Ghana is faced with four main challenges according to the UK-based EIU, namely: easing the effects of rising inflation on domestic consumers and productive sectors; addressing deep fiscal imbalances; securing external debt restructuring: and locking in an IMF deal. The CIIG believes Ghana insurers can cope!
The Economist Intelligence Unit (EU) in its April 2023 Country Report has forecast approval of Ghana’s IMF deal by md-2023. This is due to the need for Ghana to agree on debt restructuring with its external creditors before the International Monetary Fund (IMF) board can sign off on the US$3bn extended credit facility (ECF), which is aimed at restoring credibility among investors, building reserve buffers and improving fiscal and debt sustainability in Ghana. In the light of all these challenges, insurance companies have remained resilient and continue to discharge their obligations to the public and businesses.
Insurance is designed to protect society’s assets, liabilities arising from the use of assets, lives (with regard to death, illnesses and injury) and the quality of life at old age (pensions), businesses and the continuity and sustainability of business in the event of disaster. Insurance companies have braved the storm and continue to do so, while the regulator is also helping by introducing regulatory forbearances says CG president and CEO of ASIAC insurance Solomon Lartey. He said various sectors of the insurance industry in Ghana – Health Life, Non-life and Pensions – have so far held their ground in the midst of an economic crisis
He however prays the meltdown does not remain so long as to take away the gains made so far in terms of insurance coverage and penetration.
Regulatory forbearances to enhance claims settlement – NIC
The NIC has issued regulatory forbearances and guidelines for insurers, reinsurers and brokers in light of the Domestic Debt Exchange Programme (DDEP) and its possible impact on insurance business in Ghana.
With effect from January 1, 2023, a moratorium has been placed on Minimum Capital Requirements (MCR) and Capital Adequacy Ratios (CAR) for industry players. This also means that the Asset-Risk Discount will now be relaxed such that more physical assets can now be included in accounting for the capital adequacy of insurers – releasing more cash especially for claims settlement and other pressing operational activities.
Claims settlement timelines have also been relaxed and extended, such that insurers will now have more time to settle legitimate claims. Irrespective of the type of product, the maximum period within which all processes leading to the payment of claims should be completed has been increased from 4 weeks to 8 weeks. Up to 50% of statutory deposits will also be released to insurers for settlement of claims.
The NIC has also granted an up to 40% reduction in product approval fees for products that are re-packaged and re-priced as a result of the DDEP. This will be for a one (1) year period (January to December 2023). According to the NIC, separate directives will be issued for the management of life policies and benefits.
