The National Insurance Commission (NIC) is pushing for mergers in the insurance industry to meet the current capital requirement.
The commission reviewed the minimum capital of the industry to 15 million cedis on January 1, 2016 to ensure that operators have a strong capital base to operate.
According to the NIC, many of the industry players are too small and could not operate efficiently, hence the need for mergers.
Information gathered by Citi Business News indicates that some insurance firms are struggling to meet the new capital requirement , panicking over a shut down.
Speaking to Citi Business News, the Commissioner of Insurance at the NIC, Lydia Lariba Bawa stressed that companies that did not meet the capital requirement must resort to mergers.
“For a population of about 26 million, we have altogether about 50 insurance companies and some of them are very small, they don’t even have the capacity to retain big businesses. So once you capitalize they can participate in these big insurance businesses that come their way,”she said.
Madam Bawa also disclosed that, majority of the firms have met the minimum capital requirement, while others still struggle to meet the condition.
“In view of that, we are encouraging those people who have not been able to make it to merge, because it is better to have bigger companies that can absorb bigger risk, than small insurance companies that are weak”, she stated.
The NIC boss spoke to Citi Business News at the sidelines of the launch of GN Life Assurance Company.
The company acquired the license from the National Insurance Commission (NIC) in September 2014.
In his welcome address, Chief Executive Officer of the GN Life Assurance Company, Fiifi Simpson, said that prior to the start of operations, his outfit decided to take advantage of Groupe Nduom (GN) to establish a bancassurance relationship with another entity in the Groupe, GN Bank.
According to him, the relationship has given his outfit access to over 227 branches and locations across the country, with 200 financial advisors recruited and trained to sell GN Life products to over 500,000 GN Bank customers.
He stated that the company will target the informal sector since it has a huge potential to grow.
By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana