While the authorities have prioritised enhancing insurance penetration in Ghana, uptake remains stubbornly low. Indeed, insurance penetration measured as gross premium as a share of GDP hovered around 1% between 2016 and 2022, according to the National Insurance Commission (NIC). By ways of regional comparison, in 2021 South Africa had the highest penetration rate on the continent, at 17%, followed by Namibia (6.3%). However, other indicators have shown progress: insurance coverage – or the percentage of the population that has insurance services – reached 44.6% in 2022. Meanwhile, life insurance penetration, ticked upwards from 29% in 2015 to 31% in 2022; measured as a proportion of the working population, this figure rose to 45%.
Targeted Regulations
The Insurance Act of 2021 was implemented to address low penetration, as well as modernise the sector. The legislation introduced a special licence for companies with new or innovative products or services, in a move aimed to enhance accessibility among the unbanked. It also introduced three new compulsory lines of coverage: public liability, professional indemnity and marine cargo insurance. Previously, only fire and auto insurance were required. By adding additional lines of compulsory coverage, the authorities are hoping to bring additional entities and individuals who are currently uninsured into the fold.
The act built on the success of the Motor Insurance Database (MID) created to reduce the incidence of fake motor insurance and increase levels of compliance. The platform allows police to verify the authenticity of motor insurance plans and gives insurers the ability to underwrite motor policies electronically. Between its launch in 2020 and 2023, more than 4.4m insurance stickers were issued.
Awareness
While the legislation makes important steps towards strengthening the sector, awareness remains a challenge. “It is usually relatively easy to convince institutions to purchase insurance plans when required by law, as there are assets and investment involved,” Kukie Essel-Komsoon, assistant general manager of KEK Insurance Brokers, told OBG. “However, this is more difficult when it comes to the general public, as there remains a lack of understanding about the importance of being insured.”
According to the “Public Perception, Awareness and Confidence of Insurance” survey of over 1000 respondents across Ghana published by the NIC in 2021, while 96% of respondents had heard the term insurance and 87% confirmed that they understood the term, 25% reported having a good knowledge of insurance. In terms of the perception of insurance in the country, 61.6% of respondents understood insurance to be a safety mechanism against unforeseeable future risks. Around 41.4% of respondents agreed that insurance is “appealing”, while 34% did not agree with that assessment. Respondents’ sex, age and location did not affect their perception of insurance, but the study found that age affected confidence in coverage: respondents under the age of 30 were more confident in terms of trust, protection and ease than those over the age of 30.
To help address this, the NIC is implementing an awareness drive to enhance the public’s understanding and appreciation of insurance. In addition to the NIC’s insurance education programmes, private brokerages have begun to provide free online webinars for the public about the benefits of insurance. German development agency GIZ has also partnered with public and private institutions to help spread awareness about insurance. To help increase penetration and foster growth in the insurance technology (insurtech) space, in 2022 GIZ, in partnership with the NIC, launched the Innolab Insurtech Accelerator Programme, bringing together various insurtech players for mentoring and coaching, as well as fostering innovative solutions to the industry’s challenges.
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