Quality Insurance Company has announced a strong financial result despite the extremely competitive and dynamic business environment at its 25th Annual General Meeting held in Accra last week.
Mr. Jacob Kwame Kholi, Chairman of the Board of Directors of Quality Insurance, said the company also set new records – which is the best gift to mark the celebration of 25 years since its formation. He also indicated that the Board of Directors, management and staff will continue to review and aggressively implement a strategic plan, ending financial year 2025, to deliver even better performance in the years ahead.
- Economic Environment
He pointed out that the macro-economic environment, though it improved in 2021 relative to the prior year, remained challenging for the insurance industry due to the slow recovery of businesses. Gross Domestic Product (GDP) growth was 5.4% compared to 0.5% in 2020 with inflation ending the year at 12.6% from 10.4% in 2020, according to the Ghana Statistical Service (GSS) data. Per the Bank of Ghana (BoG) data, the year-end 2021 exchange rate was GH¢6.0061 to US$1 compared to GH¢5.76 to US$1 at the end of 2020. The BoG’s policy rate ended the year 2021 at 14.5% after dipping to 13.5% in the course of the year from 14.5% at the end of 2020. The Ghana Reference Rate (GRR) was 13.89% at the end of 2021, down from 14.77% at the end of 2020.
- Regulatory Review
A new insurance Act, 2021 (Act 1061) was passed during the year under review to help facilitate the growth of the industry. Five key objectives of the new Insurance Act outlined by the regulator are as follows:
- strengthening the regulator for effective supervision,
- improving access to insurance for the low-income and informal sector operators,
- improving corporate governance practices within the Insurance Industry,
- ensuring compliance with international regulatory and supervisory standards to increase the competitiveness of Ghana’s Insurance Industry, and
- increasing the insurance penetration rate
- With regard to the new minimum capital levels, the timeline for industry actors to comply ended on 31 December 2021. Your company has met this new minimum capital requirement. It is expected that the Insurance Regulator will in the course of the year (2022) act against companies that were unable to meet this capital requirement.
- Financial Performance
Your Company attained historical highs in terms of Gross Written Premium and Profit after Tax in the year under review, despite the extremely competitive and dynamic business environment. It recorded a gross premium of GH¢63,045,236, which was a growth of 37% compared to financial year 2020. Profit After Tax was GH¢I 0,490,741 – representing a growth of 122.57% over 2020 financial year. The net worth of your Company at December 31, 2021 was GH¢54,133,519 with a total asset base standing at GH¢86,797,190. The solvency ratio of the company remains very strong at 249.76% compared with the regulatory minimum of 150%.
- Dividend
We recognise the sacrifices made by our dear shareholders over the years to facilitate meeting the minimum capital threshold. The directors were not able to propose the payment of dividends over the last couple of years. Having now met the minimum capital threshold, the Board deems it appropriate to propose a dividend to coincide with your company’s 25 years of operation. Accordingly, the Board proposes a dividend per share of GH¢O.OI 704 amounting to GH¢1,984,987 in total.
- Operation &Outlook
Your company has continued to build out and maintain a strong network of branch/link offices, online portals, various distribution channels, a strong sales force and is now present in thirteen out of the country’s sixteen regions. The Company also has in place a competent workforce of sixty-seven employees, with an intensive training programme in place to make them relevant and dynamic to meet the industry’s changing demands. New agents are periodically recruited and trained to facilitate the sourcing of business.
Market Penetration
An analysis of your company’s various general insurance product lines reveals significant potential for more growth, as insurance penetration in Ghana is much lower than global and African benchmarks. As of fiscal year 2021, only 34% of Ghanaians have a home insurance policy. Retail property insurance premiums do not account for even 5% of your Company’s written premiums. The scenario is similar when one looks at the corporate-focused lines such as engineering, fire and marine insurance, with penetration estimated to be less than 20% of gross written premiums.
In 2022, the company has therefore established a non-motor unit to help increase premiums from retail property insurance. The low penetration levels indicate great opportunity for growth of your Company and the general insurance industry as a whole. Management will continue to review the company’s product portfolio with a view to keeping them relevant, as well as introducing innovative new products to meet the changing customer needs.
Improving Customer Awareness
The customer awareness levels remain very low, and need to be improved for balanced and sustainable growth of the insurance industry. Your Company has constantly focused on the need to increase insurance penetration and awareness in the country to drive inclusive growth. It has therefore continued to leverage technology and digitisation to enhance its sales and marketing efforts.
Increased social media presence, specifically creating insurance education content for YouTube, use of alternative distribution channels, digital marketing strategy, online portals and increasing number of insurance agents and other intermediaries have combined to enhance the Company’s reach and presence, and improve insurance awareness among the public. The company’s efforts are complementary to the Insurance regulator’s pro-industry initiatives to increase insurance penetration in Ghana.
Information Technology Enhancements
In the last fiscal year, your Company issued 46,504 policies and processed 1,891 claims. Steps have been initiated to enhance the speedier settlement of claims and make claim settlements hassle-free. The company’s Enterprise Risk Management and Information Technology set-up has been enhanced with the procurement of a world-leading new operating software called Premia.
