Sundry Insurance Fund Operation Rules, 2060 (2003)
Date of Publication in the Nepal Gazette
2060.6.30 (17 Oct. 2003)
Amendment
Sundry Insurance Fund Operation (First
Amendment) Rules, 2061 (2005) 2061.12.3 (March 16, 2005)
The Government of Nepal, having exercised the power conferred by
Section 2 of the Administrative Procedure (Regulation) Act, 2013 (1956) has
enacted the following Rules:

1. Short Title and Commencement: (1) These Rules may be called as
” Sundry Insurance Fund Operation Rules, 2060 (2003)”
(2) These Rules shall come into force from the date prescribed
by the Government of Nepal by publishing notice in the Nepal Gazette.1

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Pursuant to the notice published in the Nepal Gazette dated Oct. 17, 2003, the Rules has come
into force from Oct. 18, 2003.
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(e) “Member Insurer” means the insurer having obtained
membership of the fund under Rule 4.
(f) “Member” means the Member of the Board of Directors and the
term means the chairperson of the Board of Directors and the
Fund Manager also.
(g) “Fund Manager” means the Manager of Fund appointed under
Rule 15.
(h) “Fiscal Year” means the period between 1st Sharwan (Mid July)
to last day of Ashad (Mid July) of every year.

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(2a) A member insurer shall have to deposit the seed money
under Clause (b1) of Sub-rule (1) in the Fund on condition of not to be
less than the amount under Clause (a) of the same Sub-rule; and the
terms and conditions and procedure of payment of such amount shall be
as prescribed by the Board of Directors.
(3) The insurance committee may levy an additional premium to
the 4member insurer in a situation of insufficiency of the amount
deposited in the Fund under Sub-rule (2) to pay the risk under Sub-rule
(1).

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5. Dismissal of Membership of Fund: (1) The Board of Directors may
dismiss the membership of Fund granted under Rule 4 in the following
circumstances:
(a) Cancellation of certificate allowed for making
business of non life insurance.
(b) Failure to pay the premium 7
or amount supposed to
be paid to the Fund.
(c) Failure to accomplish the function supposed to be
accomplished under these Rules.
(2) The Board of Directors, prior to dismissing the membership
of a member insurer under Sub-rule (1), shall give an appropriate
opportunity to submit his explanation in his defense.

6. Premium to be Paid to the Fund: (1) The member insurer shall have
to pay the fee prescribed by the Board of Directors to bear the claim of
the risk group supposed to be made within the geographical territory
under the insurance policy and other insurance risk relating to the same.
(2) Merely the dismissal of membership of fund under Rule 5
shall not be deemed to cause obstruction in the recovery of the premium
of amount supposed to be paid to the fund by him prior to dismissal of
his membership.

7. Use of Fund: The Board of Directors, having obtained approval of the
Insurance Committee, may expend from the amount of the Fund to grant
security to the insurance policy issued by covering the risk group in
Nepal and to bear the necessary administrative cost of the Fund.

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of Directors, having obtained approval of the Government of Nepal,
may invest for the debenture, letter of guarantee or letter of saving
issued by the Government of Nepal or the Nepal Rastra Bank.

9. Board of Directors of the Fund: (1) The Government of Nepal shall
constitute a Board of Directors having the following chairperson and
members to operate the Fund.
(a) Person specified by the
Government of Nepal –
(b) Three representatives nominated
by the Government of Nepal on
condition to be proportionately
represented the insurers –
(c) Fund manager –
Chairperson
Member
Member Secretary
(2) The Board of Directors, if it deems necessary, may invite any
domestic or foreign expert to be present as an observer at the Meeting of
the Board of Directors.
(3) The tenure of the members of Board of Directors shall be 3
years.
(4) The Secretariat of the Board of Directors shall be located in
the Office of the Insurance Committee.

of Board of Directors shall be held on the date, time and place
prescribed by the Chairperson.
(2) The Meeting of Board of Directors shall be held as per
necessity.
Provided that, the gap between two meetings shall not be more
than two months.
(3) The chairperson shall chair the meeting of Board of Directors,
and the person selected by the members among themselves shall chair
the meeting in the case of absence of the chairperson.
(4) Presence of fifty percent of total number of members of the
Board of Directors shall be deemed as quorum of meeting.
(5) Opinion of majority shall be valid in the Meeting of Board of
Directors; and the person presiding over the meeting may give his
decisive vote also in the case of a tie.
(6) Minute of the Board of Directors shall be certified by the
Chairperson and the Member Secretary.
(7) Other procedure relating to the meetings of Board Directors
shall be as determined by the Board of Directors itself.

