The Chartered Insurance Institute of Ghana (CIIG) is warning that over 7.5 million policies will be affected by the Domestic Debt Exchange (DDE) programme in its current form.
According to its President, Solomon Lartey, this is because more than 40% of insurance premiums are invested in government securities, particularly bonds.
Speaking to the media at the Investiture Ceremony of the Governing Council of the CIIG, Mr. Lartey said the Domestic Debt Exchange programme will further worsen underwriting losses by insurance firms if the industry is not exempted from the programme.
He also pointed out that confidence in the insurance industry will be eroded if government goes ahead to implement the DDE programme in its current form.
“Since the industry is making underwriting losses. Overall, it means that insurance companies rely on investment income to meet their claim obligations to policyholders”.
“Therefore, any debt exchange programme will negatively affect our ability to pay claims and lead to asset-liability mismatch”, he stressed.
He again warned that the debt exchange programme will worsen the penetration rate of the insurance industry which is less than 2%.
“Taking into consideration the fact that insurance companies are making underwriting losses, the effect of the debt exchange programme will be so devastating that there will not be an insurance industry after we surmount the economic challenges”.
According to the Ghana Insurers Association, insurance firms lost ¢356 million in underwriting in the third quarter of 2022.
Source: Ghana News