The National Insurance Commission (NIC) has asserted that Insurance companies who will not meet the recapitalization deadline may lose their ability to conduct business activities such as policy renewals and advertising.
According to Mr. Justice Ofori, the Commissioner of Insurance at the NIC, the move follows a decision by the NIC to see to the recapitalization of all insurance companies in the country.
For years, Ghana’s insurance penetration rate has remained low, hovering about 2%. However, the importance of insurance to the economy cannot be overstated. By providing indemnity against the loss of life and property, it continues to serve as a backbone to thriving civilizations.
Some insurance companies, according to the commissioner, based on their financials will make the threshold while others might not. The regulator added they are waiting for proper documentation before they dole out appropriate sanctions to those who might default.
“Some of them will meet the deadline, others have also during the holidays recapitalized so we are going through all that documentation so we can give a clear figure of how many of them have done it so far. When we view your documents and we realize that you are not actually meeting the required minimum capital, then we will write to you and tell you that this is the shortfall so find resources to actually meet the deadline.
“If you are unable to achieve it by the deadline then that is when the enforcement action kicks in and we stop you from doing new business, stop you from renewing policies, stop you from advertising and then we find a manager who will take over the company.”
Mr. Justice Ofori
Seizure of licenses of insurers that fail to recapitalize
Aside from losing some of their rights to make certain business decisions, the National Insurance Commission (NIC) also stated that some of the insurance companies that fail to recapitalize risk having their licenses revoked.
Following a final review of their records, Dr. Justice Yaw Ofori, however, stated that a significant number of insurance companies will be able to meet the new criterion when the final review is done.
“Most of them have brought in their work plan on how they are going to actually achieve the ¢50 million requirement. So it’s in progress, by the end of the third quarter, we will actually have a clear figure of those companies that might be able to meet the requirement.
“So far, they [insurers] are doing well. most of them have already capitalized beyond the ¢50 million. We understand some are also trying to catch up…you know, Ghanaians always want to wait till the last minute. I know before the end of the month we will see some miracles.”
Mr. Justice Ofori
In June 2019, the National Insurance Commission announced a new minimum capital requirement. It upped the minimum capital requirement for life and non-life firms from GHS15 million to GHS50 million, while reinsurance companies’ minimum capital requirement was raised from GHS40 million to GHS125 million. Insurance brokers’ minimum capital has also been increased from GHS300,000 to GHS500,000, but reinsurance brokers’ minimum capital has remained at GHS1 million.
By June 2021, all companies in the industry were supposed to have met the new minimum capital requirement within two years. The deadline was, however, extended by the regulator because of the COVID-19 pandemic.
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