10. Functions, Duties and Rights of the Board of Directors: The
functions, duties and rights of the Board of Directors shall be as follows:
(a) To manage the fund.
(b) To make and cause to be made necessary arrangement and
implementation of reinsurance of the risk group.
(c) To overview the reinsurance arrangement of the risk group.
(d) To make and cause to be made coordination with the insurers to
make arrangement of further security of the risk group in the
future by giving due consideration to the welfare of fund, to make
arrangement of new reinsurance and to renew.
(e) To make and cause to be made payment of reinsurance premium
by collecting the necessary reinsurance statement and insurance
premium of the risk group from the member insurers.
(f) To appoint the surveyors recognized by the Insurance Committee
for the procedure of clearance of claims made at the Fund or to
prescribe the criteria regarding the surveyors to be appointed by
the member insurers for the same purpose.
(g) To implement by preparing a Directory relating to the procedure
of clearance of claim under these Rules.
(h) To implement by preparing a Directory of Management of
Insurance, Reinsurance relating to the “Risk Group” for the
members insurers and to make coordination with the insurers and
reinsurers as well as to make a time suited reformation in such
directory.
(i) To provide necessary report, advice and suggestion to the
Government of Nepal through the Insurance Committee in regard
to the operation of Fund.
(j) To deduct the amount prescribed by the Board of Directors by
obtaining approval of the Insurance Committee from the
reinsurance commission to be obtained from the reinsures in
regard to the risk group and to pay the remained amount to the
concerned insurers.
(k) To finalize the process of claim under these Rules.
(l) To make clearance of the claim made by the risk group, to deliver
authority to the insurers for clearance of the claim.
(m) To prepare and implement the Financial and Administrative
Directory necessary for the operation of fund.
(n) To formulate necessary criteria for the membership of the Fund
and to make necessary decision in regard to the membership of
the insurers who have not obtained membership of the fund in the
beginning.
(o) To dismiss the membership of the member insurers under Rule 5.
(p) To award the membership certificate to the member insurers.
(q) To accomplish other functions necessary for achievement of the
objective of these Rules.

11. Operation of the Fund and Arrangement: (1) The amount to be
deposited in the fund under these Rules shall be deposited in a bank
account opened with a commercial bank prescribed by the Board of
Directors.
(2) The operation of account opened under Sub-rule (1) shall be
as prescribed by the Board of Directors.

13. Accounts and Audit: (1) The account of income and expenditure of
the Fund shall be maintained under the prevailing law.
(2) The Office of the Auditor General shall audit the Fund.
(3) The Government of Nepal, if it deems necessary, may check
and get checked the account of income and expenditure of the fund, the
relevant documents and other cash and goods also in any time.

12. Subcommittee may be Constituted: The Board of Directors, as per
necessity, may constitute the technical subcommittees for achieving the
objective of these Rules.

13. Appointment of the Fund Manager: (1) The Government of Nepal
may appoint or specify a person having the following qualification to the
post of Fund Manager:-
(a) Having the experience of at least ten years in the
sector of insurance, reinsurance and claim after
obtaining the degree of bachelor level in the
minimum from a recognized educational
organization.
(b) Completion of the age of Thirty Five years and not
exceeding the age of Sixty years.
Provided that, the person among the existing officer staff of the
Insurance Committee prescribed by the Chairperson shall act as the
Fund Manager until the appointment of Fund Manager.
(2) The Fund Manager shall be the main administrative officer of
the Secretariat. The Fund Manager shall have full authority and duty to
execute the decisions of the Board of Directors and to supervise and
control the activities of the Fund.
(3) The tenure of the Fund Manager shall be three years and he
may be reappointed and specified.
(4) The terms and conditions of service and facility of the Fund
Manager shall be as prescribed by the Government of Nepal in the
recommendation of the Insurance Committee.
(5) Notwithstanding anything written elsewhere in these Rules,
the Board of Directors, having maintained the due process prescribed by
the Insurance Committee, may dismiss the Fund Manager from his post
in the case of his committing any act against the objective of these Rules
and welfare of the Fund by causing loss to the Fund or his failure to
accomplish function in consonance with the policy and direction of the
Board of Direction.
Provided that, the Fund Manger shall not be deprived of the
opportunity to submit his explanation for defense before such dismissal
from his post.

14. Arrangement of Staff: The Insurance Committee shall make
available the staff necessary for the operation of Fund.

15. Dissolution: (1) The Government of Nepal, if it deems necessary, may
dissolve the Fund.
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(2) The Government of Nepal and the member insurer shall have
equal right in the cash, goods and other property of the Fund in the
situation of dissolution of the Fund under Sub-rule (1). All of the
member insurers, under such right, shall be entitled to obtain the
property by dividing in equal measure in proportion with the seed
money invested by the insurers in the property of the member insurers.

16. Direction may be Given: The Government of Nepal my give
necessary direction to the Board of Directors in regard to the operation
of Fund and the Board of Directors shall have the duty to abide by such
direction.

17. Monitoring and Supervision: The Insurance Committee shall
monitor and supervise the function relating to the operation of Fund.

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Schedule-1
(Relating to Sub-rule (2) of Rule 4)
Application form for Membership of the Fund
The Chairperson
Fund Board of Directors
Subject:- Requested for Membership
I/we would like to submit this application by mentioning the following details
requesting for membership of the Fund in accordance with Rule 4 of the
Sundry Insurance Fund Operation Rules, 2060 (2003).
1. Date of registration at the Insurance Committee to operate the non-life
insurance business under the Insurance Act, 2049 (1992).
2. Details of insurance business held by the applicant:
3. Memorandum and Articles of the corporate organization of the
applicant:
4. Certificate of eligibility to hold the business of non-life insurance:
5. Other necessary details:
Applicant insurer:
Certificate No.:
Signature:
Date:

Schedule-2
(Relating to Sub-rule (3) of Rule 4)
Certificate of Membership of the Fund
Certificate No.: ……..
Mr./Ms. …………………..
……………………………
Subject:- Regarding the Membership of Fund
While taking action upon your application submitted on ……. to the Board of
Directors, you are granted membership as decided by the Board of Directors on
…………… to grant membership of the Fund to you. Please, abide by the
following terms and conditions.
Terms and Conditions
1.
2.
3.
Fund Member
Date:

(Source: Nepal Law Commission)

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