Ghana’s insurance industry is likely to suffer a setback in gross written premiums in 2016.
This is according to the Chief Executive Officer (CEO) of Hollard Insurance Ghana, Lynda Odro.
“The insurance industry over the years has grown. Gross written premiums have increased as our economy did well and as the economy suffered, gross written premium also dipped,” she stated.
Though the insurance industry grew at a compound annual growth rate (CAGR) of about 30 percent between 2009 and 2013, Citi Business News understands the figures dropped to about 17 percent growth between 2014 and 2016.
This is also said to be affecting insurance penetration in Ghana which is reeling under 2 percent.
Speaking in an exclusive interview with Citi Business News, the CEO of Hollard Insurance Ghana, Lynda Odro said insurance premiums are likely to suffer due to the challenges in the economy.
“Insurance is to cushion the economy, make people more positive about the investments they make. If the environment is not conducive for increase in investments, insurance is going to suffer…I’m afraid if the economy doesn’t pick up, the insurance premiums are going to suffer just as all the industries that are connected to the economy are going to suffer,” she observed.
The insurance industry like other sectors has also been affected by challenges including high utility tariffs, inadequate power supply, high inflation rate and high interest rates on credits.
The industry in 2015 also suffered currency volatility which affected payment of premiums as insurances companies paid more for settlement of claims and repairs.
Lynda Odro further explained, “Last year was a bad one, because insurance is to settle claims and when we pay claims we either pay the new replacement value, pay cash or repair. So if the interest rate is up, prices are going up. So when you go to the market to replace an item, it’s going to be more expensive at the time of replacement than when you were anticipating how much to charge and clients are not going to be happy with less than what they thought the insurance would give them.”
Lynda Odro expressed worry that the development has caused customer confidence in the insurance industry to wane,
“There have been difficulties with clients who complain that insurance companies are not delivering on their promise. But the promise is to put you in the place that you were before, but with how the currency depreciated, what can we do as insurers?”
By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana