NIC initiates measures to check rising underwriting losses in the insurance industry
In response to a concerning surge in underwriting losses experienced by insurance companies in recent years, the National Insurance Commission (NIC) has embarked on a series of pivotal actions to bolster the sector’s financial resilience.
Acting Commissioner, Michael Andoh, articulated the critical necessity of crafting an efficient framework to mitigate underwriting losses. This urgency stems from the significant reduction in investment income following the recent Domestic Debt Exchange Programme (DDEP).
Delivering these crucial insights at the 2023 International Conference on Inclusive Insurance (ICII) hosted in Ghana, Andoh elucidated the ramifications of the DDEP on insurance enterprises.
“These streams of income which is largely derived from revenue accrued from invested premiums gathered in investment instruments such as bonds and other medium to long-term instruments were badly affected by the DDEP.
“A lot of the insurance companies tend to be making underwriting losses and have been depending on investment income to break even and make a profit”, he explained.
In light of these challenges, the NIC, in collaboration with the Ministry of Finance, is set to implement stringent strategic measures aimed at fortifying the country’s insurance ecosystem. Mr Andoh emphasized the need to adapt to a lower interest rate environment, necessitating a departure from the dependency on investment income.
“So if you listen to the Finance Minister, the whole idea is to get into a lower interest rate regime. This means we may not be able to continuously rely on investment income, and so we are taking some strategic approach to address those losses by improving efficiency,” he added.
Furthermore, the regulatory body, in partnership with the Ministry of Finance, is committed to extending financial support to insurance companies severely impacted by recent economic turbulence.
The 19th edition of the International Conference on Inclusive Insurance, convened by the Munich Re Foundation and the Microinsurance Network, was hosted locally by the National Insurance Commission of Ghana, the Ghana Insurers Association, and the Insurance Brokers’ Association of Ghana.
The Conference provided a platform for the exchange of insights and strategies to navigate the dynamic landscape of inclusive insurance in an evolving global economic landscape.