Kathmandu, Sept 1The Bhotekoshi flood has created another major test for Nepal’s non-life insurance industry. As rescue and relief efforts continue, insurers are preparing for what could become one of the sector’s largest disaster-related claims bills in recent years.
The flood has damaged homes, businesses, roads, bridges, hydropower projects and other infrastructure across Rasuwa, Nuwakot, Dhading and surrounding areas. Around 15 hydropower projects, both operating and under construction, have been affected, while the Department of Roads has reported 32 bridges washed away, including 15 in Nuwakot. Four of 10 bridges in Dhading were destroyed.
The final insurance bill remains uncertain. Many policyholders have not yet been able to report losses, while some may themselves be missing or dealing with the death of family members. Insurers also point out that not every damaged property is insured, particularly public infrastructure. So the Rs 200 billion or more in overall economic damage will not translate directly into insurance claims.
Still, the potential exposure is substantial. Shikhar Insurance Deputy CEO Sabita Maskey expects significant claims but says it is too early to put a figure on them. NLG Insurance CEO Sunil Vallabh Pant says insurers are discussing how to manage the claims with the Nepal Insurers Association and the Nepal Insurance Authority. The immediate focus, he says, is handling claims properly rather than calculating their impact on profits.
That approach is understandable. Insurance is supposed to absorb the financial shock of disasters. Once a valid claim is established, insurers cannot simply walk away because the amount is large.
The industry, however, is already carrying a considerable burden. As of the end of FY 2025/26, non-life insurers had 106,237 outstanding claims worth Rs 41.03 billion. Their profitability has also weakened, with profits contracting by 39.29 per cent in FY 2024/25.
The pattern of recent disasters makes the latest shock more concerning. Floods and landslides in October 2024 generated about Rs 12 billion in insurance claims. A Bhotekoshi flood in June 2025, initially linked to the sudden outburst of a supraglacial lake in Tibet, generated around Rs 1 billion in claims. Another spell of extreme rainfall in October 2025 produced more than Rs 4 billion.
The insurance industry has also absorbed major claims arising from political unrest. The September 2025 Gen Z protests alone generated more than Rs 23 billion in claims from vandalism, arson and fire.
The question, therefore, is no longer whether Nepal will experience another disaster. It is how frequently such events will occur, how severe they will be and whether the insurance industry is pricing those risks correctly.
This is where insurers need to think harder. Insurance exists precisely because risks cannot be eliminated. But insurance does not mean every risk should be accepted at the same price. If the same area repeatedly experiences floods, landslides or glacial events, insurers need to reassess the probability and potential scale of future losses.
Rasuwa provides a clear example. Economic activity has expanded rapidly around Dhunche, Syafrubesi, Timure and Betrabati. The Rasuwagadhi border crossing has encouraged trade, while hydropower projects, roads, hotels, warehouses and settlements have multiplied. That means the value of assets exposed to the same natural hazards has also increased.
From an insurer’s perspective, this creates a difficult equation. More assets mean more premiums, but they also mean much larger potential claims when disaster strikes. If the probability of major losses is rising, insurers cannot continue treating the area as though the underlying risk has remained unchanged.
That does not mean refusing to insure disaster-prone areas altogether. Such a policy could leave households and businesses even more vulnerable. Instead, insurers should use detailed risk assessments to determine coverage limits, premiums, deductibles and conditions. High-risk assets may require higher premiums, stronger safety standards or mandatory mitigation measures.
Catastrophe modelling should become more important in Nepal’s insurance market. Historical claims alone are no longer enough when climate, glaciers, rainfall and mountain conditions are changing. Insurers need better geological, hydrological and climate data to understand where future losses could occur.
Reinsurance will remain essential as well. Large-scale disasters can overwhelm individual companies, but stronger reinsurance arrangements can spread that risk internationally. Insurers should regularly test whether their reinsurance protection is sufficient for a disaster larger than anything seen in recent history.
The government has an equally important role. It cannot expect insurers to carry risks created by poor land use, unsafe infrastructure and weak enforcement. Disaster risk maps should guide construction, while critical infrastructure should meet stronger flood and landslide standards. Public bodies should also insure major assets adequately rather than leaving taxpayers to shoulder the entire reconstruction bill.
Most importantly, reconstruction after Bhotekoshi should not recreate the same exposure. Rebuilding a road, bridge, hydropower facility or market in a location known to be highly vulnerable simply transfers today’s loss into tomorrow’s insurance claim.
Nepal cannot stop every glacial avalanche, flood or landslide. As a mountainous country, it has to live with natural hazards. But it can reduce the financial consequences by understanding those hazards better.
For insurers, the lesson is clear: insure the risk, but price it honestly. For the government, the lesson is equally important: do not build assets first and ask about disaster risk later.
If disasters that once appeared exceptional are becoming regular enough to affect insurance claims year after year, Nepal needs to treat disaster risk as a permanent economic variable. The Bhotekoshi flood has made that reality difficult to ignore.
People’s News Monitoring Service
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