The National Insurance Commission (NIC) is the regulator of Ghana's insurance sector and has under its supervision insurance and reinsurance companies, as well as insurance brokers and agents. The 2000-2001 Financial Sector Assessment Program (FSAP) conducted by the International Monetary Fund (IMF) and the World Bank evaluated Ghana's observance of the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs). The IMF mentions the results of the 2000-2001 FSAP, which was not published, in its 2003 Financial Sector Stability Assessment (FSSA) Update. The 2000-2001 FSAP found that Ghana exhibited only a weak degree of observance of the principles. The FSAP therefore recommended that Ghana update its legislative framework to bring it into compliance with more IAIS principles. The 2003 FSSA Update found that Ghana had made limited progress in implementing the 2001 recommendations, due to inadequate legislation and the limited resources of the NIC. It was mentioned, however, that a draft insurance bill was in the works that would address some of the weaknesses noted by the 2000-2001 FSAP. A 2005 IMF report noted that Ghana had strengthened the supervisory and inspection powers of the NIC and was still in the process of reviewing its Insurance Law, which was expected to further strengthen the authority of the NIC. A 2007 IMF report mentions that, with the passage of the Insurance Act and other legislative reforms, the NIC was provided with more resources, and Ghana's overall legislative framework for supervision and financial risk-assessment was brought into line with international standards. However, there is insufficient publicly available information as to whether the adoption of the Insurance Act has changed Ghana's compliance with ICPs.

General Overview

The National Insurance Commission (NIC) is the regulator of the insurance sector in Ghana. According to the NIC website, the NIC was established by the Insurance Law of 1989 as an autonomous body with the objective to "ensure effective administration, supervision, regulation and control of the business of insurance in Ghana." The NIC supervises insurance and reinsurance companies, brokerages, and insurance agents. One of its functions is to ensure compliance with insurance legislation and regulations. Another is to ensure the solvency and capital adequacy of both insurance and reinsurance companies. It sets standards for the industry and formulates policies by which the industry conducts its business. In addition, the NIC is mandated to educate the public on insurance and address their complaints. Ghana is listed as a member on the International Association of Insurance Supervisors (IAIS) website.

In 2000-2001, a Financial Sector Assessment Program (FSAP) was conducted by the International Monetary Fund (IMF) and the World Bank to evaluate, among other issues, Ghana's observance of the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs). The IMF mentions the results of the 2000-2001 FSAP, which was not published, in its 2003 Financial System Stability Assessment (FSSA) Update. The 2000-2001 FSAP found that "Ghana exhibited only a weak degree of observance of the principles" (IMF 2003, p. 24). Weak compliance was attributed to several factors. Regular on-site inspections were not conducted. The NIC did not have formal intervention authority. There were no corporate governance rules or rules, rules covering related party investments, or rules covering the matching of assets and liabilities. There were no tests to confirm adequate reserves to cover unexpired risks. There was no formal procedure to assess the collectability of reinsurance recoveries. There was no monitoring mechanism to oversee reinsurance arrangements. Reporting requirements were lax and there was no legal provision to protect confidentiality. The FSAP therefore recommended Ghana to update its legislative framework to be compliant with more IAIS Principles.

The 2003 FSSA Update by the IMF and the World Bank concluded that Ghana had made limited progress in implementing the recommendations of the 2000-01 FSAP and strengthening its supervisory framework. The supervision of the insurance sector was found to be heavily reliant on offsite monitoring rather than on-site inspections. The slow progress was attributed to weak legislation and inadequacy of resources available to the NIC. It was noted, however, that a draft bill was under preparation that had provisions on corporate governance, internal controls, reporting, on site inspections, sanctions and confidentiality.

A 2005 IMF Article IV report noted that Ghana had strengthened supervisory practices in the area of insurance supervision. It had also introduced a program to improve prudential reporting and on-site inspections. The 2005 report pointed out that Ghana was still in the process of reviewing its Insurance Law, which was expected to strengthen the authority of the NIC. A 2007 IMF report mentions that the Insurance Act has been passed, providing the NIC with more resources and bringing the overall legislative framework for supervision and assessment of financial risks in Ghana in line with international standards.

The PricewaterhouseCoopers (PWC) website makes certain observations on the challenges facing the Ghanaian insurance sector. It finds that this sector is profitable and very competitive, with a huge opportunity for further growth. This is due, in part, to the anticipated impact of the Insurance Law which would segregate life and non-life insurance businesses. Also contributing to the possibility of growth is the introduction of a West African common currency, which would allow firms to seek foreign markets, product diversification to expand the client base, and to an increase in the minimum capital requirement to Ghanaian Cedi (GHC) 7 billion. Ghana's challenges include the under pricing of policies and increasing losses due to bad debt. The PWC website also notes that the Ghana Reinsurance Company was created to absorb the risks related to general catastrophes.

The Principles

ICP 1 Conditions for effective insurance supervision

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 2 Supervisory objectives

II

There is insufficient information publicly available regarding Ghana's compliance with this principle. On its website, the NIC states that its mission is to develop an effective regulatory system to govern the insurance industry and ensure that participants in the sector "operate under sound, fair, and effective rules." In addition, the NIC aims to ensure solvency of insurance companies and to promptly attend to policy-holder and third-party grievances. Finally, the NIC seeks to foster growth and prosperity in the insurance sector. To achieve these objectives, the NIC aims to create a largely self-regulated insurance sector in the country that is profitable as well as accountable, and independent as well as responsible.

