Ms Lydia Lariba Bawa, Commissioner of Insurance says the National Insurance Commission (NIC) as part of its Risk Based Supervisory framework issues a risk based solvency and capital adequacy framework to improve the industry capitalisation.
She explained that the framework, which was issued in December 2014 required insurance companies to meet new minimum capital requirements, new Capital Adequacy Ratios and as well use the prescribed methodologies to calculate their Technical Provisions.
Ms Lariba Bawa, who was speaking at the launch of RegencyNem Insurance Ghana Limited, again added that even though most companies have fully met the requirements as at now, only Regency Nem did so through a merger.
She said apart from the capitalisation, the NIC has also required insurance companies to implement effective corporate governance and risk management strategies to improve efficiency and profitability.
The Commissioner said the corporate governance and the risk management framework required insurance companies to establish control functions such as internal audit, risk management and compliance to improve risk mitigation.
Ms Lariba Bawa noted that the Ghanaian insurance industry as at December 2015 recorded a gross premium of GH? 1.5 billion and total assets of more than GH? 3 billion.
She said even though this represents a significant growth over previous years’ figures; is still insignificant in terms of contribution to Ghana’s Gross Domestic Product.
She observed that the low insurance penetration could be attributed to the challenges that inhabit operational efficiency, profitability and financial soundness of the industry.
“Chief among such challenges is the high number of very small companies.
The Commissioner therefore welcomes RegencyNem Insurance Ghana Limited to the market and as well tasked the Board and Management to contribute their quota to the realisation of the aspirations of the NIC.
Mr Edward Pianim, Board Chairman of RegencyNem Insurance said Regency Alliance Insurance Limited and NEM Insurance Ghana, being the first local insurance companies to merge in Ghana, marked the beginning of a new strategic relationship which will be of benefits to its stakeholders.
He said both companies are subsidiaries of international insurance companies and entered the market in 2008 and 2009, to contribute to the advisory service in insurance and other insurance activities.
Mr Pianim said these objectives have been largely achieved because they have both operated throughout the following years with efficiency and profitability.
The Board Chairman noted that when they are operating on the Ghanaian market with the minimum capital requirement of $ 1 million.
However with the introduction of risk based supervision by NIC and with new minimum capital of GH?15 million, there is a need to change the direction to be able to pursue the purpose and also have a position in the Ghanaian market.
Mr Pianim said with the increase in managerial efficiency and increase in resources the newly launched company is now in a better position to exceed the expectation of its clients/customers.
Mr Bode Oseni, Managing Director for RegencyNem Insurance Ghana Limited in his welcome address said the combination of resources has strengthened the company, and it has set out to deliver new standards for excellence in the industry.
“We are more than ever committed to provide superior service experience to delight its numerous clients,” he said.
The Managing Director on behalf of Management expressed gratitude to NIC for its encouragement and provisions of enabling environment for the merger to take place, and also assured stakeholders of its commitment to build a strong insurance company.
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