The National Insurance Commission (NIC) has said that it will announce a new minimum capital requirement for companies in the insurance industry before the end of the first quarter of 2019.
The Commissioner of Insurance, Justice Yaw Ofori said the insurance companies should expect increases of more than 200 percent.
He further explained that the recapitalisation will see life and non-life insurers raising their stated capital from the present GH¢15 million to about GH¢50 million.
Meanwhile, the minimum capital for reinsurance companies would go up from the current GH¢40 million to about GH¢125 million signifying an increase of 212%. Insurance brokers would increase their capital from GH¢300,000 to about GH¢500,000 representing an increase of 66.7 percent.
Explaining why this decision, Justice Yaw Ofori said they considered a number of issues in the industry.
“Basically we looked at what the company needed to be solvent or be able to do business, we looked at the cost of manpower, office facilities, payment of claims, training of personnel and many other factors. We realized that it cost a lot to run an insurance company.”
“It looks high but it’s necessary because we are dealing with the interest of the public. An insurance company has to be well capitalized to actually pay claims. We also look at the business that Ghana is exposed to. Right now Ghana has oil which actually calls for a lot of capital to actually retain these businesses. Unfortunately, because of the low capacity of our insurance companies, there is a lot of capital flight. Most of the risks in the oil sector are insured outside Ghana which affects the local currency. So these are all measures taken to protect the country and the ordinary person,” he added.
He indicated that they soliciting the input of the Finance Ministry before final implementation.
“We have already sent our reasoning for the review of the minimum capital requirement to the Finance Ministry and we are working on meeting them to actually answer any questions they might have and get their blessings before we can come out publicly.”
On the time frame for the recapitalisation, the Commissioner said companies that have been operating for more than four years, will be given 18 months to meet the new capital requirement.
Meanwhile, companies that have been in existence for less than 4 years would have 2 years to meet the requirement.
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.com.gh
