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The Role of Insurance in Inclusive Growth: Ghana Diagnostic

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The Role of Insurance in Inclusive Growth: Ghana Diagnostic The role of insurance in inclusive growth: Ghana Diagnostic December 2018 Authors Mia Thom Nichola Beyers Kate Rinehart Jana de Waal Esethu Cengu Jeremy Gray Editing and research support: Takalani Malivha, Lisa Bruwer, Antoine Fourie and Karen Levent Acknowledgments The authors would like to extend their gratitude to all of those who assisted us in compiling this report. Our partner organisations played a crucial role in providing inputs, testing our insights and providing support throughout the project. In particular, we would like to thank Helen Edmundson and Ron Bohlander from DFID; Juliet Munro from FSDA and Craig Thorburn and Fiona Stewart from the World Bank. Sumana Hussein and the DFID Ghana team provided valuable guidance, inputs and support throughout the research process. Both the Ministry of Finance (MoF) and National Insurance Commission (NIC) went out of their way to assist on the project and provided indispensable inputs into this research. Sampson Akligoh and Benjamin Torsah- Klu from MoF and Kofi Andoh and Seth Eshun from NIC were invaluable guides to Ghana’s policy and regulatory environment. We would like to thank the various stakeholders we met with from government, financial services providers, industry bodies, technology providers and donor agencies for their time and the insights that guided this research and their efforts to develop the insurance industry. Finally, we would like to thank the people of Ghana, who were unfailingly friendly and helpful and provided us with indispensable insights into the financial lives of Ghanaians. Collaboration The Department for International Development (DFID) has partnered with FSDA, Cenfri and the World Bank to conduct a series of diagnostic studies into the role of insurance in development to answer the following question: How can insurance better contribute to inclusive growth within developing countries? i Table of contents Executive summary ......................................................................................................................... vi Synopsis of findings ................................................................................................................... viii Market drivers .............................................................................................................................. x Opportunities for development ................................................................................................. xv List of abbreviations ....................................................................................................................... xx 1. Introduction ............................................................................................................................. 1 About this study .......................................................................................................................... 1 Scope 2 Research approach ...................................................................................................................... 5 Structure ...................................................................................................................................... 6 2. Context drivers of market development ................................................................................. 7 2.1. Pertinent contextual factors ............................................................................................ 7 2.2. Financial sector environment ........................................................................................ 10 3. Policy and regulation ............................................................................................................. 13 3.1. Financial sector policy ................................................................................................... 13 3.2. Legislative framework ................................................................................................... 14 3.3. Financial sector regulatory architecture ....................................................................... 15 3.4. Insurance sector regulatory architecture ...................................................................... 17 3.4.1. Product development ............................................................................................ 19 3.4.2. Sales ....................................................................................................................... 21 3.4.3. Premium collection ................................................................................................ 21 3.4.4. Claims processing .................................................................................................. 22 3.5. Regulatory challenges.................................................................................................... 23 4. Provider overview .................................................................................................................. 24 4.1. History of insurance market development .................................................................... 24 4.2. Overview of the industry ............................................................................................... 27 4.3. Performance of the insurance market .......................................................................... 31 4.4. Distribution channels ..................................................................................................... 34 4.5. Insurance environment ................................................................................................. 36 4.6. Conclusion ..................................................................................................................... 37 5. Insurance for household resilience ....................................................................................... 38 5.1. Introduction ................................................................................................................... 38 5.2. Consumer groups and needs ......................................................................................... 38 5.3. A target market approach to understanding the Ghanaian population ....................... 40 5.4. Risks faced and coping mechanisms employed ............................................................ 47 5.5. Insurance uptake ........................................................................................................... 50 5.6. Barriers that influence uptake and usage of insurance ................................................. 52 5.7. Retail products............................................................................................................... 54 5.7.1. Microinsurance ...................................................................................................... 57 ii 5.7.2. Health insurance .................................................................................................... 58 5.7.3. Agricultural insurance ............................................................................................ 61 5.8. Distribution channels ..................................................................................................... 62 5.9. Key gaps and opportunities ........................................................................................... 64 5.9.1. Provider opportunities .......................................................................................... 64 5.9.2. Regulatory opportunities ....................................................................................... 67 6. The role of insurance in business and enterprise development ........................................... 69 6.1. Introduction ................................................................................................................... 69 6.2. The nature of business in Ghana ................................................................................... 71 6.3. Risk needs expressed by businesses .............................................................................. 72 6.4. Enterprise insurance in Ghana ...................................................................................... 77 6.5. Access to credit .............................................................................................................. 82 6.6. Gaps and opportunities ................................................................................................. 83 6.6.1. Market gaps and opportunities ............................................................................. 83 6.6.2. Regulatory gaps and opportunities ....................................................................... 87 7. The role of insurance in capital market development .......................................................... 89 7.1. Introduction ................................................................................................................... 89 7.2. Structure of the capital markets in Ghana .................................................................... 91 7.2.1. Banks and NBFIs .................................................................................................... 92 7.2.2. Pensions ................................................................................................................. 93 7.2.3. Fund management ................................................................................................ 96 7.3. The insurance sector ....................................................................................................
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