Nepal’s insurance regulator has fined multiple firms and suspended a broker after identifying attempts to shift a Rs 6 billion (US$40.2 million) Hilton Hotel claim onto a state-owned reinsurer despite the original risk allocation.
The Nepal Insurance Authority imposed fines of Rs 200,000 (US$1,340) each on Nepal Re’s CEO, Himalayan Reinsurance, and The Oriental Insurance Company for violations tied to the handling of riot and terrorism risk. The regulator found that liability linked to the claim had been subject to attempts to transfer it to Nepal Re, even though the reinsurance placement did not assign the exposure to the government-owned reinsurer.
Requests for clarification were issued during the review. The Authority proceeded with enforcement after determining that the explanations provided were not satisfactory.
The case relates to damage to the Hilton Hotel during protests associated with the Gen-Z movement. The Authority found that reinsurance for riot and terrorism risk had been placed with Himalayan Re in a manner that did not comply with legal provisions.
Despite that placement, the investigation identified attempts to shift responsibility for the claim to Nepal Re. An investigation committee concluded that the companies and individuals involved had breached provisions under the Insurance Act, 2079. Based on these findings, the Authority’s board approved the penalties.
The regulator also suspended Alliant Insurance Brokers for three months in connection with its role in the reinsurance arrangement.
The Hilton Hotel claim forms part of a wider set of losses linked to the protests. Data from the Nepal Insurance Authority shows total claims have reached Rs 23.19 billion (US$155.37 million) across 3,163 filings.
Property insurance accounts for Rs 19.71 billion (US$132.06 million) of those claims, while motor insurance represents Rs 3.44 billion (US$23.05 million). Engineering and contractor risk claims total Rs 331.8 million (US$2.22 million), with smaller amounts recorded across other categories.
As of mid-October, insurers had paid or advanced Rs 1.95 billion (US$13.07 million), including Rs 1.55 billion (US$10.39 million) in property claims and Rs 362.5 million (US$2.43 million) in motor claims.
Among insurers handling large volumes of claims, The Oriental Insurance Company reported 98 claims worth Rs 5.24 billion (US$35.11 million).
Regulatory action extended beyond the entities directly linked to the Hilton claim. Neco Insurance, Nepal Life Insurance, Asian Life Insurance, and Himalayan Life Insurance were penalized for operating in violation of regulatory instructions. These companies had been asked to provide explanations before sanctions were imposed after their responses were deemed insufficient.
Separate reporting on regulatory activity indicates that multiple insurers and reinsurers have undergone inspection processes related to compliance with the Insurance Act, 2079, including provisions governing business relationships and conduct.
The losses linked to the protests have drawn attention to the scale of exposure within Nepal’s insurance sector. Analysis published by AM Best indicates that early estimates from the hotel sector alone point to losses exceeding NPR 25 billion (US$167.5 million), with additional losses reported across retail and automotive sectors.
AM Best noted that the total volume of insured and economic losses remains uncertain, and that some affected assets may not have been insured. The agency also reported that Nepal’s non-life insurance market is valued at approximately NPR 45 billion (US$301.5 million).
The events have placed focus on coverage related to riot, strike, malicious damage, sabotage, and terrorism risks, which are typically available as extensions for additional premiums.
