The Commissioner of the National Insurance Commission (NIC), Nyamikeh Kyiamah, says a further increment in the capital of insurance companies operating in Ghana has become necessary owing to the nature of their risk.

According to Mrs Kyiamah, insurance firms ought to have a minimum of $5 million.

Currently, every general insurer is required to have a minimum of US$1 million in core capital per a legislation passed in 2006.

There are over 42 licenced insurance companies in Ghana now.

The NIC set December 2012 as the deadline for operating insurers to comply but they are yet to fully cooperate.

Speaking to the media in Accra recently, the commissioner said the $5 million was simply the basic minimum, emphasizing that “if there is the need for increase in capital for any company it will depend upon the portfolio of the company. In this one, we are looking at what we call risk based capital and this depends on the amount of risk that an insurer has on their books.”

Ghana’s Insurance Act 2006 (Act 724) grants the NIC powers to conduct on-site inspection of insurance companies and insurance intermediaries.

The provision, under Sections 165 to 167 of the Act, is expected to keep insurance companies and intermediaries on their toes and ensure that they follow the Insurance Act and Regulations.

The previous law, PNDCL 227 of 1989, Section 46 allowed the NIC to carry out investigation into the affairs of an insurer, but only when it violates the law or regulations.

A World Bank report in February 2012 described insurance companies in Ghana as inefficient.

The report said there were small as well as inefficient insurance businesses in West Africa.

Titled: “De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services,” it mentioned that insurance companies in Ghana and other countries within the West African Monetary Zone (WAMZ) were too small.

It added that there were far too many small insurance companies competing for premiums, adding that only one company within the entire WAMZ region, Nigeria’s NICON, had a gross premium base in excess of $100 million.

Mrs Kyiameh intends to retire voluntarily by mid-April, this year.

She said if this is done, the industry would be well-sanitized, well-capitalised and better positioned to provide the needed services.

Life insurers in the country are enjoying growth in gross premiums of about 50 percent a year on average.