The National Insurance Commission (NIC) has urged insurance companies that are struggling to meet the minimum capital requirement to consider merger before the time given them to meet the condition elapses.
According to the commission, it will be forced to take the next line of action which may be delisting, if the companies fail to meet the scheduled time.
The Insurance Act requires that all insurance and reinsurance companies meet a minimum capital requirement of 15 million cedis by December 31, 2015, even though most companies are unable to meet it.
Speaking to Citi Business News at the 4th Life Insurance Conference organized by the Ghana Insurers Association, the Commissioner of the NIC, Madam Lydia Lariba Bawa was of the view that it is time for some insurance companies to merge since there are too many insurance companies with low capacity in the country.
“If you take the Nigerian market which is over 173 million they have only 50 companies. In Ghana we have about 50 companies for our small population which is about the population of Lagos. If you take Kenya there are about 46 companies for a population of over 45 million people. Here in Ghana the companies don’t want to merge. Everybody wants to keep a small company which is inefficient and has inadequate capital,” she observed.
She stated that even though all insurance companies were expected to meet the requirement by 2015, many could not raise the capital, hence were given a period after which they may face the next action from the commission.
She however pointed out that delisting companies may be difficult due to policies undertaken hence the need for them to consider mergers to boost their capacity.
“Now we have the minimum capital, we want all companies to comply, we have done so, those who were not able to meet it instead of weeding them out we are helping them, it’s very expensive to delist a company,” she said.
“When we do that those who already have policies we need to take care of them, so we’ve given the time after that time we will take a decision on them. We are also hoping that we would rather have had very few strong companies than small-small companies,” she added.