NIA Boss, Justice Yaw Ofori
THE NATIONAL Insurance Commission (NIA) will place a moratorium on the Minimum Capital Requirements (MCRs) and Capital Adequacy Ratio (CAR) on the insurers.
This means the MCR and CAR will not be enforced but regulated entities will be required to operate in such a way so as to be able to pay claims and operating expenses.
This forms part of measures to mitigate the impact of the Domestic Debt Exchange Programme on insurance companies.
The current minimum capital requirement of life and non-life Insurance companies is GH¢50 million, whilst the CAR is 14.2 per cent.
In a letter to insurance firms on the draft regulatory forbearances to mitigate the impact of the Domestic Debt Exchange on insurance and reinsurance firms signed by the Commissioner of Insurance, Dr. Justice Ofori, the NIC said there will be a moratorium for two years after which the situation will be reviewed and appropriate decision made.
“A set of guidelines will be developed and issued to guide the operation of regulated entities during the moratorium period. These forbearances will be available to be regulated entities that abide by the operational guidelines that will be issued,” the NIC noted.
It also announced other measures such as revisions to claim payments timelines, 40% reduction in NIC product approval fees, postponement of the implementation of IFRS 17, creation of regulatory “assets”, among others.
The NIC proposed that insurance companies be given up to four to five years to write-off the day-one losses on the new bonds. This would require some departure from the accounting standards which require such losses to be written off on day one.
The NIC said it would issue a framework to guide the re-pricing of insurance products in response to changes in pricing assumptions occasioned by the Domestic Debt Exchange Programme.
The insurance regulator also announced it will release up to 50% of the minimum Statutory Deposit to eligible regulated entities to shore up liquidity upon request. The amount released, it said, shall solely be for the payment of claims and shall be replaced within two years.
By Jamila Akweley Okertchiri