Insurance companies are now required to allocate one percent of their net profit to corporate social responsibility (CSR) activities. Amending the Corporate Governance Directives 2075, Nepal Insurance Authority (NIA) on Tuesday instructed the life insurance, non-life insurance, and reinsurance companies to allocate one percent of profits by creating a CSR fund. Till now, insurers have been spending funds for CSR in their own way. Now the NIA has made the creation of CSR funds mandatory and also specified the areas where the companies should spend the CSR money. According to Raju Raman Paudel, Executive Director of NIA, insurance companies have now been instructed to allocate money for CSR funds. "Earlier, insurers used to spend money in the CSR activities on their own," said Paudel, adding, "Now onwards, they have to create a fund from one percent of their net profit."

According to the NIA, insurance companies have been mandated to use CSR funds for social projects. The directive states that CSR funds should be spent on education, health, natural disaster management, increasing the income-generating capacity of socially disadvantaged groups, insurance literacy, customer protection programs, and programs related to insurance for marginalized groups.

Similarly, insurance companies can set up child daycare centers in their offices for the children of their employees through CSR funds. However, insurers have been barred from using CSR funds for the company's brand promotion activities. Insurance companies will have to spend expenses related to CSR proportionally to geographical areas and sectors. Such CSR spending should not be concentrated in one specific geographic region or sector. The directives have also barred the board of directors of insurance companies from spending CSR money for personal or political gain. The boards of the companies have been instructed to create and implement a separate procedure covering the areas identified for corporate social responsibility, the process of evaluating the proposal received for spending in that area, the operation, and management of the fund, etc.