Fitch Solutions, research arm of sovereign credit rating agency Fitch Ratings, says it expects insurance firms with smaller market share of Ghana’s non-life insurance market to either merge or dissolve over the medium term.
According to Fitch Solutions, insurance firms that will be dissolved will be those reluctant to merge or be acquired by another insurance firm.
To avoid a possible merger or being acquired by another insurance company, particularly the big insurance firms, the research agency notes that insurance firms in the country particularly the smaller ones are seeking to grow their customer base by marketing to low-income groups and offering micro-insurance products and harnessing new distribution channels as well as increasingly targeting new demographics as a means of retaining their market share.
Fitch Solutions also notes that by 2024, it expects that the number of non-life insurance companies operating in Ghana will have fallen moderately because of their inability to meet the Ghs 50 million minimum capital requirement set by the National Insurance Commission (NIC) coupled with fierce competition from foreign insurance companies such as Allianz and Old Mutual.
Already, the NIC has given insurance companies in the country up to the end of 2021 to meet the set minimum capital requirement.
“By 2024 we expect that the number of non-life insurance companies operating in Ghana will have fallen moderately,” said Fitch Solution.
Describing Ghana’s non-life insurance market as one of the fastest growing insurance market on the African Continent, Fitch Solutions in its assessment of the country’s non-life insurance sector, notes the sector is currently undergoing transformation with the National Insurance Commission (NIC) seeking to create a more robust sector with an emphasis on consolidation to improve balance sheets of insurance firms.
Non-life insurance product offering in Ghana is broad, covering the majority of traditional non-life sub-sectors, including engineering, property, travel, goods in transit, health, and motor, with the motor insurance segment accounting for nearly half of non-life premiums written in the country and being a major source of revenue for Ghanaian non-life insurers.
Presently, there are 20 non-life insurance companies in Ghana with Enterprise Insurance, SIC, Hollard and GLICO, being the largest four.
According to the research agency, the SIC and Enterprise have been battling for market dominance, rotating around the first place over the past few years.
“In 2020, Enterprise secured 13.4% market share while SIC dropped to 12.5%. Enterprise wrote USD39.7mn premiums that year, just ahead of SIC’s USD43.4mn. There is close competition between Ghana’s other major non-life providers. Hollard, Glico and Star (in third to fifth place in 2020) all reported premiums of between USD20mn and USD30mn in 2020, giving each a market share of 7-9%,” said the research agency.
