Figures gathered by the Business Day show that insurance penetration in Ghana as a percentage of Gross Domestic Product (GDP) is growing at a slower pace against the expectations of financial experts.
As at June 2015, commercial banks in Ghana owned 75 percent of the assets in the financial sector, while insurance companies owned just five percent.
Measured as a percentage of GDP, insurance penetration still remains below two percent after hovering around 1.5 percent for many years, while South Africa, Namibia, Mauritius and Kenya have penetration rates of 14.5 percent, 7.5 percent, 5.7 percent and 3.17 percent respectively, —according to the African Insurance Organization report, 2014.
Speaking in an interview with the Business Day, the Head of Bancassurance at Stanbic Bank Ghana, Henry Manyo-Plange explained that the sector has a bright outlook as insurance companies partner banks to provide insurance products.
“We at Stanbic Bank have quite a success story when it comes to bancassurance; we have over 50,000 life cover policies”, he said, adding that, the bank outdoored the product barely two and a half years ago but doing very well.
Mr. Manyo-Plange attributed Stanbic’s success in the penetration rate to a deliberate move to consider bancassurance as a business unit and not just a desk in the bank’s operations.
“Bancassurance is a whole business unit on its own and we at Stanbic recognize that, hence we treat it as a full proposition under the Personal and Business Banking operations”, he said.
Even though the Bank of Ghana and the National Insurance Commission have granted licenses to over twenty banks to operate bancassurance service, the product is barely patronized by the banking population due to lack of education.
Another major hindrance in the insurance penetration is the large unbanked population of over 70 percent, most of whom are in the informal sector.
According to Mr. Manyo-Plange, the challenge could be addressed by encouraging the informal sector to join the banking population in order to have access to some of the profitable banking products that are available.
“The unbanked population is a general challenge to the financial sector as a whole because it creates a gap in channeling resources from those who hold it to those who need it for investment”, he explained.
Touching on the licensing regime, he maintained that the regulators could look at expanding the scope for banks in the future to enable them use technology to enroll customers into bancassurance service.
