Chief Executive Officer of Donewell Insurance Company Limited, Mr. Seth Aklasi has called for urgent measures to increase the insurance asset base to allow insurance companies in the country to penetrate the market.
Ghana’s insurance penetration, according to the National Insurance Commission (NIC) is currently at 1.2 percent, which is same as the ratio of gross insurance premium to gross domestic product (GDP).
The CEO who spoke exclusively with Goldstreet Business at the company’s 25th Anniversary Symposium said the inability of the insurance companies to make its presence felt in the target market can be partly blamed on the lack of understanding of the asset structure of the insurers which allows a firm to maximize returns from its asset base.
“We need to increase our asset base because insurance companies insure the assets and liabilities of any growing economy,” he said.
“Profit-making firms acquire assets at a measurable cost and use them for generating earnings. As a result, these assets must justify their place on the balance sheet by bringing in returns. The firm’s asset structure also represents its strategy for earning from its asset base,” Mr. Aklasi stressed.
He therefore asked for the quick passage of the new insurance bill into law as it will provide the needed legal backing to support the asset base structure as well as the reforms the NIC, intends to undertake.
Assets are items of value an organization owns or controls.
In terms of the asset base of the insurance industry (Life and Non-Life), it had GHS3.76 billion as at the end of 2016 rising from GHS3.06 billion the previous year.
Latest figures from the NIC indicates that the total assets of the industry in 2017 was GHS5.4 billion made up of GHS2.9 billion in the life and GHS1.9 billion in the non-life sector while the reinsurance sector is worth GHS0.6 billion.
The NIC, last year proposed a new minimum capital requirement of GHS50 million for all categories of insurance companies. This represented an increase of about 233 percent from the current minimum of GHS15 million.
Government on the other hand, has resolved to create an enabling environment for insurance and pensions coverage to create avenues for employment.
By Mawuli Y. Ahorlumegah