Ghana's insurance sector targets double-digit penetration by 2021

Since the enactment of the 2006 Insurance Act, which promoted the development of local content requirements, the Ghanaian insurance industry has experienced a decade of rapid growth, and the proliferation of private companies and brokers.

However, following the influx of foreign capital on the back of oil and gas production, the size of the sector in relation to the broader economy has diminished. Prior to the development of hydrocarbons projects, insurance premiums looked set to breach 2% of GDP, but this has since fallen.

Nonetheless, government efforts to strengthen the country’s financial sector and new leadership of the National Insurance Commission (NIC) – the industry regulator – contributed to rising optimism in late 2017. The Ministry of Finance and Economic Planning (MoFEP) and the NIC are in talks to expedite the passage of a new Insurance Act, and the NIC is targeting a penetration rate of 10% of GDP by 2021, as part of the four-year mandate laid out by its new commissioner, Justice Yaw Ofori, appointed in August 2017. The growth of new business lines such as bancassurance, micro-insurance and mobile insurance should help bring this target into reach, although there is still ample progress to be made.

Size

By mid-2017 the NIC’s website listed 22 life insurers and 27 non-life insurers, in addition to three reinsurance firms. In its most recent report, covering FY 2015, the NIC announced that total insurance premiums had reached GHS1.57bn ($590.1m), equivalent to approximately 1.17% of GDP.

“Even though insurance penetration has most likely risen since the publication of the 2015 data, it will remain below 2% of GDP in 2017 and 2018,” Solomon Lartey, managing director and CEO of Activa International Insurance’s Ghana office, told OBG. “That places it in the same range as other African insurance markets. However, before Ghana started receiving oil revenues in the early years of the decade, the insurance penetration rate reached 1.97% of GDP. Oil provided a huge boost to GDP, but local insurance firms’ participation in the oil business remained low.”

Regulatory Framework

The Ghanaian insurance market was overhauled with the 2006 Insurance Act, which introduced comprehensive legislation designed to effectively administer and supervise the industry, and provide better policyholder protection.

Central to the act was the focus on local content, obliging firms operating in Ghana to seek policies abroad only if domestic capacity was unable to provide coverage. Another key feature was the greater empowerment of the NIC as regulator.

First established in 1989 but now operating under the 2006 Insurance Act, the regulator licenses new insurance companies and brokers, sets industry standards, approves rates of premiums and commissions, and arbitrates disputes over claims. The body is also responsible for collating information from member companies and publishing statistics, principally in its annual report.

Other measures taken by the commission to secure and promote the industry include the Micro-insurance Market Conduct rules, put in place in 2013. Under these regulations, a company is not allowed to market or renew a micro-insurance product until it has been licensed by the NIC. Insurance contracts cannot be designated as micro-insurance unless they meet a number of criteria, which require them to be affordable and straightforward.

Furthermore, in April 2014 the No Premium, No Cover policy was adopted, which requires insurance companies to collect premiums before providing coverage. According to the NIC, this provides protection for all stakeholders by preventing companies from reporting huge amounts of outstanding premiums, while at the same time making large amounts of provisions for bad debts without significant recoveries, leaving them unable to cover potential claims.

New Direction

In September 2017 – shortly after his appointment to the commission – Ofori spoke to local media, outlining four primary policy goals: increasing the role of insurers in the broader financial sector, with greater investment of funds in the bond market; improving claims payment systems; boosting penetration in the informal sector, such as in agricultural and micro-insurance; and passing new legislation in 2018 to improve the commission’s enforcement and oversight.

“What we should be looking at is how to raise the bar of entry for new [insurance companies], and also make those already operating more competitive and stronger,” Ofori said. With this in mind, the commission is looking to double minimum capital requirements for insurance companies to GHS30m ($11.3m) as a way of bringing about a consolidation of the industry (see analysis).

The ambitious targets tie in with President Nana Akufo-Addo’s administration’s overarching goals of extending the role and strength of the nation’s financial and capital markets sector.

Central to this process is the passage of a new Insurance Bill, which has been under discussion and review since 2013. It would seek to update the framework passed in 2006 and provide a platform for effective risk-based supervision, ensuring that regulators have the ability to review the manner by which insurance companies identify and control risks. According to local press reports, the bill would also establish control functions such as internal audit, risk management and actuarial functions.

