Affordable coverage: Micro-insurance schemes are reaching new pockets of the population


With insurance penetration hovering below the 2% mark, authorities in Ghana have been attempting to increase awareness and the percentage of the population that are covered by insurance schemes. Many of these efforts have been directed towards driving the adoption of micro-insurance products, as the government and underwriters see the potential of a largely undeveloped market. Educational programmes and innovative distribution arrangements involving mobile operators are helping to bridge the gap and reach larger swathes of the population.

Protection schemes for low-income earners have been gaining a stronger footing in recent years. According to the “Landscape of Micro-insurance in Ghana 2015”, published by the National Insurance Commission (NIC) and GIZ, the German development organisation, micro-insurance gross written premiums grew 185% between 2012 and 2014 to GHS13.3m ($3.4m). The study found that as of 2014 around 7. ( 5m lives or properties were already covered by some sort of micro-insurance, up from 1.8m in 2012.

This growth in micro-insurance premiums can be partly explained by Ghana’s economic conditions. GDP per capita expanded from $264.70 in 2000 to $1827.10 in 2013, despite a decrease to $1381.40 in 2015. However, low incomes outprice a large proportion of Ghanaians from traditional insurance schemes. According to the NIC and GIZ, the average micro-insurance customers are self-employed women between the ages of 30 and 39. The report also established that over 57% of micro-insurance customers earned GHS600 ($155) or less per month.

Setting The Stage

A clear regulatory framework is also a determining factor. In 2013 the NIC developed the micro-insurance conduct rules to serve as a framework for the segment. It states clear guidelines. First, the NIC must approve all micro-insurance contracts before the schemes can be sold to consumers. The rules also established parameters for micro-insurance products, which need to be marketed to low-income populations, but also made affordable and accessible to these customer groups.

Education has been a challenging aspect of the expansion efforts, but one that is being dealt with through partnerships between insurance authorities, the private sector and development institutions. These have targeted the supply as well as the demand side. In July 2016, for example, the Ghana Insurers Association (GIA) partnered with GIZ and US-based Milliman to run a training programme to help health underwriters determine pricing for micro-insurance health products. The GIA and GIZ have also joined forces with the NIC to produce educational films about micro-insurance.

Increasing Interest

Despite the expansion, micro-insurance represents just 2.7% of total gross written premiums in the insurance sector in the country, pointing both to the segment’s growth potential, but also its constraints. This has not deterred the number of micro-insurance providers entering the segment. As of 2015, according to the NIC and GIZ report, 13 insurance providers offered micro-insurance products, out of a total of 47 underwriters in the market. This is a slight increase on the 2012 figures, when there were 11 companies offering insurance schemes for low-income Ghanaians. Micro-insurance offers marketed by Ghanaian underwriters have also been growing, with the number of products expanding from 11 in 2009 to as many as 27 by 2014, the majority of which are geared towards the life segment. In the 2015 report, 20 out of the 27 insurance products surveyed were life products, covering savings, term-life and funeral expenses.

Insuring Yields

Agricultural micro-insurance schemes have proven to be a useful entry point for new customers into insurance practices. Established in 2011 by 19 non-life underwriters, the Ghana Agricultural Insurance Pool has been a focal point for agricultural micro-insurance provision. The pool is managed under the GIA. Its main scheme, the drought index insurance product, supports farmers against weather-inflicted crop losses through the measurement of rainfall patterns using weather stations managed by the Ghana Meteorological Agency that are spread around rural areas.

The initiative was developed by a handful of sector stakeholders, including the NIC, the GIA and GIZ, as well as the Ministry of Food and Agriculture, and the Ministry of Finance and Economic Planning.

As of 2015 the minimum premium payment for beneficiaries of the protection scheme was GHS4 ($1.03), for a minimum assured sum of GHS100 ($25.80), according to the NIC and GIZ report on micro-insurance in Ghana. Besides the low-entry cost, which is essential to secure the interest of small farmers, the product was also innovative for the underwriting companies, because as opposed to other agricultural insurance products, it uses the rainfall information from weather stations, relieving insurers of the need to survey individual crops to determine the damage.


The drought index insurance product saw its first pay-out in October 2012, when 136 farmers in the country’s Northern Region were compensated for agricultural losses due to adverse weather conditions, local media reported. Although the pay-out to farmers represented a proof of concept for agriculture micro-insurance products in rural Ghana, adoption patterns have been somewhat volatile. According to the NIC and GIZ, the number of policies for agriculture micro-insurance saw a reduction from 490 to 436 between 2012 and 2013. However, adoption rose exponentially the following year, reaching 2115 in 2014, a 385% increase. The report points out, however, that part of the challenge to establishing efficient micro-insurance products for the agriculture sector remain linked to the complexities of determining adequate pricing for policies.


Micro-insurance schemes have benefitted from partnerships between underwriters and players in other sectors. The main role has been taken on by telecoms operators, which have strengthened their offers with the inclusion of micro-insurance plans. The presence of mobile operators in the segment began in 2010, and the products distributed through their networks have expanded in variety. Three of Ghana’s mobile operators – MTN, Airtel and Tigo – offer micro-insurance schemes in conjunction with mobile communications packages. According to the “Landscape of Micro-insurance in Ghana 2015” report, mobile operators insured as many as 4.3m lives as of December 2014.

The development taking place in the segment is helping underwriters to cover a larger proportion of the population with affordable schemes. However, a strong combination of technology as well as face-to-face educational programmes will be essential to ensure that a growing number of low-income citizens and small businesses are adequately covered.