouring Sri Lanka, the SRCCT line was very low-loss for many years until a single major unrest triggered losses in excess of LKR 1 billion and forced the relevant state-insurance fund to review its reinsurance programme and retention limits. This demonstrates a valuable lesson: even lines with long records of profitability can become vulnerable when risk assumptions shift. That is precisely why we are taking proactive steps here in Nepal rather than assuming past performance will continue unchanged.
Taken together, these factors strongly suggest that reinsurers will revisit their pricing assumptions for RSMDT exposures globally, and Nepal will not be exempt. So yes, we do believe reinsurance premiums for RSMDT (or SRCC-type) covers are likely to increase at the next renewal cycle.
Most importantly, this event has highlighted the importance of risk transfer mechanisms for public assets. I would strongly recommend that the government:
Establish a comprehensive insurance programme for public infrastructure and assets, possibly through a pooled or state-backed scheme.
Integrate risk management and insurance into public budgeting, ensuring resilience planning at every level.
Collaborate with insurers to design tailored coverage that considers both fiscal constraints and risk exposure.
Promote public-private partnerships for disaster and unrest risk management, including awareness and preparedness programmes.
By proactively insuring critical assets, the government can ensure faster recovery, reduce fiscal burden, and enhance public confidence in times of crisis.
‘Proper risk assessment, allocation of resources, and awareness programmes should be introduced to enhance preparedness’
Sanchit Bajracharya, CEO, Prabhu Insurance Ltd.
The Gen Z protests caused significant property losses. Our company has received and processed a considerable number of claims related to these incidents. Most of the claims were for damages to property and vehicles. We have already verified many of these claims, and some are in the process of being settled. As per our estimation, the entire claim settlement process will be completed within the next few weeks.
However, compared to the overall claims handled by other insurance companies in Nepal, the number of claims we received is relatively smaller. We have carefully reviewed, verified, and documented all the claims. The verified claims are currently being processed for settlement. Some claims that require further verification are still under assessment. All these claim settlements are being handled in coordination with our reinsurers. Based on our current progress, the process is expected to be finalised by the end of the fiscal year.
Regarding the claim settlement process, including coordination with reinsurance companies, there have been certain challenges. Due to the nature of the incidents, verification and documentation required more time and effort. Some affected parties had limited evidence or documentation, which caused slight delays. Nevertheless, the overall process is progressing smoothly.
Our reinsurers are cooperative, and we are working closely to ensure that claims are settled fairly and efficiently. Since such large-scale events fall under specific categories like civil unrest or riot-related damages, reinsurance coordination requires detailed reporting. While some minor delays are expected, all claims will be settled in due course. However, given the increasing frequency and cost of such incidents, it is likely that reinsurance premiums will rise in the future.
Incidents like the Gen Z protests have drawn the attention of reinsurers globally, which could influence the pricing of reinsurance contracts in the upcoming renewal periods. The assessment of such risks is ongoing both at the domestic and international levels. Once the overall financial impact is fully known, the final figures will help determine future reinsurance rates. It is natural for reinsurance rates to rise after large-scale unrest, as reinsurers evaluate their exposure and adjust premiums accordingly. Additionally, the industry may experience stricter underwriting standards and risk evaluation criteria.
Although most private properties and vehicles were insured, many government buildings and public assets were not covered. This has highlighted the need for better risk management and preparedness. The Gen Z movement clearly demonstrated how uninsured public properties can face major financial setbacks.
It is therefore important that the government adopts a structured insurance policy for critical public infrastructure. Establishing a national insurance pool or a public-private partnership model could help mitigate future risks. Proper risk assessment, allocation of resources, and awareness programmes should also be introduced to enhance preparedness.
The recent events have shown that investing in preventive measures such as strengthening security, implementing surveillance systems, and developing emergency response plans can significantly reduce losses. We believe that insurance should be an integral part of the government’s long-term risk management strategy.
