Ghana’s insurance industry recorded a notable increase in per capita insurance spending in 2024, yet the country’s insurance penetration remains worryingly stagnant, according to the 2024 Financial Stability Review.
While more money is being spent on insurance policies, the proportion of the population covered remains low, signalling that the sector still has significant ground to cover in reaching the broader market.
The report revealed that insurance density—measuring per capita spending on insurance—rose to GH₵202.40 in 2024, up from GH₵195 in 2023. This upward trend indicates either an increase in the average size of policies or an improvement in disposable income levels, reflecting a gradual easing of the economic strain on households and businesses.
Analysts say this growth in density is an encouraging sign for the industry’s profitability, but not necessarily for its inclusiveness. A larger proportion of policyholders may now be able to afford more comprehensive coverage, but the total number of insured individuals remains relatively small.
Penetration Rate Stalls at 1%
Despite improvements in spending, the report noted that Ghana’s insurance penetration rate—calculated based on gross premiums—remained at 1.0% in 2024, the same as in 2023. When recalculated under the new Insurance Service Revenue framework required by IFRS 17 (Insurance Contracts), penetration fell further to 0.63%.
This level is far below the averages in many other developing economies, highlighting the urgent need for broader policy adoption. The National Insurance Commission (NIC) believes that digitalisation, product innovation, inclusive insurance initiatives, and public education will be key in lifting penetration levels in the years ahead.
The life insurance segment maintained an impressive premium retention rate of 96.36% in 2024. This high level of retention underscores the industry’s ability to reserve funds locally, match assets and liabilities effectively, and protect policyholders’ funds against future solvency risks.
The non-life segment also showed improvement, with its retention ratio rising to 73% from 69% in 2023. This shift reduces dependence on foreign reinsurance markets, helping insurers avoid the full impact of global reinsurance pricing cycles and minimising foreign exchange outflows—a critical factor given Ghana’s current macroeconomic pressures.
Rising Reliance on Foreign Reinsurers
Despite improved retention rates, overseas reinsurance premium transfers surged in 2024. The NIC approved GH₵814 million in foreign premium transfers, up from GH₵656 million in 2023. This increase reflects both a growing reliance on offshore reinsurers and constraints in local capacity.
While offshore reinsurance provides valuable risk diversification, the report cautions that it also exposes insurers to exchange rate volatility and potential capital outflows, which could exert liquidity pressure in the event of sharp currency swings.
Profitability Remains Strong Across Segments
The industry’s profitability remained robust in 2024, supported by strong investment income and improved underwriting performance, particularly in the non-life segment.
For life insurers, investment income played a stabilising role, complementing underwriting profits and reinforcing financial stability. However, the report warned that heavy reliance on investment gains could expose life insurers to macroeconomic shocks, underscoring the importance of strengthening underwriting fundamentals.
In the non-life sector, profits came from both investment gains and sound underwriting practices, creating a healthier earnings structure. This diversification makes non-life insurers better positioned to weather economic downturns, though their reliance on reinsurance still leaves them vulnerable to global price changes.
The NIC emphasises that sustainable profitability must come from prudent pricing, sound underwriting, and effective cost management—not just from volatile investment returns. While the sector’s resilience is commendable, the persistently low penetration rate signals that more effort is needed to make insurance accessible and attractive to the wider population.
Industry stakeholders believe that technology could be the game-changer. Mobile-based microinsurance, digital claims processing, and AI-driven risk assessment tools are seen as promising innovations that could reduce costs and expand coverage to underserved areas.
READ ALSO: GSE Cap Roars Past GHS151bn, Fueled by 194% Spike in Trades
