The Chief Executive Officer of Africa Sureties & Insurance Advisory (ASIAC), Mr. Solomon Lartey, has said that the new Insurance bill approved by parliament will increase insurance penetration and also place the insurance industry in good stead to handle insurance needs of the African Continental Free Trade Agreement/Area (AfCFTA).
In an exclusive interview with the B&FT, Mr. Lartey said provisions like the Insurance Education Fund, the Agricultural Insurance Fund and the introduction of some compulsory insurances are plausible and will go a long way to enhance the image of Ghana’s insurance industry and increase insurance penetration in the country, which is still below 2%.
The provision for minimum premium rates should in part reduce under-cutting and provide realistic premiums to insurers, which will reduce the expense ratios of insurers and enhance profitability. He said the regulator, National Insurance Commission (NIC), has clear guidelines on the use of premium receipts by insurers, and therefore any increases in incomes or turnover by insurers will in turn be channeled to strengthening the industry and lead to better solutions and speedy claims settlement.
The NIC has recently increased the minimum capital requirement of insurance companies from GH¢15million to GH¢50million. This will take effect from January, 2022.
The 2020 Insurance bill was prepared by the National Insurance Commission of Ghana under the auspices of the Ministry of Finance, to repeal by way of re-enactment the Insurance Act, 2006 (Act 724) to establish the National Insurance Commission to provide for the regulation and supervision of the insurance market.
It was expected that under the new Insurance bill, Workmen’s Compensation, Group Life, Public Liability, Professional Indemnity, Insurance of Commercial Buildings and Marine Insurance would be made compulsory in Ghana. He said: “I am informed that not all the expected compulsory insurances were granted, but the details of which insurances had become compulsory in Ghana will be announced soon by the NIC”.
The CEO of Africa Sureties & Insurance Advisory Company (ASIAC) Limited said the 2020 Insurance bill will strengthen the regulator’s hand and sanitise the industry- – adding that this, coupled with good corporate governance and capitalisation, would benchmark the Ghanaian Insurance Industry with International best practice and ready itself for demands of the African Continental Free Trade Agreement (AfCFTA).
He said one very exciting feature of the 2020 bill is the licencing of innovative insurers, which is designed to promote innovation, niche players and increase insurance penetration in Ghana – adding that ASIAC was established to provide insurance-based credit risks and sureties’ management solutions which help reduce the cost of borrowing and increase access to loans in Ghana.
Mr. Lartey commended Mr. Justice Ofori and his team at the NIC for such a bold initiative, adding that, “What’s left is for the NIC to now issue directives and guidelines regarding implementation of the new provisions under the 2020 Insurance bill”.
The ASIAC boss explained that local insurance and reinsurance companies must now brace themselves to provide international level solutions beyond the borders of Ghana: “By so doing, they will be able to benefit immensely from the trillion-dollar investment framework of the AfCFTA” – adding that the infrastructure shortfall alone needed to make AfCFTA successful as estimated by the African Development Bank (AfDB) is almost two trillion dollars (US$2trillion) over a ten-year period.