Justice Yaw Ofori, NIC boss
THE NATIONAL lnsurance Commission (NIC) has revised the minimum capital requirements (MCR) of insurance companies.
A release issued by NIC said it formed part of on- going efforts to stabilise, strengthen and enhance the capacity of the financial services sector as well as support socio-economic development.
For Life and non-life insurance companies, they are expected to produce GH¢15 million and GH¢50 million respectively while for reinsurance companies, they are to produce GH¢40 million and GH¢125 million respectively.
For insurance broking companies and loss adjustors, they are to cough up GH¢300,000 and GH¢500,000 in that order; while for reinsurance broking companies they are expected to present GH¢1 million.
“Re-insurance companies will be required to meet the new requirements through fresh capital (cash) injection, capitalization of audited profits (retained earnings), or a combination of the above options.
“lnjection of property will not be accepted. Any unencumbered property that is introduced will have to be sold for cash by at least six months before the capitalization date, that is, December 27, 2020.”
While the MCR will be immediately applicable to all new applicants and pending applications, existing firms will have until June 30, 2020 to comply with the new MCR.
“MCR will apply immediately to new applications and existing applications and all firms are required to submit their recapitalization plan by August 31, 2019,” the NIC highlighted.
The commission urged insurance entities to ensure that they were adequately capitalized to bear the risks they underwrote adding that “the capacity of an insurance company to accept risk, among others, depends on the financial strength of the company.”
Among other things, the NIC said the new MCR will help strengthen the balance sheets of regulated insurance entities, and enhance their underwriting capacity, make resources available for investment in essential technology and the development and distribution of appropriate products.
Currently, there are 142 regulated lnsurance entities made up of 24 life insurance companies, 29 non-life insurance companies, 3 reinsurance companies and 85 insurance brokers and loss adjusters.
The Commission has also urged shareholders, directors and executives of all insurance entities to take all proactive steps to meet the new capital requirements by the set date.
BY Samuel Boadi