Kathmandu

Nepal Insurance Authority Hosts Stakeholder Discussion on Hydropower Insurance Reforms

The Nepal Insurance Authority organized a high-level discussion on Thursday focusing on the current challenges and reforms needed in the insurance of Nepal’s hydropower sector. The meeting, held at the Authority’s central office in Kupandol, brought together key representatives from the Independent Power Producers’ Association of Nepal (IPPAN), the Nepal Insurance Association, and various reinsurance companies.

Need for Sector-Specific Reforms

Addressing the program, Sushildev Subedi, Executive Director of the Nepal Insurance Authority, emphasized that the Authority has initiated measures to rectify systemic weaknesses in hydropower-related insurance practices. The goals, he stated, include:

• Improving sustainability and efficiency in service delivery

• Reducing insurance costs for project developers

• Enhancing trust and capacity in the domestic insurance system

Subedi acknowledged the concerns raised by IPPAN and highlighted the importance of balancing the interests of both the insurance industry and the hydropower sector, noting that both are essential businesses and public services.

He proposed exploring best practices from countries with similar socio-economic contexts and hydropower development models, and committed to pursuing:

• The formulation of a dedicated insurance policy for the hydropower sector

• Awareness-building programs on insurance practices

• Strengthening internal mechanisms to swiftly address emerging insurance-related issues

Stakeholder Perspectives

Nirmal Adhikari, Director at the Authority, explained that the discussion was aimed at gathering practical suggestions from key stakeholders to address the challenges plaguing the sector.

Representatives from IPPAN voiced concerns over the fixed premium rate system, advocating instead for a market-driven pricing model aligned with the principles of an open market economy. They strongly recommended the introduction of a specialized insurance policy for hydropower projects that reflects the sector’s unique risk profile and long gestation periods.

Challenges in Reinsurance

Officials from the Nepal Insurance Association and CEOs of reinsurance companies also shared pressing concerns. They reported that:

• International reinsurers are increasingly reluctant to underwrite Nepal’s hydropower projects, citing high risk levels and unfavorable loss ratios

• Domestic reinsurers, in several cases, have reached their capacity limits and are also hesitant to take on high-risk projects

• Without appropriate risk-based premium adjustments, there is a growing threat that hydropower projects may struggle to secure reinsurance coverage in the future

In response, they proposed the creation of a dedicated insurance policy and a hydropower insurance pool, jointly managed by all relevant stakeholders—including insurers, reinsurers, regulators, and project developers—to distribute risk more equitably and sustain the insurability of the sector.

The Way Forward

All participating institutions expressed a shared understanding that the hydropower sector is a national priority, and that insurance coverage must evolve to meet the scale and complexity of ongoing and upcoming energy projects.

The Nepal Insurance Authority reaffirmed its commitment to facilitating multi-stakeholder dialogue, policy innovation, and international collaboration to address the insurance challenges constraining Nepal’s hydropower growth.

Image Source : Urjasanchar

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