ANNUAL REPORT 16 & FINANCIAL STATEMENTS National Insurance Commission 2016 | Annual Report NNATIONALational Insu INSURANrance CECommission COMMISSION Appiah-Ampofo House Standard Conference Package Hall Rental (Seating Capacity 200) Power Point Projector P.A System One Coee Break Buet Lunch Mineral Water Note Pad, Folder And Pen Internet Connectivity Ultra Modern Hall | Modern and State of the Art Facilities | Secured and Large Car Park | Central Location | Competitive Price | Spacious Lawns For More Information And Reservation, Please Call The Following Numbers 0302 238300 | 0302 238301 Location: Appiah-Ampofo House, Independence Ave, National Insurance Commission Tel: 233 302 238 300/1 | Fax: 233 302 237 248 | Email: [email protected] | Website: www.nicgh.Org Contents Foreword 7 Chairman’s Report 8 The National Insurance Commission Corporate Information 11 NIC’s Operations 12 Ghana Insurance Market Report 2016 Economic Review 21 Ghana Insurance Market Report (2012 – 2016) 22 Financial & Ratio Analysis 36 Appendices 2016 NIC Financial Reports 72 2016 Fire Maintenance Fund Financial Reports 86 List of Registered Insurance Companies 96 List of Registered Reinsurance Companies 103 List of Registered Broking Companies 104 2016 Annual Report National Insurance Commission 6 2016 Annual Report 2016 Annual Report National Insurance Commission National Insurance Commission FOREWORD Introduction The National Insurance Commission (NIC) issued the Governance and Risk Management framework in 2015. The activities of NIC in 2016 was geared at ensuring that the principles and values set out in the Governance and Risk Management framework are embedded in the regulated entities operations. To this end, the NIC organised a number of workshops for key stakeholders in the insurance industry to educate them on what is expected of them in relation to the Governance and Risk Management framework. In addition, the NIC worked to ensure that all the regulated entities were appropriately capitalised as per the NIC requirements. This was coupled with on-site inspections to ensure that firms have adequate measures in place to mitigate the risks inherent in their operations. New Insurance Act a Group-wide supervisory framework. The NIC is in the process of reviewing the Insurance Act to make it more appropriate, given the changes Risk Based Capital Requirements witnessed in the insurance landscape. This will also ensure that the new Insurance bill, if passed into an A key component of Risk Based Solvency Regime Act, will be compliant with the most recent Insurance is Risk Based Capital Requirements. Risk Based Core Principles (ICPs) of the International Association Capital Requirement seeks to ensure that the capital of Insurance Supervisors (IAIS). requirement of an insurer is commensurate with the risks the insurer faces. The frameworks, directives and guidelines that the NIC has issued in the recent past will be included in the This will encourage robust risk management practices new Insurance Act. Other new areas to be included are in (re) insurance companies in Ghana, as firms with robust risk management framework will hold less as follows: capital. Group-Wide Supervision The introduction of the Risk Based Capital requirements It is generally accepted that the stand-alone view of will ensure that the regulation of insurance in Ghana an insurance company, which is part of a group of is in line with international best practices such as companies, does not give a full picture of the risks that Solvency II in EU, SAM in South Africa and C-ROSS in policyholders are exposed to. This is the main risk that China. It will also make our regulations compliant with the following ICPs seeks to mitigate: the ICPs. ■ ICP 23: Group Wide Supervision Compulsory Insurance ■ ICP 24: Macro Prudential Surveillance and There are currently two insurance products that are Insurance Supervision compulsory in Ghana. These are: ■ ICP 25 & 26: Cross Boarder Collaboration of the ■ Third Party Motor Insurance Supervision of Insurance Groups that are in more than one country. ■ Fire Insurance for Private Commercial Buildings. However, a group-wide approach to the regulation of In addition to this, the NIC is considering other insurance groups is not currently part of the insurance insurance products that should be compulsory. The regulations in Ghana. One of the key activities that the aim of this exercise is to protect life and property as NIC will undertake in the coming years is to implement well as increase insurance penetration. 