The National Insurance Commission (NIC) has hinted that it may resort to risk-based supervision if premium undercutting still persists among insurance companies.
According to the Commission, one of the factors undermining the need for an increase in the minimum capital requirement for the sector is the increased rate of insurance premium reduction by some insurance companies to entice customers.
The Commission, therefore, believes that there is the need to, require of culpable insurers, more capital.
Speaking at the official launch of Hollard Life Ghana, Deputy Commissioner of Insurance, Michael Kofi Andoh said, “It would get to a point where two companies of the same size; one is undercutting, one is not, we might ask the one undercutting to produce more capital than the one who is not undercutting because when you undercut, you make losses and when you make losses it erodes your capital.”
The NIC had earlier indicated that it was working to produce the right mechanisms to aid in addressing issues of undercutting insurance premiums by the end of March this year.
Meanwhile, Mr Andoh has added that there are some direct and indirect methods the Commission is applying in controlling the situation.
He said in the meantime, monitoring and market surveillance is ongoing.
“We do mystery shopping, we do we do inspections and we do punish the companies that breach and it comes to our attention,” he said.
Mr Andoh has however hinted of the NIC’s commitment to increase the minimum capital requirement for the sector before the end of the year.
The official launch of Hollard Life Ghana, now put the number of Life Insurance companies in Ghana to 26.
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