The National Insurance Commission has extended the deadline for the recapitalization of insurance companies from June 2021 to January 2022.
The extension of the deadline is as a result of the economic impact of the COVID-19 pandemic which has affected all businesses around the world and in the country.
The NIC in June 2019 announced a new minimum capital requirement for insurance companies operating in the country.
The new minimum capital requirement for life and non-life companies was increased from GH¢15 million to GH¢50 million with that of reinsurance companies moving from GH¢40 million to GH¢125 million. Insurance broking companies also saw their stated capital increase from GH¢300,000 to GH¢500,000, while that of reinsurance broking companies was maintained at the current GH¢1 million.
All the companies were expected to present their recapitalization plans by December 2020 and were to meet the new requirement by June 2021.
However, with six months to the deadline, the NIC has come out to give the companies a further six months to adequately prepare to meet the new requirement.
Although the Commission is yet to formally make any announcement to the public, checks by the GRAPHIC BUSINESS indicates that it had officially written to the insurance companies to inform them about the new decision.
The circular to inform the insurance companies which has been sighted by the GRAPHIC BUSINESS that the NIC has held subsequent correspondences and meetings geared towards ensuring a successful implementation of the new minimum capital directive and had carefully considered the plans submitted by insurance entities.
The Commission in the circular noted that most of the companies that currently do not meet the new MCR have planned to either raise capital from private investors including the existing shareholders, the capital market or through retained earnings.
“The Commission also notes that the global economy has been adversely affected by the COVID-19 pandemic and this places constraints on how soon the capital raising measures can be completed.
“In light of this, the Commission has extended the deadline for the implementation of the new MCR regime from 30th June, 2021 to 1st January, 2022.The Commission hereby encourages all our regulated entities to implement their work plans and proactively work towards meeting the new Minimum Capital Requirements before or by the new deadline.”