The National Insurance Commission (NIC) has postponed its deadline for insurance companies in the country to increase their Minimum Capital Requirement (MCR) by June 2021.
The postponement of the deadline to 2022, norvanreports understands, is due to fears of job losses in the insurance industry on the back of consolidations or takeovers of insurance firms as it occurred in the country’s banking sector following the sector clean-up by government.
Confirming the postponement of the deadline, Deputy Commissioner of the NIC, Michael Andoh, averred discussions between the Commission and other relevant stakeholders are still ongoing for the announcement of a new MCR for insurance firms in the country.
“Yes, new capital requirements are under considerations and discussions, we are looking what can be done about the capital requirement as well as the deadline, so very soon a new capital requirement and deadline will be announced or communicated to the industry,” he said.
Insurance companies in the country were to recapitalise with a minimum of Ghs 50 million by June 30, 2021.
Reinsurance companies and Insurance Broking companies were also to recapitalise with at least Ghs 125 million and Ghs 500,000 respectively, while that of Reinsurance Broking companies was maintained at Ghs 1 million.
The new MCR according to the NIC is to strengthen the balance sheets of regulated insurance entities, thereby enhancing their underwriting capacity and make resources available for investment in essential technology.
It said the move would also improve the development and distribution of appropriate products to increase insurance penetration while strengthening the regulatory framework, implementation of risk based supervision and solvency requirements, strengthening risk management and corporate governance structures and practices including claims payment culture within the industry.
Discussions on the revision of the MCR which commenced in 2017 and scheduled to take effect June 2021, was to allow existing insurance entities enough time to comply with the revised MCRs with little disruption to their operations.
Currently, there are about 142 regulated insurance entities comprising 24 life insurance companies, 29 non-life insurance companies, three reinsurance companies and 85 insurance brokers and loss adjusters with more than Ghs 6 billion in total assets.