Life

The Ghanaian life insurance industry has enjoyed mixed fortunes in recent years. In 2015 the 22 local life insurance companies received record premiums of GHS706m ($265.4m), up from GHS583m ($219.1m) in 2014 and GHS470m ($176.7m) in 2013. The performance allowed total assets to grow to GHS1.74bn ($654m), a 29% increase on the previous year. The dominant market players are Enterprise Life and SIC Life, which received premiums of GHS200m ($75.2m) and GHS181m ($68m), respectively.

However, 10 firms registered underwriting losses in 2015, some so severe that the overall industry registered an after-tax loss of GHS5.83m ($2.2m), compared to profits of GHS50.85m ($19.1m) in 2014, GHS46.29m ($17.4m) in 2013 and GHS61.89m ($23.3m) in 2012. In 2012 total premiums were just GHS356m ($133.8m). The aggregate underwriting results collated by the NIC show that the life segment’s losses more than doubled between 2014 and 2015, from GHS150m ($56.4m) to GHS312m ($117.3m). These losses were mitigated somewhat by the successful performance of the firms’ investment portfolios. Total investment in the life segment reached GHS1.44bn ($541.2m) in 2015, up 34% on the 2014 figure of GHS1.11bn ($417.2m), and accounting for 84% of segment assets – compared to 7% in cash, 4% in property and equipment, and 6% in other areas.

The life segment, popular with mobile insurance customers (see analysis), is considered to be a high-growth segment. In April 2016 a report by Timetric Insurance Intelligence Centre forecast total life premiums would reach GHS1.6bn ($601.3m) by 2019 as a result of the growth of the middle class and the expansion of micro-insurance products.

Non-Life

In the non-life insurance segment, which accounts for around 55% of industry premiums, underwriting losses were more modest and financial results were significantly better. Gross premium income grew by 18% in 2015 to reach GHS854m ($321m), while underwriting losses fell from GHS84m ($31.6m) to GHS65m ($24.4m).

Of the 27 non-life companies, only five registered net losses after tax, and the industry as a whole clocked profits of GHS61m ($22.9m) for the year. As in the life segment, the biggest players are Enterprise Insurance and SIC Insurance, which had total premiums exceeding GHS100m ($37.6m), but a number of firms – including Star Assurance, Vanguard Assurance and Hollard Insurance – received premiums in excess of GHS70m ($26.3m) over the course of the year.

Investment Performance

In 2015 the sector as a whole achieved an annual investment yield of 17%, only slightly down on the rates for 2012 and 2013. A number of firms’ portfolios performed significantly above the average, with Capital Express Assurance and Glico Life Insurance registering 23% yields, while Unique Life Insurance saw a 30% return.

With the domestic capital markets stagnating, firms were conservative in their investment strategies in 2015. The most popular investments were term deposits with licensed banks, which accounted for a cumulative GHS674m ($253.3m) – just under half of total investments – while government securities purchased by the industry totalled GHS208m ($78.2m), around 14% of the total.

Motor

Motor is the biggest segment of the non-life insurance industry, accounting for GHS360m ($135.3m) in premiums in 2015, or 42% of the total. “Motor insurance is huge and compulsory, and that makes it one of the most exciting segments of the Ghanaian insurance sector,” Patrick Dughan, assistant general manager of KEK Insurance Brokers, told OBG. Third-party insurance is needed for all vehicles on Ghana’s roads, and the NIC sets premium levels.

In July 2015 the premium rate was raised from GHS66.30 ($24.92) to GHS252 ($94.72) per year, while the rate for taxis was similarly hiked from GHS82.55 ($31.03) to GHS252 ($94.72) per year.

Only rigorous opposition from motor unions prevented an even sharper increase from being proposed; the NIC had initially targeted annual premiums of GHS471 ($177.03) and GHS576 ($216.49) for cars and taxis, respectively. To assuage motorists’ fears, however, the regulator agreed to introduce the increase over the course of three instalments.

Though expenses have increased, motorists also have gained coverage across West Africa. In June 2016 Ghana became the first English-speaking ECOWAS country to automatically issue the so-called brown card to all motor insurance policyholders.

The scheme, designed to encourage the movement of goods and services across the region, entitles card holders to third-party coverage in all member states. However, both brown cards and local insurance stickers have been the target of fraud, with fake stickers costing the sector in premiums.

