Insurance Act 2079

Chapter- 15 Liquidation of Insurance Company

Section 122: Insolvency of the Branch Office of Foreign Insurance Company Situated in Nepal
1) Notwithstanding anything contained elsewhere in the prevailing laws, the insurance transactions of the branch office of a foreign insurance company situated in Nepal shall automatically be closed as soon as the insolvency process against the foreign insurance company commences as per the laws of the concerned country.
2) Notwithstanding anything contained elsewhere in the prevailing laws, if it is observed that the liability of the branch office of a foreign insurance company situated in Nepal is affected due
to the commencement of insolvency against that foreign insurance company as per the laws of the concerned country, the branch office shall immediately provide the information to the Authority, including details of properties bold by the branch office in Nepal to fulfil the liabilities created from the Insurance business being operated in Nepal.
3) If the information pursuant to sub-section (2) is received by the Authority, it shall appoint a valuator and cause to make the valuation of liability of insurance business operated in Nepal by that branch and the properties owned by that office in Nepal.
4) In accordance with sub-section (3), the valuator shall have to submit a report disclosing the amount pursuant to Sections 38, 39, 40 and 41 and detail of other current and fixed assets, including their valuated amount and amount of immediate and matured liability instead of an insurance policy issued, amount to be paid to the Government of Nepal and other amount and liabilities to be paid.
5) After the report pursuant to sub-section (4) is received, the Authority shall withhold, as prescribed, the amount instead of the liabilities to be fulfilled by that office in Nepal in such a way that the insurer may strictly be prohibited to expend that amount.
6) In accordance with sub-section (5), the liabilities of that office shall be fulfilled from this amount as prescribed.
7) In accordance with sub-section (6), the amount remaining after fulfilling the liabilities may be repatriated to the concerned country as per the prevailing laws.
8) If it is observed from the report pursuant to sub-section (4) that the liability created due to operating insurance business in Nepal towards the insured and other liability may not be fulfilled, Nepal Insurance Authority shall give direction to manage the required amount so that all the liabilities will be fulfilled.
9) In accordance with sub-section (8), in case such direction is given, it shall be the obligation of the concerned branch office to manage that amount.
10) In case the branch office cannot manage the amount as per sub-section (9), the Authority shall request the Government of Nepal to manage to acquire the said amount from the regulatory body of the concerned country through a diplomatic channel.
11) In case of failure to fulfil liability as per sub-section (10), the Authority shall manage the necessary amount by making the Insured Interest Protection Fund bear the amount.
12) The Authority may request the Government of Nepal to fulfil the liability in case the liability is not fulfilled as per sub-section (11).