Recent catastrophic flooding in the Bhotekoshi-Trishuli region has severely impacted 11 hydropower projects, triggering approximately Rs 22.84 billion in engineering, contractors' risk, and property insurance claims. Total flood-related claims across the entire non-life insurance sector have surged to Rs 25.87 billion.
International insurance experts note that the repeating pattern of massive claims year after year is forcing global reinsurers to reassess the vulnerability of Himalayan infrastructure. Benjamin Ng, Asia Power Leader at Aon, indicated that insurers operating in high-risk zones may tighten coverage conditions, exclude specific risks, or impose sub-limits on future policies.
The crisis is accelerating a shift toward risk-based pricing, where insurance premiums are calculated based on a project's specific geographical vulnerabilities—such as historical flood data, landslide exposure, and the threat of glacial lake outburst floods—rather than standard blanket rates. Reinsurance executives also highlighted the danger of risk accumulation, where multiple projects situated along a single river corridor are simultaneously devastated by the same natural disaster, placing unprecedented financial strain on global reinsurers.
This hardening of the reinsurance market follows similar pressures observed after the 2023 South Lhonak Lake disaster in Sikkim, India, which severely damaged the Teesta III hydropower project.
Industry analysts point out that rising insurance premiums and tighter reinsurance conditions will directly inflate development costs for upcoming hydropower projects during both construction and operational phases. This added financial burden could reduce overall project returns, prompt commercial banks to tighten lending criteria, and complicate financing for high-risk ventures as Nepal seeks to expand its power generation and electricity export capabilities.
