The National Insurance Commission (NIC) was established under Insurance Law 1989 (PNDC Law 227) but now operates under Insurance Act, 2021 (Act 1061). The object of the Commission, as detailed in Act 1061 is to ensure effective administration, supervision, regulation and control the business of Insurance in Ghana. NIC is mandated to perform a wide spectrum of functions including licensing of entities, setting of standards and facilitating the setting of codes for practitioners. The Commission is also mandated to approve rates of insurance premiums and commissions, provide a bureau for the resolution of complaints and arbitrate insurance claims when disputes arise.

Other responsibilities include the provision of recommendation to the Minister for Finance in respect of policy formulation, supervision of practitioners, enforcement of compliance and public education. The development of strong relationships with regulators from other countries and international bodies such as the International Association of Insurance Supervisors (IAIS) and ensuring the conformity of practitioners to internationally accepted standards are also key mandates of the Commission.

The enactment of Act 1061 was a major milestone towards a robust insurance regulatory environment as it empowers and grants adequate powers to the Commission. Together with several other initiatives in the past decade, the new Law provides a strong regulatory framework for Ghana’s insurance industry. The Commission has a core mandate of protecting the interest of policyholders.

Being the supervisory and regulatory body of the Insurance industry in Ghana, the NIC has the mandate to ensure that all insurance entities comply with its directives according to the new Law.

The Insurance Act, 2021, (Act 1061)

The NIC is committed to building a resilient industry and has developed the needed legal framework to achieve that.  This new Act provides a legal backing for the digitization and growth of the industry and strengthened corporate governance requirements. 

Among others, the Act provides for the following:

• Statutory Management of any insurance company in distress
• Index Insurance Contracts
• Compulsory Insurance Contracts
• Innovative Insurance
• Establishment of an Insurance Education Fund
• Compulsory private property insurance has been expanded to include all other forms of public places.
• The Act seeks to increase the insurance penetration rate as well as the uptake of insurance by developing a stringent regulatory framework to protect customers and financially sustain the sector.
• It will also ensure that the insurance industry is regulated in accordance with international regulatory and supervisory standards.
• It also incorporates provisions which enhance the capacity of insurance companies to comply with international best practices as well as the introduction of risk-based supervisory requirements.
• The Act forms part of the initiatives of the NIC, under the auspices of the Ministry of Finance, to grow the insurance industry by strengthening the corporate governance of the industry and increase its accessibility to the Ghanaian populace in particular farmers, informal sector operators and those in low-income markets.
• Ghana being a member of the International Association of Insurance Supervisors (IAIS) is expected to comply with the Insurance Core Principles issued by the Association. The provisions of the Act have therefore been crafted in a manner to ensure full compliance with the international obligations of Ghana under the Insurance Core Principles.
• The Act incorporated reformative principles including provisions on capital adequacy framework, provisions on risk management and internal controls. 
• The Act also introduced additional compulsory insurances to help protect innocent third parties.
• Restricts Chief Executive Officers of regulated entities for serving beyond twelve (12) years. 
• The Act states that for any country to achieve a significant level of economic development, there was the need for the establishment of a vibrant and adequately capitalised insurance industry. 
• Given that one of the key objectives of the government is to achieve economic development, it was ideal that the requisite steps were taken to aid the development of the industry that serves as the main risk management mechanism in Ghana.
• The Act seeks to increase the insurance penetration rate by developing a stringent regulatory framework to protect insurance policyholders. 

Key Statistics

• Statistics about the growth of the insurance industry indicated that the sector had achieved a 25% year-on-year growth rate and over 30 per cent of Ghanaians had insurance. This, however, excludes pensions and health insurance. 
• Total gross premium for the insurance industry for the year 2019 went up to GH3.5 billion from GHC3 billion in 2018. 

Some developments in the Insurance Industry in the past 5 years

Some positive developments in the insurance space by way of policy formulation, initiation and implementation as well as training and manpower development were recorded. Some of these reduced significantly activities of fake insurance operators in the Country.

• The effective management of the way the Minimum Capital Requirements (MCRs) was announced in 2019 giving entities adequate time to meet the requirements needs no over-emphasis. About 98% of all insurance entities successfully recapitalized by the deadline of January 1, 2022. This was with the view to ensuring that jobs are protected, policyholders’ interests are protected and the industry is strengthened financially. 

Instituting the Insurance Education Fund

• An Insurance Education Fund to build the capacity of the industry and educate the insuring public including the informal sector was instituted. New entrants into Ghana’s security agencies i.e. the Ghana Police Service, Immigration Service, Fire Service, Prisons Service, etc are given insurance education as part of their training. Other sectors being trained to further entrench the insurance literacy programmes per the new law are the arts, entertainment and sports.
• In collaboration with the Ghana Education Service (GES), a move to introduce insurance as a basic course of study in second cycle institutions is at its advanced stage. A curriculum is currently undergoing review by the National Council for Curriculum and Assessment (NaCCA) of the GES for inclusion into the syllabus on non-scoring basis.
• The concept of training 10,000 Youth as Insurance Agents which was launched in 2019 as part of the employment and awareness creation has so far proven to be a successful policy. The target of 10,000 has already been exceeded and the desired objectives being met.
• All existing Sales Agents are retrained to sharpen their skills and engender the virtues of ethics and professionalism in the discharge of their duties.
• It is through these awareness creation efforts that has led to Ghana’s insurance uptake now standing at 44.6% as of December 2020 from an initial 30%.
• Similarly, the confidence level has also risen to 78% as more people are becoming aware and are beginning to appreciate the essence of insurance. (Reference www.nicgh.org). 

Increased Regional Presence

• The NIC has retooled and resourced its existing offices and created six (6) additional regional offices thus bringing the total number to cover all ten (10) traditional regions of Ghana. Regional Managers of these offices have oversight responsibility over the six (6) newly created Regions.

Relationship with Donor Agencies

The NIC’s relationships with donor agencies such as the German Development Corporation (GIZ) and Alliance for a Green Revolution in Africa (AGRA) continue to yield the needed results with their continuous support to the financial inclusion agenda. The GIZ under the current phase of its Program for Sustainable Economic Development programme keeps providing technical and financial assistance for: 

• The development and drafting of Regulations and Directives for the insurance Bill after it has been passed into an Act;
• Development and promotion of insurance products for Micro, Small and Medium Business Enterprises (MSME’s);
• Capacity building for both the industry and the NIC on the development, sale and supervision of annuities, and;
• the extension of Vizor to other departments and the regional offices. AGRA is currently sponsoring the development of a proposed National Agricultural Insurance Policy for adoption and implementation. 

Policyholder Protection

One of the Commission’s core mandates is protecting the interest of the policyholder through regulations and monitoring of the activities of insurance companies.

To ensure that the public is adequately informed, NIC’s Claims and Compensations Unit has been strengthened to administer diligently claims submitted by third party victims of accidents in uninsured vehicles and hit-and-run cases. 

Membership with International Bodies

• The NIC is involved with international bodies and associations such as the following:

• International Association of Insurance Supervisors (IAIS)
• West African Insurance Institute (WAII)
• African Insurance Organization (AIO)
• West African Insurance Supervisors Association (WAISA)
• Toronto Centre (TC)
• Association of Insurance Supervisors of Developing Countries (AISDC)