Fire, Theft & Property

Fire, theft and property represents the second-largest division of the non-life segment, accounting for 23% of premiums in 2015. Like motor insurance, under the 2006 Insurance Act it is compulsory for private commercial buildings to have insurance. Plans must cover the legal liabilities of owners or occupiers with respect to bodily injury or death to users or third parties, and damage of property belonging to users or members of the public.

However, compliance with this legislation has traditionally been weak, prompting the NIC to launch a task force investigation in March 2017. The enforcement led to official cautions for 70 firms and the arrest of two company heads in the Greater Accra region.

Though government buildings have not been subject to the same requirements, that is likely to change in coming years. In August 2016 Simon Nerro Davor, then-deputy commissioner of the NIC, told local media that a new law had been proposed to make it mandatory that government buildings have insurance.

While the bill has yet to be passed, in September 2017 the incoming commissioner of the NIC similarly voiced his support for the measure, which would provide a safety buffer for the government in times of disaster and a boon for the industry. “Given that the government is the largest spender, agreeing to insure all government assets could increase insurance penetration significantly,” Ofori told local media.

Local Content

The NIC’s regulations on local content play a strong role in capturing premiums from multinationals that might otherwise be lost to foreign insurers. Major international insurance firms – such as Allianz, Zurich and AIG – offer global programmes aimed at providing a single plan for a firm’s worldwide entities and activities.

Under Ghanaian law, however, risks taken in Ghana must be insured in country. As the insurance requirements of multinational companies often extend far beyond the basic fire, theft and property policies traditionally offered in the local market, dealing with multiple insurance firms can leave gaps in coverage, leaving the companies exposed.

Some local firms are working to rectify this. “International firms want to go beyond transport and public liability policies to include political risk and crime insurance,” Lartey told OBG. “Since it’s forbidden to issue global programmes, local firms such as Activa offer options which mimic them, offering the same level of protection in Ghana. Our main challenge is that international programmes often allocate risk premiums on a global basis. We need to market the idea to our insurance partners that they look at Ghana-specific risks and involve the local firm in the underwriting process,” he added.

Bancassurance

Ghana’s first bancassurance policies reached their 10-year anniversary in 2017. Under this model, banks sell insurance to clients alongside their own banking products and receive the government-mandated agency commission.

The segment remains small, accounting for approximately 1% of non-life and 7% of life premiums in 2015, according to NIC data. However, the model has proliferated, with dozens of partnerships between the country’s insurers and banks.

Daniel Addo, general manager of Hollard Insurance in Ghana, told OBG, “Before we entered the bancassurance market, it wasn’t structured. Partnerships with local banks mainly existed in order to cover assets and property. We began by expanding into motor, then moved into home, travel and personal accident insurance. In 2013 our premiums were just GHS2m ($751,000), but for 2017 we are targeting GHS12m ($4.5m),” he added. Crucially, given the challenges insurers have faced with premium payments in the past, selling through banks also allows for the payment of premiums on a monthly, interest-free basis – which is frequently a more attractive option for customers than paying an up-front annual sum.

This has added to increased competition for insurers looking to establish new partnerships. According to Addo, the proliferation of insurance companies means that banks can shop around for the most attractive partnership. Whereas previously they only received a commission, they are increasingly looking to strike profit-sharing deals with insurance firms.

New deals have also been coming to fruition. In March 2017 Fidelity Bank Ghana, the country’s largest indigenous bank, announced a tie-up with Prudential Life Insurance to add education and life to the existing lines of hospital and funeral coverage. In July 2017 Ecobank – which has an established life insurance partnership with Old Mutual – announced it had partnered with Allianz Insurance to offer motor bancassurance, placing policies for purchase on its electronic platform. The same month saw Ghana Commercial Bank launch a three-in-one policy in partnership with Star Life Assurance that offers a single premium for the firm’s existing Home Call Plan, Child Education Plan and Wealth Master Plan.

To strengthen activity further, regulatory changes to allow the sale of bancassurance to corporate clients are currently under discussion. “The industry has been in talks with the regulator to open a space for commercial projects,” said Addo. “The retail space is saturated, but if banks could act as intermediaries for sales to existing companies or new entrants building major projects, it would open up a huge new opportunity for the segment.”

Agents & Brokers

Despite developments in bancassurance, traditional brokers still have a large role to play. “Bancassurance might help in expanding penetration, but long-term growth of the sector will still be driven by professional brokers and companies who are closer to the customer and able to assist them technically,” James Wood, managing director of Edward Mensah, Wood & Associates (EMW), told OBG.

