Insurance Act 2079

Chapter- 7 Operation of Insurance Business

Section 69: Activities restricted to be carried on by Insurance Company
1) An insurance company shall not carry out or cause to carry out the following activities:
(a) Purchase or sell moveable or immovable assets in excess of the limit prescribed by the Nepal Insurance Authority,
(b) Provide loan or any kind of guarantee or security in loans taken to its director, director’s family members, substantial shareholders, chief executive officer, any firm, company or corporate body in which the insurer or its director is managing agent or partner,
(c) Provide any type of loan to insured except on security of life insurance policy,
Provided that these provisions shall not restrict the insurer to provide loan or advance to its employees as per the provisions of employee services, terms and conditions and facilities bye-laws.
(d) Issue insurance policy in any format other than the format prescribed by the Nepal Insurance Authority,
(e) To issue any type of insurance other than the one approved by the Authority,
(f) Calculate and make assessment of insurance tariffs contrary to the insurance tariffs prescribed by the Nepal Insurance Authority,
(g) Make investment in shares or securities of another insurance company undertaking same type of insurance business or making investment in insurance brokers,
Provided that these provisions shall not restrict the insurer to make investment in shares or securities of another insurance company undertaking different type of insurance business, by
obtaining prior approval of the Nepal Insurance Authority.
(h) Make any type of investment in any company, firm or corporate body in which any of the director of insurer is holding position of director or in any in any company, firm or corporate body in which any of the director have personal, financial or occupational interest.
(i) Indulging in any kind of activities to mutually create any type of monopoly or any other type of activities that may create control in insurance business,
(j) Doing or causing other to do any kind of act which that may create an artificial obstruction in the competitive environment of the insurance or any activities that may create controlled practice in the insurance business.
(k) Doing such other acts or causing others to do any such acts prohibited from being done as per this act or rules and regulations made hereunder or directives issued by the Nepal Insurance Authority.
2) If any insurer finds out or has strong reason to believe that that any insured have purchased insurance policy from fund obtained from illegal sources or from offence of assets/ money laundering, such insurer shall not conceal or alter or make payment or conceal or disguise the true source and origin of such fund or assist any person for such purpose.
3) On receipt of information about any person that activities as per sub-section (2), had been done or had assisted in doing such activities or has strong reason to believe, the insurer shall, immediately inform about such to the Nepal Insurance Authority or to the Financial Information Unit established as
1
per prevailing laws.
1 Excerpted from the Act to Amend Certain Acts Relating to the Prevention of Money Laundering and Promotion of Business Environment, 2080.