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World Bank grant helps PNG insurance

A new general insurance project in Papua New Guinea has received a $US300,000 ($388,000) grant from the World Bank.

The project, which is being managed by the Insurance Commission in Port Moresby, was launched last week by Treasury Minister Sir Rabbie Namaliu.

Aimed at giving PNG a risk-based capital and assessment system for non-life insurers, it is expected to lead to proper levels of capitalisation in the country’s insurance industry.

Sir Rabbie says the project will help the industry to improve its evaluation of risks, which in turn should lead to adequate capitalisation.

“The insurance industry has a vital role to play in the economic and social development of Papua New Guinea by insuring risks so that businesses and individuals will be able to cope with and recover from their losses,” he said.

The project is also expected to reduce the likelihood of systemic failure of the insurance sector and provide greater alignment with risk-based capital norms in the banking and financing sector.

Other benefits include a reduced need for what is described as costly, inefficient and ineffective forms of prudential regulation that do not assess risk, and achieve closer links between the regulator’s and insurers’ measures of risk.