7 2016 Annual Report National Insurance Commission CHAIRMAN’S REPORT Mr. Lionel Molbila 1. INTRODUCTION Out of the 573 buildings inspected 344 of them had procured compulsory fire insurance policies while The National Insurance Commission (NIC) the remaining had not procured one as required implemented various reforms in 2016. The 229 under the Law. Commission issued guidelines on Financial Conditions Reports, approval of Commission Rates, The task force therefore arrested managers of the introduced the Risk Based Capital Requirement buildings and threatened to prosecute them if and Group-wide Supervision Framework. The they failed to comply with the directive. They were Commission also organised workshops for key further requested to report back to the various Police stakeholders to educate them on the corporate Headquarters with evidence of compliance. governance and risk management frameworks. Thereafter, managers of the229 buildings had duly All the initiatives taken and directives or guidelines complied with the directive, with majority of them issued in 2016 were aimed at improving the complying within 48 hours of arrest. operational efficiency of the regulated entities. 5. IMPLEMENTATION OF SOLVENCY FRAME- 2. GUIDELINES ON COMMISSION RATES WORK The NIC in accordance with the requirements of The New Solvency Frameworks for Life and Non- section 77 of the Insurance Act 2006, Act 724 approved Life insurers were issued during the year after minimum commission rates payable to insurers extensive consultations with all stakeholders on and brokers for overseas facultative reinsurance the Framework. This guideline uses a risk-sensitive placements of global multinational businesses by approach to determining the solvency of insurance foreign intermediaries on the Ghanaian market. companies. The compliance date for the new solvency framework was 31st December, 2016. 3. ANTI-MONEY LAUNDERING AND COUNTER- ING THE FINANCING OF TERRORISM (AML/ In view of the above the commission issued a CFT) directive in 2016 to all life, non-life and reinsurance companies to maintain the recommended solvency Based on the Financial Action Task Force on Money Laundering (FATF) recommendations, the levels. insurance industry was subjected to second round 6. IMPLEMENTATION OF GOVERNANCE AND mutual evaluation in 2016. The Commission issued RISK MANAGEMENT FRAMEWORK guidelines on Know Your Customer (KYC), Customer Due Diligence (CDD), Enhance Due Diligence The NIC as part of measures to adopt the Risk-Based (EDD), Beneficial Ownership, Independent Audit approach to Supervision of Insurers, developed a Assessment, Suspicious Transaction Reports, Record Governance and Risk Management Framework to Keeping and Monitoring of Employee Conduct. guide the operational activities of insurers as well as enhance the effective supervision of the Insurance 4. ENFORCEMENT OF COMPULSORY FIRE IN- and Reinsurance Companies. SURANCE OF PRIVATE COMMERCIAL BUILD- Subsequent to the issuance of the frameworks the INGS Commission organised capacity building seminars The Compulsory Fire Insurance Task Force undertook for Boards and Risk management control functions several enforcement actions in Accra, Takoradi, Cape of all insurance and reinsurance companies to Coast, Tamale, Wa and Bolgatanga during the year facilitate effective implementation. The Commission under consideration. They inspected five hundred further issued directives on the requirements of the and seventy-three (573) Commercial buildings frameworks. to demand evidence of compulsory fire insurance cover. 8 2016 Annual Report 2016 Annual Report National Insurance Commission National Insurance Commission 7. RISK BASED SUPERVISION AND LEGAL FRAME- The Commission provided feedback on a set of WORK the financial condition reports (FCR) submitted by companies. A key part was the need for regular stress and In line with the Risk Based On-Site inspections: scenario testing. implementation of its Risk Based Supervision Framework, the NIC inspected a number of companies to enable it The Commission issued a directive that set out the determine their Risk Rating and the way forward. minimum set of stresses and scenarios that companies are required to undertake as part of the FCR reports. 8. INDUSTRY PERFORMANCE Some key performance indicators of the industry is summarised below: LIFE 2016 (GHS M) 2015 (GHS M) GROWTH RATE TOTAL ASSETS 2241 1744 28% TOTAL INVESTMENTS 1939 1465 32% ACTUARIAL LIABILITIES 1434 1165 23% TOTAL CAPITALIZATION 649 463 40% NON-LIFE 2016 (GHS M) 2015 (GHS M) GROWTH RATE TOTAL ASSETS 1506 1320 14% TOTAL INVESTMENTS 886 620 43% TECHNICAL PROVISIONS 547 566 (3.4)% TOTAL CAPITALIZATION 704 545 29% Industry gross premium amounted to GHC 1,929million at year end 2016. This represents a growth of 24% from GHC 1,560million over the same period in 2015. Total premium for life insurance stood at GHC 859m while non-life business amounted to GHC 1070m. This represented a contribution of 45% and 55% respectively in 2016 compares with