A former board member of the National Insurance Commission (NIC) has raised questions over the increasing number of insurance firms operating in the country.
Emmanuel Baba Mahama says this has led to persistent price undercutting and a saturated industry for a small economy like Ghana.
According to Mr Baba Mahama who is also the former Managing Director of Vanguard Assurance, the industry seems ripe for roll-ups and mergers, much like is seen in the banking industry, where the number of banks has declined in recent times.
He revealed that the current total number of companies collectively contributed to a gross premium of $600 million and with a penetration rate of ‘abysmal’ 1.2% compared to African countries like South Africa and Morocco.
“If Morocco that has gross premium of $4 billion for the whole industry fields 10 companies, South Africa that has gross premium of $45 billion fields 161 companies then I think that there is really no particular advantage from having too many companies that are working against each other because they must survive,” he said.
“so we must reach a point where the supervision is strong, allows companies that can pay claims properly and really answer to the excellence that we require of our insurance industries to remain and do the work that will ensure that clients all well satisfied with our services,” he said.
Mr Baba Mahama spoke to JoyBusiness at a Public Lecture organized by the Chartered Insurance Institute of Ghana (CIIG).
He delivered his speech on the topic, “The Relevance of Minimum Capital Requirement increases under Effective Risk-based Supervision and Corporate Governance.”
The CIIG Public Lecture brought together insurance practitioners, accountants, shareholders and other stakeholders including students of Insurance as well as Accounting & Finance.