The Managing Director of Activa International Insurance Company, Mr. Solomon Lartey, has urged government to sign onto the African Trade Insurance (ATI) initiative that will enable Ghanaian Insurance companies offer guarantees backed by the ATI to local firms.
The ATI offers specialized insurance products designed to promote and protect investments in Africa. It offers a full suite of products to protect against political risks, which covers expropriation of assets, currency inconvertibility or transfer restrictions, and trade embargoes.
ATI also offers protection against non-payment risks, wrongful calls on a firm’s performance bond and damage to a firm’s property or loss of revenue from business interruption due to politically motivated violence or terrorism and sabotage events. It also offers surety bonds and trade credit insurances.
To become members of ATI, government must sign the ATI Treaty, Participation Agreement and Host County Agreement, which must be ratified by parliament.
Mr. Lartey made the call at the just-ended 7th Ghana Economic Forum (GEF), organised by the Business and Financial Times Group in Accra.
He said parliamentary approval of the ATI would go a long way to enhance Ghana’s position as a preferred investment destination and also promote local business growth, adding that some of Ghana’s neighbours who are competing for the attention of global investments have already signed on to it.
Speaking on the topic: ‘Building a competitive economy for sustainable growth: The role of insurance’ Mr. Lartey said the contribution of insurance to the Ghanaian economy is always understated, as the qualitative benefits far outweigh the quantitative, especially when we only consider the value of insurance to the economy in terms of penetration.
He said the Ghanaian insurance industry has grown steadily at about 25% annually over the last 3 years with insurance coverage hovering around 30 percent.
Mr. Lartey said the main reason for the fall in penetration– the ratio of retained insurance premiums to GDP, which has fallen from 1.7% in 2016 to 1.2% in 2017– is oil which has led to a significant increase in the nation’s GDP.
Mr. Lartey added that he believes the National Insurance Commission would increase minimum Capital requirement for Insurance companies in the near future, however, this must be done in a graduated format, such that insurance companies which desire to write risks with minimum exposures which would not require high capital outlays would have lower capital requirements compared to those exposed to large corporate risks which should be required to set aside high capital.
By so doing, he argued, insurance companies would fall into different licensing categories depending on their appetite and the nature of risks they intend to carry.
The session, moderated by Rev. Asante Ahenkorah-Marfo, President of CIIG, also saw presentations by Mr. Faris Elias Attrickie, General Manager, Operations at SIC.
Mr. Faris also called on Government to help create strong insurance companies by significantly reviewing the minimum capital requirement and encourage the smaller ones who cannot manage and handle huge premiums and risks due to lack of financial capacity to merge. This will reduce the undercutting of premiums which consequently reduce Insurance penetration.