Evaluate the benefits and risks of Bancassurance in the Ghanaian Insurance industry Examine why insurance penetration in Ghana is still low despite the benefits of insurance
In the Insurance Industry of Ghana, the National Insurance Commission (NIC) reports that
Gross Premiums grew by approximately 21% from GHS2.9 billion in 2018 to GHS3.5 billion in 2019. This is about the same rate at which gross premiums grew in 2018 compared with 2017. If the Oil and Gas premiums from the Ghana Oil & Gas Insurance Pool (GOGIP) are excluded, Life sector premiums will be a bigger proportion of the total industry premium. The steady growth of the Life sector over the years is a good sign for the Insurance Industry because none of the Life insurance products is bought under compulsion and, as such, Ghanaians are buying Life Insurance primarily because they understand and appreciate the benefits that can be derived. Another positive aspect of the growth in the Life Insurance sector is that it is a vehicle for the mobilisation of long-term local funds. Even though the Non-Life Insurance sector has always contributed a larger proportion of the industry’s total premiums, the gap between the gross premium of the Life and Non-Life sectors has narrowed considerably over the years. It is expected that the Life insurance sector will overtake the Non-Life insurance sector in the next few years. Total assets grew from GHS6.23 billion in 2018 to GHS7.49 billion in 2019. The total assets can be broken down into GHS3.85 billion for Life, GHS2.86 billion for Non-Life and GHS0.78 billion for Reinsurance. This translates into a 20% growth in the total value of assets in 2019 as compared to a 15% growth in 2018 over 2017.
Despite the growing trend in recent years, the insurance penetration rate is around 1% which compares unfavourably with the rate in some jurisdiction. Analysts believe that Bancassurance is the avenue to increase the rate of growth of the insurance coverage in Ghana.
Required:
- Evaluate the benefits and risks of Bancassurance in the Ghanaian Insurance industry
- Examine why insurance penetration in Ghana is still low despite the benefits of insurance
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