Ghana’s insurance sector has strong potential for growth despite the structural challenges facing the sector, the new Deloitte report on African insurance has revealed.

“The low penetration rate underscores both the scale of untapped opportunity and the structural hurdles that must be addressed to build a more competitive and sustainable market,” the report dubbed Africa Insurance Outlook 2025/2026 stated.

The report, which is on the theme: ‘Adapting for Growth in a Changing World,’ highlights key developments, challenges, and opportunities shaping the insurance landscape in Ghana and across the African continent.

The Ghana section of the report was jointly written by Kwabena Situ, Partner, Assurance and Financial Services Industry (FSI) Deputy Leader at Deloitte Africa, and Richard Omari, Associate Director, Assurance at Deloitte Africa, and indicated that with about 50 licensed insurers and reinsurers and market penetration at just one per cent in 2024, Ghana’s insurance sector remained relatively small compared to its potential.

Despite this, the report said Ghana’s insurance industry had demonstrated resilience in the face of economic and operational pressures. It cited the impact of the Domestic Debt Exchange Programme (DDEP) and currency depreciation as key factors that have eroded balance sheets and compelled insurers to rethink their strategies.

Prior to the debt restructuring, insurers held approximately GH¢4.6 billion in government securities. The DDEP significantly reduced these holdings, prompting the establishment of a $750 million Financial Stability Fund to provide support to affected institutions.

Inflation, the report said, had posed challenges to the sector, with the rate reaching 23.8 per cent in December 2024. As a result, the Ghana Insurers Association proposed a 10 per cent increase in motor insurance premiums to offset rising costs. However, the National Insurance Commission suspended the proposal, citing concerns about the burden on consumers.

The report further highlighted the transition from International Financial Reporting Standard (IFRS) 4 to IFRS 17 as a major milestone for the industry. The new standard, the report said, enhanced transparency by ensuring that revenues and expenses are recognised as services are delivered, providing a more accurate reflection of insurers’ financial positions.

However, the implementation of IFRS 17, the report said, had exposed significant gaps, including outdated systems, poor data quality, and a shortage of skilled actuarial professionals. It said many insurers continued to rely on manual processes or external expertise, which increases compliance risks.

The cost of implementation, the report said, was estimated at about $110,000 and remained a major concern, particularly for smaller firms that may struggle to meet the requirements without additional support.

The report identified several emerging trends that could drive growth. These include the introduction of environmental, social, and governance (ESG) guidelines, plans to adopt risk-based supervision, and opportunities to expand coverage through potential regulation of commercial motorbike transport.

It also underscored the growing role of technology and industry convergence, as insurers increasingly collaborate with banks, telecom companies, and other non-traditional players to deliver innovative products and services.

The report said that while the sector faced notable challenges, addressing gaps in technology, data, and human capital would be critical to unlocking its full potential and positioning it for sustainable growth.