News of insurance – Himalayan Reinsurance Group has reportedly leveraged policy maneuvers with the Ministry of Finance and the Nepal Insurance Authority, shifting the burden of riot-related claims onto the state-owned Nepal Reinsurance Company (Nepal Re).

As a result, damages caused by the Gen-Z protests on September 8 and 9 (23–24 Bhadra), which inflicted massive losses in the private sector, are being shouldered almost entirely by Nepal Re.

Nepal Re, a government-owned reinsurance company, was originally established in the aftermath of the 2006 People’s Movement to cover riot and terrorism-related risks domestically and prevent excessive outflow of reinsurance premiums abroad. Currently, Nepal has two reinsurance companies: Himalayan Reinsurance, backed by major business groups such as Golchha, Deepak Bhatt, and Shanker Group; and Nepal Reinsurance, which is state-owned.

Although both companies had agreed to share risks, riot-related reinsurance was kept exclusively under Nepal Re’s responsibility. This arrangement, insiders allege, has left Nepal Re shouldering billions in liabilities, while Himalayan Re escapes largely unscathed.

Billions in Damages

The Gen-Z protests resulted in large-scale destruction:

• Bhatbhateni Supermarket: Out of 28 branches nationwide, 21 suffered severe damage, including 12 completely destroyed by arson and looting. Preliminary estimates suggest losses amounting to billions of rupees.
• Hilton Hotel: Built at a cost of around Rs 8 billion, Hilton Kathmandu suffered major fire damage. The property was insured with The Oriental Insurance (India) for Rs 5 billion, with reinsurance shared between Nepal Re and Himalayan Re. However, riot-related liabilities fall under Nepal Re’s responsibility, adding further pressure.

Experts note that under current rules, insurance companies must retain 35% of riot and terrorism risks, while the remaining 65% is ceded to Nepal Re. Since foreign retrocession (reinsurance transfer abroad) does not cover riot-related claims, Nepal Re is directly exposed to these massive losses.

Himalayan Re Avoids Major Liability

While discussions had been held in the past about sharing riot and terrorism risks between the two reinsurers, sources allege Himalayan Re consistently lobbied to shift large risks onto Nepal Re. Consequently, Nepal Re now faces overwhelming financial pressure, with industry observers warning of payouts worth tens of billions of rupees.

Meanwhile, Himalayan Re, despite holding a significant share in other reinsurance portfolios, has avoided much of the liability this time.

Partial Recovery Efforts

Bhatbhateni has insured properties worth over Rs 2 billion through IGI Prudential Insurance. Some branches in Kathmandu (Tokha, Satdobato, Anamnagar, Sanagaun, Tripureshwar, Patan, Kalanki, Radheradhe, and Balaju) and outside the valley (Nepalgunj, Janakpur, Butwal, Birgunj, Dhangadhi, Itahari, and Bhairahawa) have resumed partial operations, while others remain under repair and reconstruction.

With Nepal Re bearing the brunt of riot-related claims, experts fear the state-owned reinsurer could face severe financial strain, potentially destabilizing Nepal’s insurance sector.