NIC raises capital for companies

Page 57: Daily Graphic, January 21, 2010.
Story: Albert K. Salia
THE minimum capital of insurance companies has been increased from $1 million to $5 million.
This follows the approval by the board of the National Insurance Commission (NIC) for the increase as part of efforts to position Ghanaian insurance firms in the oil and gas business.
Mrs Nyamikeh Kyiamah, acting Commissioner of NIC, told the Daily Graphic that the increase would “ultimately allow the industry to retain more business on our market and help grow the industry”.
She said the NIC would soon initiate discussions with the insurance companies on the new levels and the modalities for implementation.
She conceded that the increase in capital base would affect some of the insurance firms as some of them were even currently operating below the prevailing $1 million capital.
Mrs Kyiamah said concerns had also been raised about the increasing number of insurance firms, resulting in some of them engaging in unhealthy industry practices.
According to her, the increase in the capital base, among other measures to be introduced, would automatically kick some of the firms out of business and retain the genuine and vibrant ones in the industry.
Mrs Kyiamah said with the enactment of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act, Act 749, the NIC was procuring technical assistance to develop and issue comprehensive guidelines to help the insurance companies and the intermediaries comply with both the Insurance and AML/CFT Acts.
She said the AML/CFT Act required insurance companies to be reporting agencies and avoiding being used for the purposes of money laundering or for terrorist funding.
On offshore insurance, Mrs Kyiamah said Section 37 of the Insurance Act required that Ghanaian risks should be insured through Ghanaian companies and that contracts with offshore companies should be approved by the NIC.
She reminded the industry players to expect a very strong opposition from international insurers because they were already “doing the business which by law and as a matter of international practice should be done by Ghanaian companies”.
Mrs Kyiamah said the NIC would see to the enforcement of the rules since that could result in the size of the local insurance industry being doubled.
She called on the insurance companies to put in place a programme which would ensure that companies employed a number of graduates per year and gave them specific training to enable them expand their companies.
She said the life sector of the insurance business was growing fast while a full implementation of the provisions of compulsory fire insurance for owners of commercial buildings, both completed and uncompleted, would substantially increase the level of their insurance business.
She said to fully satisfy clients and increase their businesses, high skills professionalism and competence were needed to deal with the emerging challenges.
She said when the insurance companies put in place the machinery to employ graduates and trained them, the firms would “be contributing directly to the level of employment in the economy and general economic development”.