Brokers are paid on fixed-commission terms mandated by the NIC that vary depending on the type of policy. The sale of property insurance carries a 12.5% commission, while motor generates 15%. Total commissions have grown significantly from just over GHS20m ($7.5m) in 2011 to GHS40.5m ($15.2m) in 2015. The dominant players in the market still enjoy healthy market shares, with a third of all commissions earned by KEK Insurance Brokers. The second-largest broker, EMW, received GHS6.6m ($2.5m) in 2015, or 16% of the market. “Due to the high number of players, there is a strong level of competition in the insurance sector. This is beneficial to the consumer, even if there is some consolidation,” Bode Oseni, managing director of Regency Nem Insurance, told OBG.

Competition

Aside from KEK and EMW, however, only two of the 72 licensed brokerages reporting figures to the regulator earned over GHS3m ($1.1m) in commissions in 2015. With a further 10 brokers joining the market by mid-2017, the industry has become both highly dispersed and very competitive.

“The increase in brokerages has led to unnecessary competition and undercutting of rates,” Eric Addo-Mensah, COO of local firm Midas Insurance Brokers, told OBG. “Many clients look to benefit from this situation to negotiate better deals, and some brokers end up overpromising in order to win business. This does not augur well for the industry.”

Along with increased competition, the sector has been affected by the new sales channels. “The way insurance is sold in Ghana is changing,” Lartey told OBG. “We have always worked with general agents, but now we see many insurance companies rolling out branches in district capitals to attract direct customers. For smaller companies, the future is digital. More insurance is sold through banks these days, but as they move to a branchless model, insurance companies will have to follow suit.”

In 2015 roughly 14% of life insurance premiums and 30% of non-life insurance policies were sold through direct business. Tied agents, who work exclusively for one insurance company, sold an additional 63% of life and 30% of non-life premiums. Bancassurance accounted for 1% of non-life and 7% of life, while mobile insurance held a 2% share of life.

Brokers have historically played an important role in the industry, by advising and assisting clients in purchasing the most suitable policy for their needs. “The brokerage industry has been very effective in Ghana over the last 25 years in terms of providing confidence to policyholders,” Addo-Mensah told OBG. “The industry has grown since 1992. There were times when insurance companies interpreted policies in the way that suited them best. Brokers provided vital advice and protection to policyholders.”

However, the rapid growth of the Ghanaian insurance industry along with the diversification of the channels through which policies are sold, has been accompanied by soft regulations, which have fuelled the proliferation of brokerage firms and increased competition, which can be problematic.

Regulations

Existing brokerages state that the sector could benefit from higher requirements to entry and improved enforcement.

“The NIC introduced minimum premium guidelines to check undercutting last year,” Dughan told OBG. “However, many firms are not complying with the guidelines and undercutting still takes place to suit the client’s budget,” he added.

Speaking in April 2017, Lydia Lariba Bawa, then-commissioner of the NIC, noted that he Ghanaian market had as many insurance companies as Nigeria – a country with six times Ghana’s population – and that firms had proved resistant to mergers.

“Here in Ghana, the companies don’t want to merge. Everybody wants to keep a small company [that] is inefficient and has inadequate capital,” she said.

Ofori has also underscored the benefits of mergers, telling local press in September 2017, “The more capital you have, the stronger you are, and that means international companies are ready to do business with you. You can’t be a very effective international insurance company when you are small.”

The gradual raising of minimum capital requirements on insurance companies, promoting the consolidation of the market and merger of insurers, could also have a parallel effect on brokerages.

“Reducing the number of insurance companies will also reduce competition between insurance companies and brokers,” Dughan said. “Currently, there are too many small companies providing a wide range of services. A consolidation in the industry will also lead to greater specialisation and higher incentives for excellence for brokers,” he added.

Growth Areas

While motor, and fire, theft and property insurance make up the biggest segments of the non-life insurance market, many believe that the government’s economic policy and future NIC regulations could open up new areas for growth.

At present, marine and aviation insurance contribute 7% to the overall non-life market, but this could be boosted if existing regulations are enforced. “Marine insurance has massive potential,” Addo told OBG. “Most cargo destined for Burkina Faso and other landlocked West African countries passes through Ghanaian ports. The local law requires it to be insured in country. However, at the moment, transport firms often choose to pay the penalty for not having insurance, which is a 1% tax on the value of the goods. If the government enforced the law properly, it could have a big impact on marine and transport premiums.”

