Page 24 - The Insurance Times September 2025

increase mortality risk capital. So, there is a need to Focus on niche products or regional strengths.
create the right mix of portfolios.

Participating products: Risk-sharing with policyholders. Over time, this may lead to a leaner, more efficient insurance
landscape with greater customer focus.
Unit-linked insurance plans (ULIPs): Investment risks
are borned by the policyholders.
5. Rise in Internal Risk Culture and Governance
Insurers will need to re-evaluate pricing, profitability, and RBC implementation will force insurers to strengthen
product mix through a capital-efficiency lens. internal frameworks, including:
Enterprise risk management (ERM)
3. Investment Discipline and Asset Matching
Actuarial modeling and scenario analysis
The new regime will penalize overly risky or illiquid
investments with higher capital charges. Insurers will be Board-level risk oversight
incentivized to: Stress testing and ORSA (Own Risk and Solvency
Improve asset-liability matching by optimizing capital Assessment)
requirement.
Reduce exposure to volatile equity or non-rated This cultural shift will be critical for long-term sustainability
instruments. and stakeholder confidence.
Maintain diversified and high-quality investment
portfolios. Global Lessons and Regional Benchmarks
Nepal's Risk-Based Capital framework is borrowed from the
This will deepen the link between actuarial projections and
international models but is in the tailoring process to its own
investment strategy.
market maturity and institutional capacity. Unlike Solvency
4. Competitive Differentiation and Market II in Europe or Singapore's RBC2, Nepal's approach is starting
with standardized modules and stronger supervision rather
Consolidation
than complex internal models. This is the right path for now
Larger, well-capitalized insurers with advanced risk - building foundations in actuarial practice, IT systems,
management capabilities will gain a competitive edge. Enterprise Risk Management, and risk culture before
Conversely, smaller players with thin capital buffers may: layering in sophistication.
Need to raise additional capital.

Explore mergers or acquisitions. Regionally, India is still in transition through QIS studies,
Malaysia's 2009 adoption
spurred product innovation,
and Thailand phased in reforms
to allow insurers time to adapt.
The common lesson: go
gradual, encourage regulator-
industry dialogue, use standard
templates, and create safe
"sandbox" spaces to test new
approaches.

The RBC solvency ratio of
companies across Asian
countries is reflected below. It
considers ratio of companies
from higher band to lower band
as compared to the industry
standards.

The Insurance Times September 2025 23