The Central Bank of Liberia (CBL), has placed a premium on the reform of the insurance sector because of its strong belief that the sector has high potential that, when properly harnessed, can bolster sustained economic growth in Liberia.
“To this end, the CBL shall continue endeavoring to instill confidence in the sector by among other things ensuring that companies are financially sound (including being adequately capitalized) and that they can handle claims in a proper and timely manner,” says Jay G. Brown, CBL’s Deputy Director for Insurance.
According to him, in the CBL’s strategic plan (2017-2019) which pivots on three mutually reinforcing pillars… CBL’s reform, financial sector reform, and financial inclusion, the reform of the insurance sector is prominent.
Brown added that reform of the insurance sector is clearly seen under financial sector reform; but beyond, a fully functioning insurance sector can meaningfully contribute to financial inclusion, for instance by rolling out products related to micro-insurance and other savings programs.
The passage of the Insurance Act of 2014, he said, provided a coherent legal foundation for robust regulation and supervision of the insurance sector, because the draft new guideline on regulatory and financial reporting has been shared with insurance companies.
Moreover, Brown said the internal reform of the CBL which contains the enhancement of its regulatory and supervisory functions can further support the development of the insurance sector. “This led me to briefly discuss other ongoing and prospective reforms of the insurance sector,” he added.
The CBL’s Deputy Director for Insurance made these revelations on Wednesday, September 19, at the official rebranding ceremony of Equity Assurance to SUNU Assurances Liberia Limited.
He said the new guideline seeks to improve the quality of reporting by insurers and, among other things, requires periodic publication of financial and prudential information on insurers which is expected to expand the surveillance and prudential analysis of the regulator.
According to him, the new guideline also requires periodic reports of financial or prudential information by insurers because it is very important to strengthen the market discipline.
Brown said that recently, in March 2018, CBL issued a circular to the industry which articulates the position of the Bank on separation of the insurance business.
“In essence, the CBL has taken the position that only companies who met the minimum capital resources of a composite company (US$1.8 million — June 2018 and US$2.3 million — December 2018) would continue to operate as composite insurers (both Life and General).
“All companies that fall below the composite requirements shall be restricted to the business for they have adequate capital; either Life Insurance US$600,000 — June 2018 and US$750,000 December 2018) or General Insurance US$1.2 million — June 2018 and US$1.5 million — December 2018,” Brown said.