THE government will now be stricter with insurance companies as there are more penalties for not complying.
BY BUSINESS REPORTER
According to the statutory Instrument 24 of 2016, insurers were now required to have a prescribed asset ratio of 7,5% of the market value of total adjusted assets including those in funeral assurance business.
The prescribed asset ratio used to be 10%, but it has been reduced to 7,5% making compliance for insurance companies easier. Prescribed assets were investments approved by government and were seen as assets good for infrastructure development
Treasury has made regulations on Insurance (Amendment) Regulations 2016 (No 18).
“5% of the market value of total adjusted assets in the case of an insurer which carries on any other class of insurance business other than life assurance, composite companies that is those conducting both life and non-life business will be required to have 7,5% of the market value of total adjusted assets in respect of that portion of their life assurance business including funeral assurance and 5% of the market value of total adjusted assets in respect of that portion of their insurance business other than life assurance,” part of the SI read.
The SI showed that all insurers were required to conduct self-assessment to prescribed ratios within 14 days after the end of every calendar month based on management accounts.
“An insurer who fails to comply with the minimum prescribed assets ratios shall, within 30 days from date it becomes aware or ought to be aware of the non-compliance, advise the commission, in writing, of the non-compliance and the plan to regularize the non-compliance within a period of not more than six months from the date of the submission of the plan.”
The Insurance Pension Commission will give the insurance companies two chances to comply, but when they fail to do so they will face stiffer penalties.