One of the insurance companies currently in operation is set to be closed down by the end of December 2017 as it is unable to meet the current minimum capital requirement of ¢15 million.
Although the National Insurance Company (NIC) had initially put out three companies that were expected to go down for a similar reason, it has been reduced to one.
According to the NIC, it is taking this action because it wants only firms that are well capitalised to be in operation.
Commissioner of the NIC, Justice Yaw Ofori, disclosed to JoyBusiness that the process to shut down the company in question has already started.
“We are now looking at how to deal with the existing customers by transferring them to another firm so that these policyholders’ interests are protected,” he explained.
He added that it did everything within its power to save the company in question, because “it is not a pleasant action that any regulator wants to undertake.”
But the planned move by the regulator has not gone down well with some industry watchers. Insurance expert Edgar Wiredu has challenged the regulator on its planned move.
According to him, the Commission has not got the “legal mandate” to carry out this action.
“The rules governing capitalisation is being misunderstood here, the fact that someone cannot meet a particular capitalisation the commission has set cannot be the basis for closing down that insurance company or revoking its license”.
He added that the Insurance Act, under section 69, spells out how to carry out some of these actions.
“You increase the capitalisation under risk-based and not just any increases,” he said.