Despite robust asset growth and regulatory overhauls aimed at boosting accessibility, insurance penetration — measured as gross premiums as a percentage of GDP — remained stubbornly low at 1.0 percent last year, unchanged from 2023, according to the Bank of Ghana’s latest Financial Stability Review.
This figure, while stable, underscores a persistent challenge in a country where financial inclusion has advanced rapidly in areas like mobile money but falters when it comes to risk protection.
Digging Deeper
The report, released in July 2025 by the central bank in collaboration with regulators, including the National Insurance Commission (NIC), paints a picture of a resilient yet underpenetrated industry.
Total assets in the insurance sector climbed 18.6 percent to 17.9 billion Ghanaian cedis (about $1.1 billion at current exchange rates) by the end of 2024, representing 1.5 percent of GDP — a slight dip from 1.8 percent the previous year.
Yet, this growth has not translated into broader market reach. Under the new International Financial Reporting Standards (IFRS 17), which recalibrates how insurance revenues are reported, penetration drops even lower to 0.63 percent, highlighting the sector’s limited footprint in everyday life.
Insurance density, or per capita spending on premiums, offers a glimmer of progress: It rose to 202.40 cedis (roughly $12.50) in 2024 from 195 cedis in 2023, signaling modest increases in policy sizes or disposable incomes amid easing inflation.
Factors such as low financial literacy, high premiums relative to incomes, and a cultural reliance on informal safety nets like family support contribute to the stagnation.
The sector’s share of Ghana’s financial system assets has hovered around 3.4 percent, stable over the past five years but dwarfed by banking (76.4 percent) and pensions (16.4 percent).
This limited integration raises concerns about interconnected risks: Insurance firms hold about 3.1 billion cedis in exposures to banks, meaning banking sector woes could ripple through insurers, potentially eroding confidence further.
Strong Profits
Profitability, however, provides a counterweight. The industry posted strong earnings in 2024, buoyed by investment income and improved underwriting, particularly in non-life segments like property and auto coverage.
Equity bases expanded 31 percent to 6.62 billion cedis, pushing average capital adequacy ratios well above the 150 percent regulatory minimum — 325 percent for life insurers and 390 percent for non-life.
Retention ratios also improved, with life insurance holding steady at 96.36 percent and non-life rising to 73 percent, indicating better local capacity to handle claims without heavy reliance on overseas reinsurers.
Yet, the outflow to foreign reinsurers climbed to 814 million cedis in 2024 from 656 million the year before, exposing the sector to exchange rate volatility in a country where the cedi depreciated 19 percent against the dollar last year.
This dependency highlights a key vulnerability: Ghana’s insurance market, while maturing, still leans on international partners for complex risks, limiting domestic penetration.
Roll Out of Reforms
Regulatory reforms are at the heart of efforts to reverse this trend. The NIC is rolling out a risk-based capital framework by 2026, which will tie capital requirements more closely to actual risks, potentially freeing up resources for expansion into underserved areas.
IFRS 17 implementation is enhancing transparency, while a shift to risk-based supervision promises more dynamic oversight.
Initiatives like reviewing microinsurance rules aim to target low-income groups, where coverage has risen from 29 percent to 44 percent over six years, per industry data.
“Inclusive insurance strategies are crucial,” Dr. Abiba Zakariah, the NIC commissioner and a member of the Financial Stability Council, noted in the report.
The push includes diversifying distribution channels, such as partnering with mobile networks, to reach rural and informal sectors that make up much of Ghana’s 33 million population.
Challenges in the sector
Challenges persist. High inflation, which averaged 22.9 percent in 2024, erodes affordability, while the legacy of the 2022-2023 debt restructuring — including the Domestic Debt Exchange Program — has made insurers cautious in their investment strategies.
Broader economic risks, like global commodity price swings and climate-related events, could strain non-life segments.
Looking ahead, the outlook is cautiously optimistic. With GDP projected to grow 3.9 percent in 2025 amid moderating inflation, regulators hope penetration will edge upward.
“The sector’s resilience positions it for growth,” the Bank of Ghana report concludes, “but sustained efforts in awareness and innovation are essential.”
This article was edited with AI and reviewed by human editors
