The Central Bank of Liberia (CBL) has set March 31st, 2018 as the deadline for all insurance companies to comply with the bank’s new capital requirements for insurance companies operating in Liberia. The CBL said companies failing to meet the deadline would have their licenses revoked.
The Deputy Governor for Economic Policy, Dr. Mounir Siaplay, made the statement Monday, December 11, 2017, at the opening of a two-day Insurance Sector Consolidation Workshop held at the CBL head offices in Monrovia.
The new regulation sets the capital requirement for each class of insurance business and requires each insurance company to maintain a minimum capital requirement based on the category of insurance activity being undertaken by a company. Under the regulation, General/Non-Life Insurance Business must maintain a minimum capital requirement of U$1,500, 000.00 (One Million Five Hundred Thousand U.S. Dollars); Life Insurance Business, a minimum capital requirement of US$750,000.00 (Seven-Hundred and Fifty Thousand U.S. Dollars); and Reinsurance, a minimum capital requirement of US$5,000,000.00 (Five-Million U.S. Dollars).
Speaking on behalf of Executive Governor of the Central Bank of Liberia, Hon. Milton A. Weeks, Dr. Siaplay spoke of the progress made since the bank took over the regulation and supervision of the insurance industry, including the passage of the New Insurance Act of 2014 as well as the introduction of several insurance prudential regulations covering capital, corporate governance, risk management, reinsurance, and financial reporting, among others.
The CBL Deputy Governor, however, noted that in spite of the gains, compliance with the new capital requirement of the bank remains a major challenge in the industry, stressing that the CBL remains committed to implementing and enforcing the regulations.
Dr. Siaplay encouraged non-compliant companies to either merge with, or be acquired by, viable companies.
The two-day workshop, sponsored by the CBL, was attended by both foreign and local insurance personnel with expertise in mergers and acquisitions to discuss issues that would provide a full understanding of the subject-matter, including the advantages and disadvantages, as well as the legal implications.
The implementation of the capital requirements is part of the reform agenda of the CBL, aimed at strengthening the insurance sector by ensuring safety and soundness of the industry through adequate capitalization, strong corporate governance, adequate risk management and reinsurance arrangements, among others. The move, the Bank noted, is in line with its mandate under the New Insurance Act of 2014 as the Regulator and Supervisor of the Insurance Industry of Liberia.