Insurance Companies that fail to meet the January 2022 recapitalization deadline will no longer be able to conduct business activities such as renewal of policies or advertisement of the business.
This is according to the Commissioner of Insurance at the National Insurance Commission (NIC), Justice Ofori. The move follows a decision by the NIC to see to the recapitalization of insurance companies in the country.
Insurance penetration in Ghana has remained low for years, hanging at just around 2%. The contribution of insurance to the economy cannot, however, be overlooked. It continues to act as a backbone to thriving societies, by providing indemnity against the loss of life and property.
The National Insurance Commission announced the new minimum capital requirement in June 2019. It increased the minimum capital requirement for life and non-life companies from GHS15m to GHS50m, while that of reinsurance companies was raised from GHS40m to GHS125m. Insurance brokers also have their minimum capital increased from GHS300,000 to GHS500,000 while that of reinsurance brokers remained at GHS1m.
All companies in the sector were to have complied with the new minimum capital requirement within two years by June 2021. However, the regulator extended the deadline by six months because of the COVID-19 pandemic.
In an interview with Citi Business News, Commissioner of the NIC, Justice Ofori said insurance companies must ensure they meet the deadline.
“Some of them have met 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 yourself and then we find a manager who will take over the company”.