Non-admitted insurance, perhaps the mainstay of a multinational programme, is the focus of change in Ghana. Buyers are not permitted to purchase insurance from unlicensed insurers without first obtaining regulatory approval. The penalties for breaching the rule would significantly increase under the new law (not yet in effect). Currently, the penalty for entering a non-admitted contract without regulatory approval is 250 penalty units –approximately USD 500. The new law looks to increase the penalties between 10 and 20 times higher than their current levels. A minimum fine would be 2,500 penalty units, with the maximum going up to 5,000 penalty units – approximately USD 10,000. But worse than the monetary penalty, buyers breaching the rules on non-admitted insurance could be subject to imprisonment – for at least one year to a maximum of 5-years behind bars. The potential change has set off alarm bells for local importers since it is compulsory to insure all imports. Ghana’s trader’s association is lobbying for the law to be changed, but regulators have, for now, only promised to consult when regulations are drafted to law.
Ghana is one example of the growing list of countries prepared to impose fines and penalties of non-adherence to their non-admitted regulations. Operationally, this means a local policy will be required for local exposures within Ghana – unless the foreign insurer has a direct insurer license in place for the territory. Because differences in conditions and differences in limits (DIC/DIL) are considered as non-admitted insurance, DIC/DIL would most likely not be a suitable solution for Ghana. Fronting is strictly prohibited in Ghana – encouraging most risk to be retained by the local market – meaning the pricing of risk is typically undertaken locally. Given that Ghana is also a Cash before Cover territory – it is crucial to gather all the necessary information well before the inception date.
It is clear there are a number of moving parts to consider when a country opts to adjust or change their regulations regarding, in this case, non-admitted practices. How likely are you to be up-to-speed on all of this?
Axco's presentation at a Commercial Risk's Global programmes detailed some of the recent regulatory changes worldwide. One listener from a large global technology firm commented that the information provided by our experts has potentially saved them a lot of time and expense, as this was nowhere on their radar. How many regulation changes like the one happening in Ghana right now, could potentially await you? Are you confident with the current information you rely on to ensure no exposures exist? Put more simply, how would you even begin to know if they do exist?
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When structuring a global programme there are a number of moving parts to consider when a country opts to adjust or change their regulations regarding, in this case, non-admitted practices. How likely are you to be up-to-speed on all of this?