National Insurance Commission (NIC) is targeting a 100 per cent increment in the current minimum capital requirement for insurance companies in the country, as part of efforts to strengthen the sector and engineer consolidation in a saturated industry.
There are more than 50 insurance companies in the country serving a population of 27 million. Insurance penetration however, remains relatively low at about 2 per cent.
The current minimum capital requirement for insurance companies is GH¢15 million, but at the current figure, some companies are said to be struggling since their capital base is too small to underwrite big-ticket transactions.
Commissioner of Insurance, Justice Yaw Ofori, speaking at the launch of Loyalty Insurance in Accra, said as the regulator, the NIC was committed to doing all it can to strengthen the sector, and might consider a huge revision of the current minimum capital requirement for insurers.
“I don’t know when yet [the percentage of increment] but I think even if we go a hundred per cent, it will be good because the more capital you have the stronger you are, and that means international companies will be ready to do business with you and that is how it should be. You can’t be a very effective international insurance company when you are small,” he said.
He added: “When you go abroad, one insurance company is worth more than the whole insurance industry in Ghana, so inasmuch as it is a problem for players to recapitalise, we have to encourage them.”
Mr. Ofori, who was appointed last month, however, assured that the decision will be taken in consultation with players in the industry.
He further urged stakeholders to work assiduously to boost confidence in the sector so as to improve insurance penetration, adding that “all stakeholders in the insurance industry have a role to play to reverse the low confidence Ghanaians have in the industry. Key among these stakeholders is the insurers.”
“Policyholders and claimants expect nothing but prompt and adequate payment of claims. This is the only way our people can have confidence in us, with this, our ultimate objective of improving the penetration rate of insurance in the country can be achieved,” he added.
…with Kofi Owusu Tawiah