Rebasing the Economy Insurance Companies must put their Houses in Order

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STORY BY: MILLICENT EDUFUL, TEMA.

– To avoid mistakes of collapsed banks…………………………
Finance Minister.
The Minister of Finance and Economic Planning, Mr. Ken Ofori-Atta has disclosed that the Nana Addo Dankwa Akufo-Addo administration remains unequivocally focused on creating the right macro-economic environment for private sector participation in the country’s economy.
Therefore, the shake ups in the banking industry to bring sanity among players should not be misinterpreted as a way to kill private businesses since the government had spent over GH¢12.7 billion liquidity support to the collapsed banks.
In view of this, he has sound an alarm bell to insurance companies to put their houses in order to avoid mistakes of the collapsed banks, saying, “As it were in the days of the son of man. Government will leave no stone unturned to overhaul entire financial institutions including insurance companies and bring sanity into the system.”
Consequently, he has urged them to build their capabilities and empower themselves to handle big ticket risks generated particularly in the oil and gas sector.
This, he said, will go a long way to boost their income generation and support the economy because the premiums will be kept right here in the country.
Ken Ofori Atta observed that the risk in the oil and gas sector was so huge that the entire insurance industry in Ghana took just a fraction of it while the rest goes outside the country.
President Nana Akufo Addo was quoted to have said that, “it is better to have one strong viable local bank than to have many mushroom banks killing the industry”, urging the Bank of Ghana to continue the exercise in taken over non-performance banks in the system.
Accordingly, the Finance Minister has told the insurance companies that being part of the financial sector they were not entirely immune from troubles that had beset the banking industry and urged managers of the various insurance companies to uphold the highest standards in all their operations.
“I have absolute confidence in the National Insurance Commission (NIC) as a regulator to crack the whip in order to maintain compliance in the event of any breach of statutory regulations or unethical conduct” he told industry player in a speech read on his behalf at the official opening ceremony of the Serene Insurance Company in Tema, recently.
He assured them that government was committed to empower the private sector by creating the friendly business environment to attract the needed investments that will accelerate growth of the Ghanaian economy.
The Finance Minister said, there are positive developments in the insurance sub-sector with premium income growing from 24 percent in 2016 to 26 percent in 2017, and the huge premium incomes leaving the country remains a source of worry to government.
According to him, total reinsurance premium transferred out of the country amounted to over GH¢13.5 million last year, although the insurance Act, 2006 (Act 724) requires that insurers fully utilize local market capacity before resorting to overseas reinsurance.
The Minister, therefore, tasked the National Insurance Commission (NIC) to strictly enforce the aforementioned law to ensure they exhaust local capacity requirements.
Currently, there are about 35 insurance companies operating in the country.
The total assets of the insurance industry grew by 26 percent to GH¢5.45 billion. The life sector recorded a growth of 28 percent from GH¢2.24 billion in 2016 to GH¢2.89 billion in 2017.