Insurance Companies Recapitalisation Deadline Extended To February 6

The National Insurance Commission (NIC) has given up to 6 February 2022 some insurance companies time to find money and recapitalise to the tune of GH¢50 million or, fold up and hand over their operations.

According to the industry regulator, the companies have also failed to move their capital adequacy ratio to 150%, as required by an earlier directive.

The affected companies have been informed via a notice since 6 January 2022 and should they not be able to do as required, will mean their collapse, mass layoffs, loss of investments and disruptions in the insurance sector.

NIC said the companies that were unable to raise the capital had breached Section 59 of the Insurance Act 2021 (Act 1061).

“Pursuant to Section 178 of the Insurance Act, the Commission, by this letter, issues a one-month notice of enforcement to [name withheld] effective January 12, 2022. For the purposes of protecting your policymakers, the entire insurance industry and the general public, you are will be placed under enforcement with effect from February 10, 2022,” the notice that was issued to the companies said.

Our sources say more than five companies are involved, raising the stakes on the impact to joblessness and disruptions to the insurance sector and the financial sector in general.

The notice further warned affected companies not to enter into new contracts for any class of business, renew any existing contracts, vary contracts or engage in any marketing activities.

It also ordered the firms to stop their staff and agents from selling their products.

“You are, however, required to service existing policies until expiry,” the notice said, adding that payments must only be for claims, salaries, statutory requirements and other essential management expenses but with prior approval from the NIC.

It also warned the boards and management of the companies that they would be held liable for liabilities resulting from new contracts entered into.

The directive to insurance companies to recapitalise from GH¢15 million to GH¢50 million was issued in 2019 and meant to elapse in June 2021.

It was, however, extended to the end of January this year, as a result of the impact of the COVID-19 pandemic on businesses.