Exempt Insurance companies from the Domestic debt Exchange – GIA pleads to Govt
The Ghana Insurers Association (GIA) has called on government and other stakeholders in the financial value chain to exempt the insurance companies from the domestic debt exchange programme which was launched by government as part of the requirement to allow the country’s economy to recovery as quickly as possible from the current economic crisis.
“An exemption will have far reaching consequences for the insurance industry and the significant role the Association plays is to protect assets and liabilities”, the Ghana Insurers have stated explaining further that the introduction of the domestic debt exchange by government through the Finance Ministry will discourage the citizenry from taking up life and annuity policies.
According to the Association, there are uncertain periods and challenges confronting the markets and the financial space therefore entities must protect their assets through insurance which happens to be a risk management tool.
The President of the Ghana Insurers Association, Mr. Seth Aklasi made this known at a news conference in Accra dubbed “Impact of domestic debt exchange on insurers and reinsurers’ ability to pay claims” adding that some insurance companies have had their funds locked up in banks and other institutions which were part of the banking clean up and urged government to release the said funds to the insurance companies to help enhance liquidity.
He said insurance have been identified as one of the important tools for increasing financial inclusion from the current 58% to 75% by the year 2023 and explained that government must put in pragmatic measures to repose confidence in insurance.
The move he said will help formalise the informal sector which constitute over 80% of the country’s workforce as accrued interest on government of Ghana Bonds and must be paid to insurance companies to enable them pay claims that have already crystalized.
Mr. Seth Aklasi revealed that insurance companies experience high rates of surrenders when confronted with economic challenges and outlined that life insurance companies are experiencing over 50% increase in surrender of policies.
He added that insurance companies have invested the premiums in government related securities and may not have earned the expected returns indicating that early surrenders leads to asset liability mismatch.
“Inflation have sharply increased in the current year at a rate of over 40% as at October, 2022 saying the cedi has depreciated against foreign currencies by over 40% leading to increase in prices of vehicles” he said.
The Chief Executive Officer (CEO) of Ghana Insurers Association, Dr. Kingsly Kwesi Kwabahson in an interview urged government to collaborate with the association to enable it bring to bear its challenges on the domestic debt exchange programme for redress and again called on government to have a deeper consultation with insurance companies on issues relating to financial policies and programmes.
Source: Ben LARYEA
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