ICP 3 Supervisory authority

II

According to the NIC website, the commission was established by the Insurance Law of 1989 as an autonomous body with the objective to "ensure effective administration, supervision, regulation and control of the business of insurance in Ghana." The NIC supervises all participants in the industry: insurance and reinsurance companies, brokerages, and insurance agents. It is mandated to ensure regulatory compliance within the sector, and to ensure that insurance and reinsurance companies are solvent and maintain adequate capital. The NIC also sets standards for the industry, formulates policy, addresses the public's concerns and complaints, and provides education on the insurance industry and its products.

A 2003 FSSA Update by the IMF and the World Bank confirmed the findings of the 2000-2001 assessment regarding limited resources available to the NIC. A subsequent 2005 IMF Article IV report noted that Ghana had strengthened the supervisory practices in the area of insurance supervision and that a review of the Insurance Law was underway which would potentially strengthen the authority of the NIC. A 2007 IMF report mentions that the Insurance Act was passed, providing the NIC with more resources. However, there is insufficient publicly available information as to whether the adoption of the Insurance Act has changed Ghana's compliance with ICPs.

ICP 4 Supervisory process

II

There is insufficient information publicly available that addresses Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 5 Supervisory cooperation and information sharing

II

The NIC website states that one of the supervisory functions of the NIC is maintaining national and international relations. However, there is little further information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 6 Licensing

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 7 Suitability of persons

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 8 Changes in control and portfolio transfers

II

According to the 2000-2001 FSAP, the NIC lacked formal authority to monitor and control transfers in ownership. However, there is little further information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 9 Corporate governance

II

According to the 2000-2001 FSAP, there were no rules pertaining to corporate governance of insurance companies. The 2003 FSSA mentioned that the proposed draft bill contained provisions on corporate governance. The 2007 IMF report noted that the Insurance Law was finally passed. However there is insufficient information publicly available with regard to Ghana's compliance with ICP 9 Corporate governance.

ICP 10 Internal control

II

According to the 2000-2001 FSAP, there were no rules pertaining to internal controls in insurance companies. A 2003 FSSA Update mentioned the fact that the proposed draft bill contained provisions on corporate governance. The 2007 IMF report noted that Insurance Law was finally passed. However there is insufficient information publicly available with regard to Ghana's compliance with ICP 10 Internal control.

ICP 11 Market analysis

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 12 Reporting to supervisors and off-site monitoring

II

According to the IMF's 2003 FSSA update, the unpublished 2000-2001 FSAP found reporting requirements to be lax. The FSSA added that Ghana had made limited progress in implementing the recommendations of the 2000-2001 FSAP, and but that the supervision of the insurance sector was still heavily reliant on offsite monitoring rather than on-site inspections. The slow progress was attributed to weak legislation and the inadequacy of the NIC's staff and resources. The 2003 Update mentioned a draft bill that had provisions on reporting of the insurance companies. In 2004 the World Bank assessed the accounting and auditing practices in Ghana and confirmed the IMF's earlier findings relating to inadequacy of the NIC's resources. It noted that the existing insurance law was "outdated" and that the NIC had limited sanctions available for non-compliance. However, a proposed law was expected to address some of the shortcomings. In 2007, the IMF reported that the new Insurance Law was finally passed. However there is insufficient information publicly available with regard to Ghana's compliance with ICP 12.

ICP 13 On-site inspection

II

According to the 2000-2001 FSAP (cited by the 2003 IMF FSSA update), regular on-site inspections were lacking. The 2003 FSSA added that the NIC still relied heavily on offsite monitoring rather than on-site inspections. However, in 2003 the NIC established a task force to conduct regular on-site inspections and a draft insurance bill was in the works that contained provisions on on-site inspections. The IMF's 2007 report noted that the Insurance Law had finally been passed. However there is insufficient information publicly available with regard to Ghana's compliance with ICP 13.

ICP 14 Preventive and corrective measures

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 15 Enforcement or sanctions

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 16 Winding-up & exit from the market

II

The 2000-2001 FSAP recommended Ghana to strengthen the mechanisms it employs to liquidate weak insurance companies. In 2005, the IMF reported that five insolvent companies had been liquidated. However, there is little further information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 17 Group-wide supervision

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 18 Risk assessment and management

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 19 Insurance activity

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003. At the time of the 2000-2001 FSAP, the Ghanaian insurance sector did not have a reinsurance arrangement monitoring program.

ICP 20 Liabilities

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003. According to the IMF's 2003 FSSA update, at the time of the 2000-2001 FSAP, there was a "lack of rules concerning matching of assets and liabilities and related party investments" (p. 25).

ICP 21 Investments

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003. According to the IMF's 2003 FSSA, at the time of the 2000-2001 FSAP, there was a "lack of rules concerning matching of assets and liabilities and related party investments" (p. 25).

ICP 22 Derivatives and similar commitments

II

There is insufficient information publicly available concerning Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 23 Capital adequacy and solvency

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003. However, the 2003 IMF FSSA noted that, at the time of the 2000-2001 FSAP, there was an "absence of tests to confirm the adequacy of the reserve for unexpired risks and the any formal process for assessing the collectability of reinsurance recoveries claimed by the companies" (p. 25).

ICP 24 Intermediaries

II

There is insufficient publicly available information regarding Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 25 Consumer protection

II

There is insufficient information publicly available as to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 26 Information, disclosure & transparency towards the market

II

There is insufficient information publicly available addressing Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 27 Fraud

II

There is insufficient information publicly available relating to Ghana's compliance with this principle, as revised by the IAIS in October 2003.

ICP 28 Anti-money laundering/ Combating the Financing of Terrorism

II

There is insufficient information publicly available regarding Ghana's compliance with this principle, as revised by the IAIS in October 2003.