Section 2: Definitions

Unless the subject or context otherwise requires, in this Act:

(a) “Chairman” means the Chairman of the Board of Directors pursuant to section 6.

(b) “Other insurance service provider” means a person in an institution other than an insurance intermediary licensed by the Authority to act in relation to insurance.

(c) “Basic shareholder” means a person, company or institution owning one percent or more of the paid-up capital of an insurer and includes a unitary house where the members of the family of the unitary house separately own one percent or more of the shares.

(d) “Licence” means a licence granted to carry on the business of insurance in accordance with this Act and includes a licence granted to an insurance intermediary and other insurance service provider to carry on the business as specified.

(e) “Family of one household” means the husband or wife, son, daughter-in-law, daughter, son-in-law, adopted son, adopted daughter, father, mother, stepmother and any other person required to maintain or maintain himself.

(f) “Executive Head” means the Chief Executive Officer responsible for the administrative, managerial or business operations of an insurer appointed in accordance with section 57.

(g) “Self-Asset” means the whole of the liability, other than the paid-up capital of the insurer and any named reserves, funds or accumulated profits to which the shareholder is entitled, or any reputation of the insurer, including the accumulated losses, if any, of the insured.

(h) “Life insurance” means an agreement entered into by the insurer with the insured in respect of the life of any person for payment of any specified sum of money in a lump sum or instalment on the basis of his age, by the person who has paid the sum assured by him or herself or, in the event of his death, by the person who has paid the sum assured by himself or, as the case may be, by the person who has given the sum assured by himself or, as the case may be, by the person who has willed it or by the holder of the sum assured by himself.

(i) “Third Party Facilitator” means a licensed insurance intermediary acting as a conduit between the insurer and the insured for the conduct of insurance.

(j) “Prescribed” or “as prescribed” means prescribed or prescribed in this Act or the rules or regulations made under this Act.

(k) “Close Relative” means father-in-law, mother-in-law, brothers, sisters, sisters-in-law, brothers-in-law, sister-in-law, uncle, aunt, marital uncle, marital aunt, grandson, granddaughter, granddaughter-in-law, nephew, niece, partial uncle, partial aunt, nephew, niece, cousin, and the husband, wife, son-in-law or daughter-in-law of those relatives. 

(l) “Non-life insurance” means insurance other than life insurance and reinsurance. The term shall mean the agreement entered into by the insurer with the insured for payment of any specified amount of damages or compensation in respect of the risk of any property or liability after accepting the risk as mentioned in the insurance statement by charging an insurance fee.

(m) “Reinsurance” means an agreement entered into with such insurer to bear by the reinsurer or another insurer a higher proportion of the risk borne by any one insurer.

(n) “Proposed insurance company” means a public limited company proposed to be set up in accordance with the law in force for the purpose of carrying on the business of insurance.

(o)” Authority” means the Nepal Insurance Authority pursuant to Section 3.

(p) “Insurer” means an insurance company or reinsurance company licensed to carry on the business of insurance in accordance with this Act.

(q) “Insurance Agent” means a licensed insurance intermediary person or institution acting on a commission basis on behalf of an insurer, other than an employee of the insurer.

(r) “Insurance contract” means a written agreement between an insurer and an insured on the condition that the insured bears the risk pursuant to an agreement on payment of a fixed insurance fee.

(s) “Insurance Broker” means an insurance intermediary person or institution licensed to act as an insurance broker in relation to the insurance business.

(t) “Insurance Pool” means a collective insurance fund established by insurers to collectively bear the risk in respect of insurance or risk of a particular nature, to collect insurance charges at one place, to arrange for reinsurance and to arrange for payment of claims.

(u) “Insurance Intermediary” means an insurance broker, third-party facilitator or other insurance intermediary licensed by the Authority.

(v) “Insurance Business” means life insurance business, non-insurance business or reinsurance business.

(w) “Insured” means a person who has obtained the title of insured from a recognised institution for the purpose of assessing the assets and liabilities of the insured.

(x)”Account” means an instrument of insurance issued by the insurer to the insurer to the insured acknowledging any risk.

(y)”Insurance Surveyor” means an insurance intermediary person or institution licensed to assess damaged property and liabilities.

(z)”Insurance Fee” means the amount charged by the insurer as a lump sum or instalment from the insured as a consideration while insuring.

(aa) “Insured” means an insured person and includes an entitled person from insurance.

(bb)” Bonus” means the share or amount of profit to be insured on the basis of the sum insured under the life insurance that accrues to the profit.

(cc)”Ministry” means the Ministry of Finance of the Government of Nepal.

(dd)”Micro-Insurance” means micro-insurance provided in accordance with Chapter 8, aimed at low-income, economically, socially and geographically disadvantaged groups.

(ee) ” Auditor” means an auditor who has obtained a license to audit pursuant to prevailing law.

(ff)” Financial Interest” means the involvement of the insurer of the following persons, institutions, firms, companies or organisations:

(1) The director or the principal shareholder or the executive head or a member of his unit,

(2) A single or joint firm, company or organised institution having the right to nominate a director,

(3) The director, executive head or family member of the firm, company or organisation pursuant to sub-clause  (2),

(4) Where a person, firm, company or body corporate pursuant to sub-clause (1) or (2) has taken ten percent or more of the paid-up capital of any other single or joint firm, company or body corporate, the firm, company or body corporate has taken such shares.

(gg) “Foreign Insurance Company” means an insurance company licensed to carry on insurance business in a foreign country and licensed to carry on insurance business in Nepal in accordance with this Act.

(hh) “Administrator Level” means a manager who is involved in the decision-making process relating to the operation and management of an organised institution and includes a person holding the designation of manager or manager appointed to the post of head of an organised institution or any branch or unit thereof, or an officer of the second class or above, so as to exercise final responsibility or authority.

(ii) “Board of Directors” means the insurer’s Board of Directors to be constituted per Section 47.

(jj) “Member” means a member of the Authority’s Board of Directors and includes the Chairperson.

(kk) “Committee” means the Board of Directors of the Authority constituted in accordance with Section 6.

(ll) ” Collective Insurance Fund” means a collective insurance fund (insurance pool) established by insurers to collectively bear the risk in respect of insurance or risk of particular nature, to collect insurance charges at one place, to arrange for reinsurance and to arrange for payment of claims.

(mm) “Permanent Resident Permit” means the Diversity Immigrant Visa (DV), Permanent Resident Visa (PR) or Green Card issued to a Nepali citizen by a foreign country to enable him to permanently reside in that country without any conditions and the term also refers to the Permanent Resident Permit in any name issued to a Nepali citizen to permanently reside abroad.