Emerging Trends in Ghanaian Insurance Market—An Overview
According to a report by a UK based IT Solutions, Ghana has one of the fastest growing insurance industries in the world. The industry is expected to grow at a forecast-period CAGR of 23.0% by 2018, supported by an increase in oil and gas production, the implementation of mandatory fire insurance for commercial buildings, and an increase in gold production. With the separation of Life and Non-Life insurance markets, the economy is focusing on strengthening both of these sectors.
With the recent developments in Ghana including rising public awareness about insurance benefits, advancements in the regulatory framework, expansion of the middle class population and acceptance of mobile insurance products, the Ghanaian insurance industry is driving towards progressive growth. Rapid growth in the recent past reveals the huge potential to grow and can contribute enormously in the national development. Some veterans in the field believe that the innovative sound methodologies in the insurance industry can revolutionize the industry and can even result in twofold growth.
The emerging technologies, upcoming developments in terms of client segments and the overall economic expansion in the continent has forced regional insurers to rethink and has forced the global players to look at Ghana as a strategic market for growth.
Due to the budding mobile insurance sector, a sturdy rise has been seen in the insurance sales owing to the trust of the general public in the mobile operators. With the ever so increasing number of MNOs (Mobile Number Operators), the insurers have been given a run for their money. With the advent of providing insurance schemes by the MNOs, people’s attention has been drifting away from the insurers. The insurance industry is looking at forming alliances between the masses and the network providers for staying relevant.
Also, bancassurance is another booming business of the Insurance sector in Ghana. The insurers and banks are actively teaming up in partnerships to offer a wide range of competitive and innovative products. Bancassurance has always been considered optimistic opportunity when it comes to helping the insurance industry owing to customers’ trust on banks and their competitive marketing strategies. Banking institutions have been performing well in selling insurance that traditional brokers are starting to feel the pressure. But even after positive results of market calculations, the insurance industry is stagnant. Edem Dora Agbezuge, Relationship Manager, Barclays Bank Ghana Limited, will be sharing her insights on innovative approaches of the banks and how they can attract bankers towards selling the insurance products. A growing number of insurers and banks have joined forces to offer policies through banking windows; more than 20 banks have already been granted licences to offer bancassurance products.
Another very important part of this sector is Microinsurance which has received an increased attention in the recent years. It has been considered as one of the most viable ‘alternative financial product’ that is delivered to the unserved and underserved market and the most vulnerable and marginalised sector. The affordability of MI products, ease of purchase and high speed of claim settlement are among the positive considerations why MI is a viable business line. AdjoaBoateng, Regional Director for MicroEnsure Holdings, will be joining us to share her in depth industry expertise with the attending audience about the prospects and shedding light on the current developments in the sector, the need for tremendous focus shift to come up with new, competitive and innovative business models for driving towards growth and sustainability, and to make people understand the importance of and create awareness about the concept of microinsurance.
The National Insurance commission noted with concern that some insurance companies have resorted to unconventional practices by reporting huge amounts of outstanding premiums while at the same time making equally large amounts of provision for bad debts without considerable subsequent recoveries. This provoked the need for a regulatory framework that could put a halt over these ill practices. The No Premium, No Cover Policy, since its implementation, has been helping in building and sustaining a more viable and robust insurance sector that can rank and effectively compete with counterparts globally. Future projections have stated that the Ghanaian Insurance market will be better placed and empowered to secure their rightful ranking and recognition within the Ghanaian economy in terms of contribution to GDP, employment opportunities, investment outlets and investable fund channels.
The NIC Non-life insurance sector premium volumes are expected to increase by 2.2 per cent in real terms in 2017 and by 3 per cent in 2018 due to emerging market growth. Nearly half of non-life covers are generated from automotive insurance. Almost another quarter comes from health. Given the relative prosperity in Ghana, the insurance penetration in the non-life sector is improving, suggesting major opportunity for expansion.
On the other hand, the NIC seemed satisfied with the average annual growth rate of 30% of life insurance in Ghana as well as the change in non-life to life premium ratio from 60%: 40% in 2010 to 53%:47% in 2014. It has stressed on the need for insurers and other organizations to protect their most important resource, which is human capital, through interventions such as Group Life Insurance.
It is considered that the life industry depends on the economic growth in Ghana as it is expected that the increased wealth would trigger demand for life products. Products are typically centred on group life covers. The Group Life Insurance is a wonderful opportunity to increase insurance penetration in Ghana, mainly because a single employer can purchase a policy cover for a number of employees. The growth in the life and non-life sectors can be witnessed through the emergence of 23 and 26 in the sectors, respectively.
Agro Insurance, is another much talked about subject. Agriculture is a key sector of Ghana’s economy, accounting for 23% of the national GDP. Farmers with insurance invest more in agricultural inputs, particularly in chemicals, land preparation, and hired labour. The cultivation expenditures go up to more than GHC 250 (US$188) higher for farmers with insurance, representing a 33% increase relative to the comparison group. About 76% of farmers were willing to adopt agriculture insurance and secure their investments. Thus, showing the growing need to develop strategic and innovative approaches in agricultural insurance for farmers to get their compensation as well as counter the unavoidable phenomenon.
Larger and complex risks have arisen, requiring insurance protection and creating product development opportunities. The broader African middle class population is eager to protect its valuables and make future provisions for the same. Plentiful resources, a juvenile and growing population and the need for investments in infrastructure, energy, health, education and other basic facilities drive the demand for insurance protection and reinsurance cessions. Cyber risk is among the top ten risks facing companies today. And not surprisingly, options for managing and mitigating various cyber risks are currently an ongoing topic of discussion. So far, however, most of the focus has been from an insurance perspective. But reinsurance clearly has a significant part to play in confronting this evolving and escalating risk.
In line with African and Ghanaian insurance sector developments, Trade Essential is organizing a conference, Ghana Insurance 2017, scheduled 28-29 March, 2017 in Accra, Ghana. The conference aims to highlight the most recent Opportunities and Challenges including—Strategies to Increase Agricultural Insurance Productivity, Bancassurance, Microinsurance, Cyber Insurance & Reinsurance and Climatic changes affecting the insurance world, Ghana Fire insurance Enforcement, Deposit Insurance Law and much more.
Ghana Insurance 2017conference will offer a platform for policy makers, regulators, industry executives and researchers from the industry to keep them up-to-date with the latest industry developments, marketing strategies, and product innovations relevant for the Ghana Insurance sector. The conference is attracting many regional and international participants to gain insights into the growth prospects for coming years.
For more information visit: http://tradeessential.com/events/ghana-insurance-2017/