Thu, 11 Jan 2018 11:09:24 +0000
…as they fail to meet minimum paid up capital
By BUUMBA CHIMBULU
FIVE insurance companies will have their operating licences suspended this year following their failure to meet the required minimum capital requirement whose deadline was on 31st October, 2017.
The companies are currently being assessed and a decision will soon be made whether to give them some time to raise the funds or undergo possible mandatory liquidation.
In 2015, Government signed Statutory Instrument (SI) no. 71 of 2015 to allow insurance companies increase their paid-up capital to the minimum of K20 million from K1 million , long-term and general insurers to K12 million and K10 million respectively from K1 million, while for brokers, it stands at K100, 000 from K50, 000. According to the Pensions and Insurance Authority (PIA), as at 31 December 2017, 32 insurers (out of 37) with a combined market share of 97 percent had achieved full compliance and 33 out of 44 insurance brokers had also complied. PIA communications manager, Doreen Silungwe, said PIA would not issue 2018 licences to the remaining five companies that did not meet the minimum capital requirement.
Ms. Silungwe said the five would therefore not be allowed to handle any insurance business. She said the new capital regulations helped keep away insufficiently capitalised players from entering the insurance market. Ms. Silungwe explained that PIA had only processed two new applications for new insurance companies from the inception of the SI in October 2015 to date.
She said the SI had also helped some of the already licensed insurers to meet the statutory solvency margin and thereby remain viable. “However, it is important to note that current capital and solvency regulations have limitations on promotion of liquidity for quick settlement of claims. To this end, necessary enabling provisions for development of robust solvency regulations have been included in the Insurance Bill. The Bill is currently being prepared by the Ministry of Justice,” Ms. Silungwe said.
