Insurance Act, 2017 (Act No. 18 of 2017)Chapter 6 : Financial SoundnessPart 1Financially sound condition37. Capital add-on |
| (1) | The Prudential Authority may direct a capital add-on for an insurer or an insurance group, if the Prudential Authority reasonably believes that— |
| (a) | the risk profile of the insurer or the insurance group deviates significantly from the assumptions underlying the solvency capital requirement calculation or the group solvency capital requirement calculation; or |
| (b) | the governance framework of an insurer or a controlling company deviates significantly from the requirements of this Act. |
| (2) |
| (a) | In the circumstances referred to in subsection (1)(a), the capital add-on that is imposed by the Prudential Authority must be such that the solvency capital requirement or group solvency capital requirement after the capital add-on is in line with the underlying prescribed assumptions of the solvency capital requirement or group solvency capital requirement. |
| (b) | In the circumstances referred to in subsection (1)(b), the capital add-on that is imposed by the Prudential Authority must reflect the significance of the deviation of the governance framework from the requirements of the Act. |
| (3) | The Prudential Authority, if an insurer’s minimum capital requirement exceeds its solvency capital requirement, may direct the capital add-on to be applied to the minimum capital requirement of the insurer. |
| (4) | The Prudential Authority must review any capital add-on imposed at least once a year and remove the capital add-on when the Prudential Authority is satisfied that an insurer or controlling company has remedied the deficiencies that led to its imposition. |