Source-Daily Independent
The subsidiaries of Nigerian insurance companies in Ghana including Equity Assurance, WAPIC, Regency Alliance, IEI Ghana and NEM Insurance, as well as all local insurance companies in the country have been directed to comply with the new solvency regime issued by the National Insurance Commission (NIC). The solvency framework takes effect on January 1, 2015.
In circular to the chief executive officers of insurance, reinsurance and broking companies dated December 19, the Commissioner of Insurance, Ms. Lydia Bawa, justified the rationale for this new solvency framework, saying “recent developments worldwide require that our solvency regime complies with the international standards and best practice”.
“This implies that we should have a risk adjusted sensitive approach to the determination of capital adequacy requirements of insurance companies,” the NIC boss explained.
The scope of the new solvency framework covers the capital resources, capital adequacy requirements, solvency control levels, investments, technical provisions, valuation of assets and liabilities and financial condition reports.
While the current solvency regime was to ensure appropriate asset spread, good yield and safety of investments of insurance companies, as well as appropriate asset liability matching, she added that the new solvency framework aims to ensure that a risk sensitive approach is adopted in assessing the solvency of insurance companies based on the size, nature and complexity of operations of the company.
Consequently, the assessment and analysis of the 2015 annual returns of all insurers and reinsurers will be based on this framework.
While the minimum solvency capital requirement applicable to the insurer is three million Ghana Cedis, all insurance and reinsurance companies are required to comply with the minimum capital requirement of fifteen million Cedis by December 31, 2015.
Besides, all insurance and reinsurance companies are also required to comply with the target Capital Adequacy Ratio of at least 130 per cent by December 31, 2015, 140 per cent by June 30, 2016 and 150 per cent by December 31, 2016.
All non-life and reinsurance companies are required to calculate their technical provisions using the prescribed methodologies with effect from December 31, 2015.