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The National Insurance Commission (NIC) has increased the minimum capital requirement for the various regulated entities that operate in the insurance sector effective 30 June 2021.
The adjustments are as follows:
Insurance companies (Life & Non-life) – from GHC 15 million to GHC50 million
Reinsurance companies – from GHC 40 million to GHC 125 million
Insurance Broking companies Loss Adjustors – from GHC300,000 to GHC500,000
Reinsurance Broking companies – the MCR remains GHCl million
The NIC said to ensure that the recapitalization exercise achieves its intended objectives of improving the financial capacity and liquidity of the insurance industry, companies will be required to meet the new requirements through: Fresh capital (cash) injection; or 2. Capitalization of audited profits (retained earnings); or 3. A combination of the above options”.
“Injection of property or revaluation surpluses will not be accepted. Any unencumbered property that is introduced will have to be sold for cash and the proceeds capitalized by, at least, six months before the capitalization date, that is by December 31, 2020”, the NIC statement said.
“Please note the key implementation points on the new MCR:
1. The MCR will be immediately applicable to all new applicants and pending applications. 2. Existing firms will have until June 30, 2021 to comply with new MCR. 3. The Commission would accelerate the implementation of its Risk Based Solvency Capital framework to ensure that in addition to the MCR, the capital of a firm is commensurate with the risks it bears”.
The NIC’s mandate is to protect the interest of policyholders by ensuring a financially strong Insurance industry. “The new MCR is one of the initiatives the Commission is taking to achieve this. The Commission strongly urges Shareholders, Directors and Executives to take all proactive steps to meet the new capital requirements by the set date”, the statement noted.
The Commission said it will work with all industry players and provide the needed assistance to help the industry meet the new MCR. “This will help Ghana enjoy the benefits of a well-developed Insurance market which includes improvement in the well-being and welfare of Ghanaians and the economy as a whole”.
