West African integration could help Ghana's insurers compete on a global scale

Established global insurers hold a number of advantages over their domestic counterparts. Most multinationals offer a wider array of products, can offer more complex insurance offerings, employ a larger workforce and hold a wider geographic presence granting them a broader skills base. For smaller players looking to compete on a regional or global scale, however, coming up with a sufficient capital base usually presents the single most limiting factor. Therefore, stakeholders are looking at building a regional network and encouraging consolidation to increase West African providers’ competitive edge.

Fragmented Market

In March 2018 the issue of capital base was taken up by President Nana Akufo-Addo at the 45th African Insurance Organisation in Accra, where he highlighted the small size of local providers as a key challenge facing the industry. “Individual companies are too small to shoulder the risks. Therefore... most of the business [is] going overseas. The Ghanaian insurance industry, for instance, can only absorb 3% of oil and gas risk, the rest is taken overseas.”

Insurance industry fragmentation also makes it difficult for the nation’s insurers to gain sufficient traction. As of the second quarter of 2018 Ghana’s three largest life insurers by market share, Enterprise Life Assurance Company, SIC Life Insurance Company and StarLife Assurance Company, claimed around 66% of the market by premium among them, according to the National Insurance Commission. The other 22 players in the life sector shared the remaining 34% of market premium, with 14 of them claiming less than 1%.

The non-life segment shows similar levels of fragmentation, with the three largest firms, Enterprise Insurance Company, SIC Insurance Company and Star Assurance Company, together accounting for just over 37.6% of non-life premium. Only four of the other 26 firms in the non-life arena claimed a share above 5%.

Long-term Remedy

While exact figures remain to be issued, proposed reform would see new capital requirements raised to between GHS30m ($6.5m) and GHS50m ($10.8m), possibly resulting in consolidation, as insurers combine balance sheets in order to comply with the regulation. This would be a welcome development, allowing domestic firms to accept bigger risks without undermining financial stability.

However, for many in the industry, the long-term solution lies in facilitating a West African network, through which regional firms could cooperate to distribute risk across their balance books. A regional network could also see firms merge completely to form new multinational firms with capital bases sufficient to take on the large-scale insurance demands being generated by the region’s growing economies.

Keeping It Regional

This is an idea shared by the West African Insurance Companies Association (WAICA), formed in 1973 to encourage the harmonisation of the region’s fledgling insurance industries. In 2011 WAICA Reinsurance (WAICA Re) was established as the region’s first reinsurance provider. Owned by insurance companies in the West African countries of Ghana, Liberia, Nigeria, Tunisia, Gambia and Sierra Leone, WAICA Re had an authorised share capital of $100m and a paid-up share capital of $65m in 2017, according to the latest data on their website. Ghanaian insurance companies accounted for the largest share of WAICA Re’s premium income by any one single country in 2017, at 22.57% of the total.

However, while West African reinsurance integration has proved successful, extending this trend to domestic insurance markets poses its issues. The real integration of regional insurance firms would involve harmonising the legislative regulations of each country, removing barriers to cross-border investments, as well as standardising the treatment of foreign investors across West Africa. Although somewhat challenging, implementing such reforms would likely prove beneficial to both the local and regional insurance industry’s ability to compete with established global players.


You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Ghana 2019

Insurance chapter from The Report: Ghana 2019

Previous article from this chapter and report
An analysis of Ghana’s pensions system
Next article from this chapter and report
Keli Gadzekpo, CEO, Enterprise Group : Interview
Cover of The Report: Ghana 2019

The Report

This article is from the Insurance chapter of The Report: Ghana 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart