The rate of insurance penetration, defined as gross premium over Gross Domestic Product (GDP) has remained relatively stable at 1% over the last five years, according to the Bank of Ghana’s Financial Stability Review 2020 report.

Insurance penetration in the near-to-medium term is however expected to increase on the back of the passage of the new Insurance Bill, recapitalization of the insurance sector, continuous product innovation, and increased public education.

The report however said the on-going recapitalization of the insurance industry is expected to further improve retention of insurance business in the country.

In the year under review, non-life insurers retained 66% of premiums, as compared to 84% by life insurers. The lower retention ratio of non-life insurers was due to the nature of the risks underwritten and the high gross insurance risk ratio.

At the end-December 2020, overseas reinsurance premium transfers, amounting to approximately ¢229 million, was approved by the NIC.

Meanwhile, gross premiums within the insurance industry grew by 20.6% in the review year.

Gross premium at the end of December 2020 stood at ¢4.20 billion as compared to ¢3.49 billion at the end of December 2019.

The report said the steady growth in gross premiums was attributable to the rollout of various alternative distribution channels on digital platforms and the introduction of a digital platform (Motor Insurance Database – MID) by the NIC in January, 2020.

The MID, introduced in the review year, ensured that sales of insurance policies were not compromised during the pandemic and that premiums generated from motor insurance, were commensurate with the risks associated with the asset insured, it explained.