The Vice-President, Kwesi Amissah-Arthur, has charged the insurance industry to move away from the over-reliance on the formal sector and explore the informal sector.
He said the informal sector had been largely ignored by the industry, thereby creating a gap between the potential social value of insurance and the transaction cost of insurance.
Launching the 25th anniversary celebration of the National Insurance Commission (NIC) at the Banquet Hall of the State House in Accra yesterday, the Vice-President said bridging the gap was crucial for the poorer segment of society, and therefore, charged the commission to help address the situation.
The NIC also used the occasion to unveil its new logo and rename its head office after one of its former commissioners, Mr Samuel Appiah-Ampofo.
Growth of financial sector
Mr Amissah-Arthur said the growth of the financial sector during the last decade had exceeded every sector in the economy, with the banks enjoying dominance, citing for instance that as of June, this year, the commercial banks had about 75 per cent of assets of the financial sector.
He expressed concern that the insurance sector had less than five per cent of the assets of the sector, adding that “if nothing at all, this shows how much work the insurance industry needs to do to catch up with the banks.”
Mr Amissah-Arthur explained why the government was committed to sustaining and accelerating the progress made so far in the financial sector by pursuing policy initiatives and measures that were aimed at improving the sector and the insurance industry in particular.
The contribution of insurance in poverty alleviation and the improvement in the welfare of the poor “is of considerable importance in economies such as ours,” he said.
The Vice-President said in a developing country such as Ghana, insurance contributed materially to the economic growth process by improving the investment climate and promoting more efficient activities.
“The availability of insurance properly packaged to meet the needs of the market enables risk averse individuals and firms to undertake high risk and achieve high returns on activities they would otherwise have avoided,” he added.
He, therefore, charged the insurance sector to work even harder to create more employment and support the country in its development efforts.
As the commission celebrated its 25th anniversary, Mr Amissah-Arthur charged it to take advantage of the growing level of sophistication of the middle class to create the necessary awareness of new products that would boost the life insurance sector.
He also advised the commission not to use its celebration to extol its successes, but to use the platform to fashion out new approaches and strategies to improve the sector.
Mr Amissah-Arthur pointed out that as the economy grew, different sectors were emerging and cited the oil sector as one that would require some financial services.
He expressed the hope that the insurance sector would be able to take advantage of the changing trend to fill the gap.
He said the channels had also been created for private pensions and life insurance and charged the NIC to lead in sensitising the public to take advantage of those opportunities.