Magazine

Read the latest edition of AIR and MEIR as an Interactive e-book

Mar 2024

Ghana: Call on insurers to re-strategize to ensure claims are settled

Source: Middle East Insurance Review | May 2023

The head of the Insurance Brokers Association of Ghana (IBAG) has said that it is time for the industry to restrategize their business model to avert a possible funding crisis arising from their participation in the Domestic Debt Exchange Programme.
 
IBAG president Shaibu Ali, said that “insurers are losing investments that would have facilitated the prompt settlement of claims. Brokers are losing investments that would have ensured the effective running of their operations”, according to a report carried on the news website myjoyonline.com.
 
Mr Ali said, “Through the insurance sector’s commitment to supporting the government to achieve economic stability and growth, the industry recently reached an agreement with the government regarding the Domestic Debt Exchange Programme which poses difficulties to both insurance companies and broking firms.”
 
On 5 December 2022, the government of Ghana launched the Domestic Debt Exchange Programme, under which there is to be the voluntary exchange of approximately GHC137bn ($11bn) of domestic government notes and bonds for a package of new bonds issued by the state. The new bonds offer lower coupons and longer tenors, among other differences compared to the old bonds.
 
Financial-sector regulators will temporarily reduce regulatory capital and liquidity requirements for regulated institutions and schemes that voluntarily participate in the debt exchange.
 
Insurers, which reportedly reluctantly agreed to participate in the bond exchange, remain wary even though the government says that it will, through the solvency window of the Ghana Financial Stability Fund, provide support for insurance companies that are seriously affected by the debt exchange programme.
 
The debt exchange programme is aimed at restructuring the country’s debt to stabilise the economy which has suffered from a depreciating local currency, rising interest rates and excessive government spending that is not productive. The Ghanaian government has turned to the International Monetary Fund for help.
 
IBAG Education and Publicity Committee chairman Stephen Kwarteng Yeboah, said the insurance industry must consider moving from its over-reliance on investment income to underwriting profit. The insurance sector has 40% of investments amounting to some GHC4.6bn directly exposed to government securities. M 
 
| Print
CAPTCHA image
Enter the code shown above in the box below.

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.