Insurance laws Ghana
Ghana's insurance sector is governed by the Insurance Act, 2021 (Act 1061), which replaced the previous Insurance Act, 2006 (Act 724). This updated legislation modernizes the regulatory framework, aiming to enhance market stability, consumer protection, and industry innovation.
📜 Key Provisions of the Insurance Act, 2021 (Act 1061)
1. Licensing Categories The Act introduces three primary licensing categories for insurance businesses
Insurance Licence:For traditional insurers
Reinsurance Licence:For entities providing reinsurance services
Innovative Insurance Licence: A new category designed to accommodate insurtech companies and innovative insurance models This license supports the development of a regulatory sandbox to encourage technological advancements in the insurance sector
2. Regulatory Oversight The National Insurance Commission (NIC) is empowered with expanded enforcement authority, including the ability to sanction non-compliant insurers The NIC is also responsible for issuing directives, monitoring market operations, and ensuring compliance with anti-money laundering and countering the financing of terrorism regulations
3. Capital and Governance Requirements Insurers must maintain higher capital reserves to ensure financial stabilityThe Act mandates robust corporate governance structures, requiring insurers to adopt sound risk management practices and maintain transparency in operations
4. Consumer Protection The Act introduces mechanisms to protect policyholders, including
-Mandatory processing and payment of claims within specified timeframes Establishment of a Policyholders’ Protection Fund to safeguard consumers in the event of insurer insolvency
5. Foreign Insurers and Reinsurers Foreign insurers may operate in Ghana under specific conditions
They can open a contact office in Ghana with NIC approval They may enter into contracts with licensed insurers if no local insurer can cover the risk They are permitted to underwrite life insurance policies for Ghanaian residents on a reverse solicitation basis, provided the policies are not marketed or distributed within Ghana
6. Mandatory Insurance Coverage The Act mandates certain types of insurance coverage, including
Public Liability Insurance:For specified persons and entities
Professional Indemnity Insurance:For certain professionals
7. Specialized FundsThe Act establishes two key funds
Insurance Education Fund:To support the Ghana Insurance College in training industry professionals and promoting public awareness of insurance matters
Agricultural Insurance Fund: To subsidize agricultural insurance premiums and support the development of agricultural insurance products
🛡️ Workmen’s Compensation Insurance
Under the new Act, insurers are required to maintain higher capital reserves to meet compensation obligation. The Act also mandates the processing and payment of claims within specified timeframes and establishes a Policyholders’ Protection Fund to safeguard workers in the event of insurer insolvenc.
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