Ambitious plans for the industrialisation of the countryside through a national programme known as One District, One Factory – aimed at building a factory in each of the 216 districts in the country – could also spur greater coverage for engineering and building. “The government’s development plan requires bold construction,” Lartey told OBG. “In the future, engineering policies are going to increase, and we will see a parallel rise in marine policies as much of the materials and equipment needed are imported.”

Private pension represents another area that could be tapped for growth. Seth Kwaku Ansah Obiri, managing director of United Pension Trustees, told OBG, “The private pension market is still young, but it does have enormous growth potential, especially in the informal market. However, in order to attract voluntary participants to third-tier schemes, additional incentives should be provided.”

Reinsurance

Companies in Ghana seeking reinsurance are also required by the 2006 legislation to exhaust local capacity before seeking coverage from overseas companies. The three reinsurance companies registered with the NIC have seen their premiums grow rapidly between 2011 and 2015.

The non-life insurance segment represented over 90% of income throughout this period. In 2011 local reinsurers received GHS3.1m ($1.17m) in life and GHS56.2m ($21.1m) in non-life premiums. By 2015 these figures had risen to GHS11.4m ($4.3m) and GHS152.2m ($57.2m), respectively.

The state-owned Ghana Reinsurance Company, in business since 1972, controls roughly 60% of the market, according to the MoFEP. The other players in the segment are Mainstream Reinsurance and the newest member, GN Reinsurance, established in 2014.

“The 2000s saw tremendous growth in the domestic insurance market, both in terms of the number of companies and premiums,” Prince Kwesi Nkrumah, COO of GN Reinsurance, told OBG. “The demand for reinsurance exceeds domestic capacity, so the entrance of new companies strengthens the market by helping to absorb local premiums and reduce the volume of foreign exchange that leaves the country. Over the course of 2016 all the domestic reinsurance firms experienced very strong growth.”

Some foreign placement of reinsurance premiums still occurs, but these transfers must be approved by the NIC. In 2015 Ghanaian reinsurance firms transferred approximately $4.45m, just under €500,000 and a nominal amount in pound sterling.

Focus

At present, the reinsurance market is focused principally on property, fire and specialised vehicle policies. “The local life insurance market is absorbed by the insurance companies, who rarely turn to reinsurance,” said Nkrumah. “Meanwhile, motor policies for normal cars are for relatively small sums and direct insurers can absorb claims. The reinsurance market exists for expensive vehicles, such as trucking fleets, and protection for corporate offices and facilities.”

However, as with other sections of the insurance industry, the government is keen to promote reinsurance for major projects in the natural resources and infrastructure sectors. Speaking in August 2017 at the inauguration of Ghana Reinsurance’s new board, Abena Osei Asare, deputy minister of finance and economic planning, said that the firm required $53m in capital in order to compete globally in the oil and gas and construction sectors, and urged members to help acquire new funds. The company is already a growing regional player, sourcing around one-third of its premiums internationally, and has a strong presence in Kenya and Cameroon.

Some local firms, however, believe the local protection rules inhibit healthy competition in the market. With companies guaranteed an allocation of reinsurance premiums in accordance with their total capital, there is little incentive to invest in specialisation or develop new client relations.

“I think the regulators need to define more clearly what is meant by local retention,” Lartey told OBG. “Dealing with other companies and building relationships and alliances is part of the insurance business, but the current legislation forces firms to do business with their own competitors. There are companies who are inactive in developing or marketing, but receive clients because local content protection demands they receive a share of the reinsurance business.”

As with many of the challenges faced by the Ghanaian insurance industry, this problem could be addressed in part by the consolidation of the market through higher capital requirements (see analysis).

Micro-Insurance

While the country’s insurance companies face tough competition to win lucrative corporate and upper-income clients, there is a significant evolution occurring in other brackets.

Ghana is a regional leader in terms of the uptake of micro-insurance, a product range marketed to small businesses and low-income families. A large proportion of premiums for this market are sold through mobile phone operators, with a combined 2.7m policyholders registered on the three major networks by June 2015, according to a study by the NIC and German development agency GIZ (see analysis).

The products are also sold through rural banks, post offices and government outreach programmes. One example, the Fisherman Life Insurance Scheme – launched in January 2016 by the Ministry of Fisheries and Aquaculture Development and local firm Star Micro-Insurance – aims to provide life and equipment and tools coverage for an estimated 200,000 individuals upon completion. In doing so, Star Micro-Insurance aims to grow its client base from around 1m in August 2017 to 1.5m by the end of 2018.

