Solomon Lartey, the President of the Chartered Insurance Institute of Ghana (CIIG), has raised concerns about the potential consequences of removing non-life insurance from the Value Added Tax (VAT) exemption list.
According to Mr Lartey, such a move would lead to an increased cost of insurance and adversely affect insurance penetration in Ghana. Mr Lartey emphasized that the removal of non-life insurance from the VAT exemption list would result in a 21.9% Value Added Tax on the insurance industry.
This, in turn, would lead to an escalation in the cost of insurance, making it less attractive for Ghanaians. He points out that the insurance sector in the country already faces a low penetration rate, currently standing at less than 2%. The imposition of VAT on insurance premiums is expected to further discourage interest and potentially hinder the growth of the industry.
In response to the changing economic and geopolitical landscape, Mr Lartey calls for insurance professionals to double their efforts in understanding insurance products and maintaining high professional standards. The recent global events, such as the Russia-Ukraine conflict and unrest in the Middle East, have impacted the insurance landscape. These events have thrown various reinsurance and insurance arrangements, such as marine coverages, out of balance.
Mr Lartey acknowledges that the industry is facing underwriting losses, making it imperative for insurance companies to rely on investment income to meet their claim obligations to policyholders. In light of these challenges, he stresses the importance of continuous education within the insurance sector to adapt to evolving circumstances.
CIIG’s Role as the Mother Body
The Chartered Insurance Institute of Ghana (CIIG) serves as the mother body for all insurance professionals in the country, bringing together practitioners from various sectors, including life and general insurance, reinsurance, health insurance companies, broking firms, pensions, securities, and trustee firms.
As the 9th president of CIIG, Mr Lartey underscores the significance of maintaining high professional standards and addressing the current challenges facing the industry.
In the face of these challenges, Solomon Lartey’s call for insurance professionals to deepen their understanding of insurance products becomes even more pertinent. The industry must proactively respond to the changing dynamics by enhancing its capacity to innovate and offer tailored solutions that address the evolving needs of consumers. This may involve exploring new technologies, creating innovative insurance products, and implementing customer-centric approaches.
Additionally, collaboration between the government and the insurance sector is crucial to finding a balanced taxation policy that supports industry growth while ensuring adequate revenue for the state. As Ghana finds a balance between revenue generation and industry sustainability, a collaborative effort will be essential in securing a resilient and thriving insurance landscape for the benefit of both insurers and the insured.
The removal of non-life insurance from the VAT exemption list is a critical issue that has raised concerns within the Ghanaian insurance industry. Solomon Lartey’s warning about the potential increase in insurance costs and the adverse impact on insurance penetration highlights the need for careful consideration of tax policies affecting the sector.
As the CIIG continues to play a vital role in uniting and representing insurance professionals in Ghana, the industry must collaborate to navigate these challenges and find sustainable solutions to ensure its growth and stability.
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