- industry set to increase contribution to GDP by 3%
The insurance sector’s contribution to Gross Domestic Product (GDP) could increase by about 3 percent in the next ten years, given patronage of microinsurance products by the informal sector.
Insurance contribution to national output is barely one percent at the moment, but President of Insurance Brokers’ Association of Ghana (IBAG), Shaibu Ali, is confident that with microinsurance products gaining traction among informal sector workers and the rural population, the industry’s contribution could rise to around three percent in the coming ten years.
“We need to move away from over-concentration on the big-ticket businesses and also focus on micro-insurance. If you go to the rural areas, so many people do not even know what insurance is.
“So, for us as insurance people, we should stop chasing the city-dwellers who know about insurance and are already buying insurance, and tap into the huge uninsured rural population by developing products that are relevant to them,” he noted.
Delving into what makes it challenging for informal sector workers to sign onto insurance products, Mr. Ali cited lack or irregular income as a contributory factor.
He said one of the key differences between Ghana and countries with high insurance penetration rates is that in those countries, all insurance packages – from traditional to all others – have been merged, unlike locally where everything is fragmented.
“One major hindrance is lack of disposable income. If they do not have disposable income, they will not think about acquiring insurance.
“The issue with penetration is that some countries having higher penetration numbers – like South Africa and Morocco – have traditional insurance, health insurance and pensions. All these are put together as insurance and the percentage is high. But in Ghana, health insurance is standing alone, pension is standing alone and traditional insurance is standing alone; automatically, the percentage is low.
“So, one of the ways we can drive the numbers up is by putting these together. But until then, we can say that, hopefully, by the next 10 years if we are able to do 2.5 to 3 percent, it should be an achievement,” he said.
Mr. Ali further emphasised microinsurance products as those with the biggest potential to help increase penetration, given the economy’s informal nature.
He said: “With microinsurance, you are basically looking at health insurance – whereby some telcos will say pay GH₵35 and get a health cover or life insurance, or pay like GH₵2 or GH₵5 and you will get health insurance at a certain threshold”.
Mr. Shaibu also reiterated the need for everyone to sign onto one form of insurance or another, in order to provide protection in times of need. “People should try and take advantage of insurance in any form to cover whatever operations they do. Because in times of a loss, you can only benefit, not lose.”