Although mobile insurance is the primary distribution channel for micro-insurance, there is evidence that growth of this product line has spurred consumer education more generally, as well as boosted sales of micro-insurance sold through other channels.

BIMA, who partners with Tigo on mobile insurance, has since developed new products sold directly to middle- and low-income Ghanaians. Russell Haresign, country manager of BIMA, told OBG, “We have proven that you do not need mobile technology to spread micro-insurance. If you create the right policies at the right price point, you will find there is demand from the informal sector,” he added.

Training & Education

The entrance into non-traditional areas of business will necessitate greater investment in human resources from companies.

“The development of the Ghanaian economy will require more underwriters and policy experts with more skills than previously,” Addo told OBG. “It’s not just motor and property anymore. The oil and gas sector is still very new in Ghana, and the insurance companies are still learning. We’ve built capacity through training organised by business associations and the regulator, but there is still a lot to do.”

One available resource is the Ghana Insurance College. Established in 2006 with the goal of educating and training the country’s insurance professionals, the school offers short courses in a wide variety of areas such as auto, bond and marketing; associate programmes in five areas, including reinsurance, claims and risk management; and a diploma in insurance. With underwriting among the technical skill sets in high demand in the local insurance market, the Ghana Insurance College could play a role in the ongoing specialisation in the sector Additionally, the Insurance Institute of Ghana (IIG), an association of industry professionals, has taken steps to improve standards, including developing guidelines and frameworks for everything from customer service to ethical behaviour.

However, some current regulations reduce the incentive for investment in training, according to Lartey. “Under the previous government, there were many seminars and training programmes related to insuring the oil and gas segment, but that knowledge has remained in the Ghana Oil and Gas Insurance Pool (GOGIP) and has not extended to companies,” he told OBG. “If the government were to liberalise the writing of oil insurance and dissolve the GOGIP, then we could build proper capacity in the sector. Regulation would have to be strengthened for firms specialised in the hydrocarbons segment.”

The GOGIP, formed in 2011 after the discovery fossil fuel in the country, is made up of general insurance companies in the segment and endorsed by the regulator. Given the combination of market fragmentation and local content rules, the GOGIP is designed to create shared capacity to handle and disseminate insurance risks, as well as provide advice and technical support for matters related to risk management, and the insurance of oil and gas.

Improving Consumer Awareness

As well as training underwriters and brokers, there is a wider need to improve education and awareness about insurance among potential clients. While micro-insurance may be finding ways to connect with the informal sector, there are still large segments of the Ghanaian population that remain uninsured.

“The industry has great potential, but something needs to be done on the education front to increase penetration, which is at risk of falling below 1% of GDP,” KEK’s Dughan told OBG. “The middle class is growing and they have more disposable income, which could be invested in insurance if they had the right education about its importance and benefits. In the meantime, companies should also be working to provide more competitively priced policies and products to attract low-income customers.”

Claims Confidence

An additional impediment identified by the NIC is lack of client trust, which is fuelled by unsatisfactory claims management. In the life segment, the number of customer complaints lodged with the NIC increased from 67 in 2012 to 327 in 2014, but then declined to 222 over the course of 2015. In the non-life segment, however, complaints increased from 165 in 2012, to 193 in 2014 and 217 in 2015. In response, in August 2017 the IIG launched a new initiative to improve professionalism by developing a framework for companies focused on customer service, ethical conduct, qualifications and continuing professional development.

Gideon Amenyedor, vice-president of the IIG, explained to local media in August 2017 that breach of trust might be caused by uncertainty or ambiguity in the choice of wording, lack of clarity in policy language and exclusions in the policy not stated. “The business of insurance, perhaps more than any other, is thus based on trust and commitment. The contract between the insurer and the insured is a contract of utmost good faith; and requires honesty and trust from both parties,” Amenyedor said.

Outlook

With both the regulator and the government pushing towards an ambitious target of 10% penetration, the coming years should see the insurance market become a larger and more central part of the Ghanaian economy.

The increase in minimum capital requirements for the insurance industry, proposed by the new commissioner of the NIC,appears sufficiently steep to force a consolidation of the sector, a process that will lead to more sustainable profits and greater specialisation in a market that is witnessing increased competition.