70% of Ghanaians have no access to insurance, UNDP report reveals

September 30, 2021

Flood in Accra. Photo Credit @NADMO

In Ghana, most communities often have to find ways of coping with losses arising from major hazards such as fire, flood, drought, road accidents, pest infestation and diseases. These phenomena are being worsened by changes in climate conditions that are increasing the frequency, intensity, and unpredictability of severe weather events. COVID-19 has further exposed the extent of vulnerability.

Despite increase in disaster risks, protection gaps persist. To identify challenges, opportunities, and solutions to increase inclusive insurance and risk financing towards the achievement of the Sustainable Development Goals (SDGs), the United Nations Development Programme (UNDP) commissioned a diagnostic study. This was supported by the UNDP’s Insurance and Risk Financing Facility, which is a flagship initiative of UNDP's SDGs Finance Sector Hub and a product of a Tripartite agreement between UNDP, Insurance Development Forum, and the German Government.

The findings from the study on Ghana’s insurance industry reveal that despite the country’s favourable environment for insurance and risk financing, about 70% of Ghanaians do not have access to any form of insurance. The study also shows that the insurance industry has provided insurance products that do not respond to the needs of the population.

The diagnostic study identifies inclusive insurance and risk finance as critical to closing the protection gap and calls for a change of focus from post-disaster management to pre-intervention activities in Ghana.

Speaking at a stakeholder workshop to discuss the findings from the diagnostic report, Dr. Angela Lusigi, the Resident Representative of UNDP in Ghana emphasized the need to increase access to affordable insurance and risk financing to deliver the SDGs to build back better from COVID-19.

“As an organisation, we are committed to working with partners in Ghana and beyond to mobilize additional financing and resources to support the implementation of Ghana’s own coordinated disaster prevention, mitigation and response plans to achieve SDGs”, noted Dr Lusigi.

The report also reveals that the average growth of the insurance industry in Ghana is about 25% and the industry has grown ten-fold over the last 10 years. According to the National Insurance Commission (NIC), the strategy is to grow the industry from 2% to 10% of GDP by 2023.

Our strongest desire is to see Ghanaians derive full benefits from risk protection that insurance offers. The agriculture sector employs about 40% of the informal sector yet there are no immediately available affordable protection mechanisms for these group of people and we are happy that the new insurance act has made provision to set up an Agricultural Insurance Fund so that the cost of agricultural insurance can be subsidized”, stated Albert Oko Dagadu, Head of Actuarial Unit of the National Insurance Commission.

The key recommendations from the diagnostic study include the need to establish a stakeholder hub to coordinate activities, improve the enabling environment, and increase capacity, advocacy, and knowledge management. These, according to the report, will increase access to affordable and suitable insurance and risk financing products to reduce the impacts of disaster risks in Ghana.   

It is expected that the findings will lead to the development of a programme intervention, that will be supported by the UNDP’s Insurance and Risk Finance Facility through the Tripartite agreement, by leveraging the expertise and capacity of the insurance industry to reduce risks, and by focusing on integrating this expertise into development frameworks and financing. The aim is to contribute to the objectives of the Sustainable Development Goals and the InsuResilience Global Partnership Vision 2025 that is seeking to strengthen the resilience of developing countries and protect the lives and livelihoods of poor and vulnerable people against the impacts of disasters and other climate risks.

The UNDP Senior Advisor and Corporate Lead on Insurance and Risk Financing, Jan Kellett, commended Ghana for being one of the advanced countries in the roll out of the Insurance Risk Finance Facility and for being one of the first four countries that will receive the financing.

Dr. Angela Lusigi, UNDP Resident Representative in Ghana speaking at the stakeholder workshop to discuss the findings on Ghana's insurance industry.

Mr. Albert Oko Dagadu, Head of Actuarial Unit of the National Insurance Commission.