Dr. Justice Ofori
As part of measures to mitigate the impact of the Domestic Debt Exchange Program on insurance companies, the National Insurance Commission 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 as to be able to pay claims and operate expenses.
The current minimum capital requirement of life and non-life Insurance companies is ¢50 million, whilst the CAR is 14.2%.
In a letter to the insurance firms on 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 would be a moratorium for two years after which the situation would be reviewed and an 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 comply with the operational guidelines that will be issued.”
The NIC 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.
Spreading day-one losses of new bonds over 4-5 years
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 will require some departure from the accounting standards which require such losses to be written off on one day.
Re-pricing of products
The NIC said it will 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.
Revisions to claim payment timelines
The NIC stated that the number of working days within which non-life claims are to be paid after the signing of the discharge voucher will be increased from five to 15 days.
Again the number of working days within which life maturity claims are to be paid will be increased from three to 15 days.
Also, irrespective of the type of product, the maximum period within which all processes leading to the payment of claims should be completed is to be increased from four weeks to eight weeks.
Release of up to 50% of Statutory Deposit
The insurance regulator also announced it would release up to 50% of the minimum Statutory Deposit to eligible regulated entities to shore up liquidity upon request. The amount released, it is said, shall solely be for the payment of claims and shall be replaced within two years.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policies of Multimedia Group Limited.
- How To Get Cheap Same-Day Car Insurance – Forbes Advisor
- Ontario car insurance rates based on postal codes will 'come to an end,' Doug Ford suggests
- 5 things you don't have to tell your car insurance provider
- Bill hiking minimum car insurance coverage clears Legislature
- Educating Car Buyers to Defuse Insurance Pricing Qualms