The insurance industry is a very critical sector in the nation’s socio-economic development, and therefore pledges the government’s support to the insurance industry in particular and the financial services sector as a whole. Conservative figures put the rate of insurance penetration in Ghana at about 1%, compared to South Africa with a penetration of 14.8%, Namibia with 7.3% and Kenya with 2.8%, even though on the whole, the continent’s insurance market contributed less than 2% of the world’s total insurance premiums in 2011 and 2012. Here in Ghana, the low penetration rate is an indication that as a country, we are not reaping the full benefits from the insurance sector. When fully activated, I have no doubt that the sector has the capacity to rival and maybe even surpass the activities of the banking and manufacturing sectors in terms of contributing to sustainable economic development.

As a government, we are interested in seeing both life and non-life sides of the industry grow for the benefit of individual and corporate clients. The nation needs a well-functioning and dependable insurance industry for sustainable socio-economic development. Foreign investors need this as much as local investors and businesses. The insurance industry in Ghana has been too conservative and not proactive. It is time the industry takes advantage of available technology and deploys robust information technology infrastructure to improve the efficiency and effectiveness of its service delivery.

Now it is necessary that the industry adapt its products and services to the needs, circumstances and aspirations of our people. There is no doubt at all that the life insurance sector can and must contribute to Ghana’s economic development. Due to the long-term nature of life insurance liabilities, it is an effective tool for mobilising long-term funds through the prudent investment of life premiums. A well-organised and vibrant life insurance industry in Ghana, when combined with the new pension industry, can provide a reliable source of funds for infrastructure development, thus reducing our reliance on foreign bilateral and multilateral sources.

Of course, these benefits are only fully realised in markets where insurance and pension service providers invest a substantial portion of their funds in long-term instruments and capital markets, notwithstanding the attractions of playing in the short-term market. Therefore, to provide maximum benefits to the economy, it is imperative that insurance and pension service providers focus on institutional investors providing capital to infrastructure and other long-term investments.

Despite some recent hiccups, the prospects for our economy look bright. Though the value of the cedi has not been very stable, we have kept inflation significantly under control. Our investment in infrastructure will continue to increase significantly, especially considering the projects and programmes we have lined up with the necessary funding and support from our foreign partners and not forgetting the revenues from our newfound oil and gas resources. The insurance sector is a major beneficiary of the opportunities that come along with the growth in economic activities.

There are bound to be new demands that will call for a paradigm shift in the way we do things. As an industry, more must be done towards revamping products and services. It is prudent for organisations expecting major changes in the national economy to rethink their future strategies and undertake major transformations of the industry’s business model.

In that respect that government will continue to provide an effective and efficient legal and regulatory environment to ensure a thriving financial sector. We are aware that the National Insurance Commission (NIC) has lined up several policy interventions, including the crafting of a new insurance bill to make the regulatory environment more conducive and bring it in line with best practices world-wide. Capital has a major role to play in a successful insurance industry able to underwrite high value risks and retain substantial portions in the local economy. The industry must support plans to raise the start-up minimum capital of insurance companies coupled with risk-based supervision by the NIC.