The Deputy Commissioner of Insurance at the National Insurance Commission (NIC), Michael Andoh, has said the insurance is currently small however the sector has potential for growth.
He explained that adequate capitalization would create the needed capacity for sustainable and profitable growth in the sector.
“Appropriate interventions are then made to mitigate such risks. Such interventions can include; enhancement of capital, improving risk management, or other appropriate measures.
“This model deepens transparency, improves regulatory bites, and ensures that regulated entities are able to put in place remedial measures quickly before the risk deteriorates,” he said on the second day of the 2022 investor webinar series by the Black Star Group (BSG) that focused on the insurance sector.
Mr. Andohm further indicated that the NIC is currently embarking on plans to enhance its solvency and capital adequacy framework.
“The technical specifications for the new risk-based capital framework, have therefore been issued to the insurance industry. The model is anchored on three pillars, quantitative requirements, supervisory reviews and reporting, disclosure, and then market discipline,” he said.
“What we have witnessed generally is a shift towards creating regulation regimes that are characterized by a higher standard for risk capital and solvency – the reason is that an insurer’s capital to unforeseen shocks or losses is determined by the capital of the insurer. Capital requirements are therefore prerequisite for growth and resilience of insurers and banks.”
“The NIC has been working on a regulatory framework that ensures capital sustainability, market resilience, growth, and transformation of the insurance sector,” he said.
“Currently, the insurance industry is small but has potential for growth. Adequate capitalization would create the needed capacity for sustainable and profitable growth.”
“The recent challenge has been low market retention. It is expected that capitalization improves the retention capacity,” he added.