The National Insurance Commission (NIC) says it will before the end of the first quarter of 2019 announce new minimum capital requirements for players in the insurance industry.
Companies within the insurance sector are to expect increases of more than 200 percent according to the Commissioner of Insurance, Mr. Justice Yaw Ofori.
The expected recapitalization exercise within the insurance sector which should come to an end in a little over 2 years, will see life and non-life insurers raising their stated capital from the present GH¢15 million to about GH¢50 million.
That of reinsurance companies would go up from the current GH¢40 million to about GH¢125 million signifying an increase of 212%.
Insurance brokers would now be required to increase their capita to about GH¢500,000 from the present GH¢300,000 representing an increase of 66.7 per cent.
According to the Commissioner of Insurance, Mr. Justice Yaw Ofori, a number of factors influenced the decision to significantly review the minimum capital upwards.
“Basically we looked at what the company needed to be solvent or be able to do business, we looked at the cost of man power, office facilities, payment of claims, training of personnel and many other factors. We realized that it cost a lot to run an insurance company.”
The Commissioner also highlighted the role that a well-capitalized insurance sector can play in protecting the countries interest.
“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 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.”
Mr. Ofori added that his outfit was working with the Finance Ministry to ensure they incorporate their input 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.”
When it came to the time frame, the Commissioner mentioned that companies that had been in existence for more than four (4) years, will get 18 months to meet the new capital requirement, whereas newer companies who have been in existence for less than 4 years would get 2 years to meet the requirement.