Accra, April 15, GNA- Star Assurance Company Limited, on Friday launched a new company to separate its Life and Non-Life businesses, in line with the policy direction proposed by the Insurance Bill, which is expected to receive Presidential accent this year.
Ms Josephine Amoah, the Commissioner of Insurance, who presented the license for Starlife Assurance Company to commence operations, said all insurance companies would be given a one-year maximum period to comply with the new law.
"Once life assurance has been identified as one of the major vehicles for the mobilisation of long-term investible funds, the insurance industry should all it can to promote it," she said. Ms Amoah said since efficient investment of the mobilised funds was a challenge to the industry, it is necessary for life companies to invest in the right instruments, which will ensure that there is fair balance between safety, liquidity and yield; " and that the right asset liability match is maintained".
"Life companies should therefore be professionally managed. Life companies should properly assess their own capabilities before deciding whether to use the services of already licensed fund managers or whether to license a subsidiary to manage their funds," she said. "It is also expected that life companies will quickly develop products which will be patronised by employers on behalf of employees, as occupational retirement schemes."
The Commissioner gave the assurance that if the products were designed well they would enjoy tax rebates allowed under the Long-Term Savings Act.
She said with the passage of the Act and other laws in the financial sector, it was becoming more pressing for the financial regulatory authorities to harmonise various sections of their operations such as the implications of universal banking in insurance, the supervision of investment service providers and the harmonisation of suitability requirements for directors.
Ms Amoah expressed dissatisfaction with the conduct of conglomerates who pose a great challenge to regulators through related party trading, cross transfer of funds, double counting of capital and dressing up of balance sheets which tended to jeopardise the solvency and financial viability of the various subsidiaries which formed part of the group.
" I therefore advise insurance companies which are setting up subsidiaries to guard against such practices. I will also add my voice to the call on insurance companies which are having problems with capitalisation to seriously consider the option of merging." Mr Kofi Duffuor, Managing Director of Star Assurance, said the separation of Life and bon-life business will boost premium income.
"The separation will forestall any cross-subsidisation and thus enable a true assessment of the cost of each line of business, which should lead to a better management of ...funds."